Economic and financial crisis tax measures adopted

Following the May 2010 State of the Nation speech, the Government has approved a draft law that introduces some tax measures aiming at restoring budgetary balance. The draft law still needs to be discussed and commented by the various chambers and the State Council prior to being passed by the parliament. It might therefore evolve in this process. The key measures are listed below:

• Minimum taxation of EUR 1.500 introduced for SOPARFIs

A minimum taxation of EUR 1.500 is introduced for unregulated collective undertakings for which the sum of fixed financial assets, transferable securities and cash at bank represents more than 90% of total assets. The entities concerned are likely to be SOPARFIs with a mainly holding activity.

• Energy saving investments: maximum special depreciation brought from 60 to 80%

The depreciation rules applicable to energy saving investments are amended in order to spur this type of investment. The maximum special depreciation is increased to 80%.

• Exit payments no longer tax deductible above a ceiling of EUR 300.000

Exit payments (so-called “golden parachutes”) will now only be tax deductible up to an amount of EUR 300.000.

• Solidarity surcharge due by companies increased by 1% (from 4% to 5%)

The solidarity surcharge due by companies will be increased by 1%, from 4% to 5%.

This means that the global tax rate for companies (i.e. Corporate Income Tax + Municipal Business Tax) will be brought from 28,59% (current rate) to 28,80%, meaning a slight increase of 0,21%:

CIT = 21% + (21*5% solidarity tax) = 22,05%

MBT = 6,75%

Total: 28,8%

• Top marginal income tax rate of 39%

A new top marginal tax rate will be introduced, which will apply as from a taxable income of EUR 41.793 (EUR 83.586 for a household of 2 persons).

• Kilometer allowance and lump sum for traveling expenses reduced by half

The kilometer allowance available to dependent and independent workers will be reduced by half. The same will apply to the lump sum for traveling expenses.

• Crisis contribution of 0,8% introduced

A crisis contribution of 0,8% will be introduced for the tax years 2011 and 2012. This contribution will apply on all types of professional income, income from property and income from certain pensions.

• Solidarity surcharge increased to 4 or 6%

The solidarity surcharge due by individuals of currently 2,5% will be increased to 4% and it will be brought to 6% as from a taxable income of more than EUR 150.000 (EUR 300.000 for a household of 2 persons).

• Registration tax credit for acquisitions of personal dwellings limited

A EUR 20.000 registration duty tax credit is currently available to all individuals, disregarding their level of revenues, in case of acquisition of a personal dwelling. In future, the tax credit will only be granted to individuals whose income does not exceed a certain level.