Also in 2021 tax exemption for COVID-19 support
Shortly after the start of the corona crisis in March 2020, the various governments quickly issued support measures to help companies survive in lockdown. In order to avoid that financial support from regions, communities, provinces or municipalities ends up partly in the federal treasury, this support is tax-free. This tax exemption was extended some time ago until 31 December 2021.
The first measures
The law of 29 May 2020 containing various urgent tax provisions as a result of the COVID-19 pandemic, providing that the allowances granted in the context of support measures taken by the regions, communities, provinces and municipalities are, under certain conditions, tax exempt.
This concerns both natural persons subject to personal income tax (or to the non-residents tax (natural persons)) and to taxpayers subject to corporate income tax (VenB) or to the tax on non-resident companies (BNI/ven.).
The exemption applies to the financial support granted by the regions, communities, provinces and municipalities for the economic consequences suffered by taxpayers as a result of the COVID-19 pandemic.
However, there are some conditions:
the allowances do not constitute direct or indirect consideration for a supply of goods or the provision of services;
the scheme under which the compensation is granted expressly provides that such compensation is provided in order to cope with the direct or indirect economic or social consequences of the COVID-19 pandemic;
the compensation will be paid or granted between 15 March 2020 and 31 December 2020.
Note: these allowances are tax exempt and you are not obliged to report them. However, they will appear on the calculation note accompanying the personal income tax assessment. This is done because those exempt benefits will be taken into account for the calculation of income dependent allowances.
The information comes directly from the assigners of these allowances.
For corporate income tax purposes, the amounts received are in principle included as revenue in the result of the taxable period in which they were received. The exemption runs through a positive adjustment of the initial reserves.
Extension of the measures
This exemption was initially limited to fees paid or awarded between 15 March and 31 December 2020.
But the health crisis was not over by the end of 2020. That is why the exemption was extended through the law of 20 December 2020. Therefore, the exemption also applies to aid paid or granted up to and including 31 March 2021.
With a law of 2 April 2021, the exemption was extended again, i.e. until 31 December 2021.
So you will also receive a tax exemption for financial aid received in 2021. The conditions and modalities of the exemption remain unchanged.
What was not initially arranged was the possible repayment of financial support. If an entrepreneur has wrongly received (tax-free) support, the reimbursement is not a deductible professional expense.