The American Chamber of Commerce in Belgium (AmCham Belgium) vigorously defends the notional interest deduction, which attracts foreign investment in Belgium by offsetting a cost of labor and nominal corporate tax rate among the highest in Europe.
“The attack on the notional interest deduction threatens to drive multinational corporations from Belgium, and indeed at least one high-profile company has already decamped,” says Marcel Claes, Chief Executive of AmCham Belgium. “Of course, it is not only multinational corporations that benefit from NID, but all businesses in Belgium.”
Against the high cost of labor and the otherwise high tax burden, the notional interest deduction (NID) creates a powerful incentive for companies to maintain or locate their activities in Belgium.
In particular, NID encourages multinational corporations to locate their group financing activities here. “Despite the recent reporting about mailbox companies, the fact is that most of the corporations named by the press have a significant presence in Belgium, creating employment and contributing to public finances,” says Claes. “Instead of attacking these companies, we should work with them to expand their operations in Belgium.”
Apart from the large multinational corporations which have come under intense scrutiny, it must also be said that the NID likewise helps small and medium-sized enterprises to increase their after-tax results and hence longer-term investments, while also incentivizing them to increase their equity and solvency.
As other commentators have already noted, the NID regime has helped make Belgium an attractive place to invest since its introduction in 2006, but the ongoing debate is creating considerable uncertainty for businesses, uncertainty which renders Belgium a less attractive investment location. Werner Heyvaert, who heads AmCham Belgium’s Task Force on the NID, adds: “A cap on the NID benefit was already put in place in 2009 as well as other restrictive conditions – for example, concerning the carry-forward of unused NID amounts. In addition, the Belgian tax administration has issued stringent administrative guidelines to combat (perceived) abuses of the NID. It is time that we move past this debate.”Source: AmCham