By means of notional interest, companies deduct a fictitious interest amount from their profits which are calculated based on their equity. For example, this has allowed Arcelormittal to pay 84 million Euros in taxes between 2008 and 2011, on profits of 5.8 billion Euros. This represents a tax of 1.4% per year... which caused a certain grinding of teeth when the company announced the closure of its coal and blast furnaces in Liege. This is an indictment of the system among an ever-increasing number of such criticisms. “The risk, if we abolish notional interest, is that we will see these financial centers setting up elsewhere and laying off their workers. The decision is a political one. It will not be possible to reduce company tax to 1% for everyone! This mechanism responds to the objectives pursued when it was created even though it needs to be improved in order to eliminate the abuse highlighted here”.

The politician decides, the tax specialist executes

Belgium possesses other tax advantages. Wealthy French people who decide to set up in Belgium will attest to this, they have often been attracted by the low wealth tax and/or by the non-taxation (as a general rule) of capital gains on shares. Can our little country rival Switzerland or Luxembourg as supposed tax havens? “Not for Belgians if we consider the tax burden. However, we mustn’t forget what we are offered in terms of state services. Education is cheap and accessible compared to other countries as is health care; we benefit from many advantages. Is it so scandalous that French exiles in our country make profits from shares? We need to decide what we want”.

Isabelle Richelle is cautious about taking sides. The politician decides and the tax specialist executes. “Should we tax profits on shares or capital gains on property? This would certainly create more equality. As for knowing what impact this would have on the markets, I do not have the answer. It is for economists to make that analysis”. But a change in taxation would represent a departure from our civil law concept of the taxation system which taxes income in the strictest sense, (salaries, rents, dividends, company profits…). “It is important to implement coherent mechanisms”.

In Belgium as in Europe, fiscal policy has reached a turning point. “Faced with this internationalization, a certain number of things need to be rethought”, affirms Isabelle Richelle.  It remains to be seen what direction needs to be taken…