Small companies, large tax breaks

1. What exactly will change?

From financial year 2024 (for companies that keep their accounts per calendar year), the thresholds for determining the size of a company will change as follows: 

	Old thresholds	New thresholds
Annual average number of employees	50	50
Annual turnover (excluding VAT)	EUR 9,000,000.00	EUR 11,250,000.00
Balance sheet total	EUR 4,500,000.00	EUR 6,000,000.00

A company is considered small if it exceeds at most one of these thresholds on the balance sheet date of the last completed financial year.

In principle, the transition from a large to a small company occurs only in the event of exceeding at most one of these thresholds for two consecutive years. Consequently, the transition must be somewhat durable. 

Fortunately, it is now temporarily accepted that a one-off exceeding of at most one of the new thresholds will suffice for a large company to be considered as a small company.

Consequently, a company that was large under the old thresholds in the 2023 financial year but small under the new thresholds in the 2024 financial year will immediately be considered a small company. 

2. Tax benefits for small companies

Small companies enjoy various tax benefits, including :

• the application of the lower tax rate of 20% on the taxable base up to EUR 100,000;
• the possibility to distribute (liquidation) dividends at a reduced withholding tax rate under application of the VVPRbis regime or through the creation of a liquidation reserve;
• the possibility of making use of the ordinary one-off investment deduction, on the basis of which one may deduct a percentage of the acquisition or investment value of certain investments, carried out during the taxable period, from the taxable profit;
• the creation of an exempt investment reserve;
• the exception to the basket limitation for the deduction of previous losses during the first four taxable periods from its formation;
• the tax reduction or exemption granted to private investors in start-up companies (through the acquisition of shares or for loans granted through the intervention of a recognised crowdfunding platform);
• the exemption from multiplication if no or insufficient advance payments were made during the first three years from incorporation.

In addition, small companies are subject to more lenient rules on annual accounts and publications.

While your company may not have been eligible for these various tax benefits in the past, this could potentially be the case from now on as a result of the changed threshold values. You should be aware of this and seek more information if needed. 

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