07 February 2018

Avoid a financial corporation and receive the reduced SME rate

The news is out: as of this year, the corporate income tax rate for SMEs will generally fall to 20.4% on the first EUR 100,000 of taxable profit. For the reduced rate to apply, a whole series of conditions must be met, meaning that some companies that are ‘almost’ SMEs still fail to qualify.

Companies that hold shares whose investment value exceeds 50% of the paid-in capital plus taxed reserves and ‘recognised’ gains are among those excluded from this reduced rate. These are the so-called ‘financial corporations’. However, shares representing at least a 75% stake are not taken into account in the calculation to determine whether the 50% limit has been exceeded.  

It is therefore worth noting that ‘recognised’ gains may be counted – in other words, including revaluation gains.

If a situation occurs where the 50% limit has been exceeded, it is definitely worth checking whether a ‘revaluation gain’ can be recognised on tangible or financial fixed assets (for example, on land or buildings or on 75% participations). If so, you may still be able to qualify for the reduced rate, provided, of course, that your company meets all other conditions.


Do you have any further questions about this? Then be sure to contact our advisors! Let's talk!

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