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.


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