Belgian tax authorities publish circular letter on global minimum tax and grant an extension for the first QDMTT return – what do you need to know?

After reviewing the circular letter, we conclude that it does not introduce groundbreaking new elements, but confirms that Belgium continues to follow the international OECD guidelines and the EU Pillar 2 Directive. The tax authorities explicitly refer to the most recent sections of the OECD Consolidated Commentary to the Global Anti-Base Erosion Model Rules, the Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two) Examples, and the EU Frequently Asked Questions on the Pillar Two Directive, clearly illustrating that the Belgian interpretation remains aligned with the international consensus.

What should you remember?

1. Scope remains broad

Belgian Pillar 2 legislation applies not only to MNEs, but also to large domestic groups with a consolidated turnover of more than €750 million. Hence, even if all entities are located in Belgium, the group falls under the Pillar 2 rules. In this respect, Belgian legislation and the EU Directive go beyond the OECD guidelines.

2. Qualified Domestic Minimum Top-Up Tax Return (“QDMTT return”): deadline extended to 30 June 2026! 

Although the circular letter can be considered extensive, it does not provide new information on the first Belgian QDMTT return. The deadline for the first QDMTT return was initially planned for 11 months after the end of the reporting period (thus by 30 November 2025) for MNEs with a calendar year reporting period for FY 2024. However, this was a tight timeline, as in most countries the filing deadline for QDMTT returns is only 15 or 18 months after the end of the reporting period. In mid-November, the tax authorities officially announced that the deadline for the first QDMTT return has been extended until 30 June 2026. This extension applies to groups with a reporting period that begins on or after 31 December 2023 and ends no earlier than 1 January 2024 and no later than 30 June 2025.

Important note: the Belgian QDMTT return currently exists only in draft format. The government further stated that practical guidelines and technical documentation regarding the filing procedure will be provided at a later date. 

MNEs must already determine whether they are subject to a 15% minimum tax in Belgium (or abroad) and whether they can rely on a transitional safe harbour (see item 3 below). If not, groups must calculate the effective tax rate per jurisdiction and may become subject to a domestic top-up tax.

As for the domestic top-up tax itself, it is in principle imposed on the group entity with the highest net qualifying income in Belgium. However, the rules allow flexibility: the group may designate another Belgian entity—e.g. a Belgian holding company, even if this entity does not have the highest net qualifying income.

In practice, the tax authorities note in the circular letter that MNEs in Belgium are often managed through a local holding company. Although such holdings generally have limited qualifying income (as dividends are typically excluded from the qualifying income base – see item 10 below), they often play a central role in providing services within the group. 

3. “Transitional safe harbours”: more clarity for large domestic groups and need for qualitative data

The transitional period, during which transitional safe harbours are available, applies for financial years beginning on or after 30 December 2023 and ending no later than 30 June 2028.

These safe harbours allow MNEs to avoid the complex calculations of qualifying income, the effective tax rate (“ETR”) and potential top-up taxes. More details can be found in our previous article.

Summarized: the transitional safe harbours rely on data from qualified financial statements and/or the qualified Country-by-Country Report (“CbCR”). Important: although the CbCR for financial year 2024 is, in principle, only due at the end of 2025, the MNE should ideally already have the necessary qualitative data available per jurisdiction in order to determine whether a safe harbour may apply. 

Further clarification: large domestic groups—normally not required to file a CbCR—may still use the following safe harbours, just like MNEs.

Safe harbour 1 – The de minimis test:  pay attention with entities held for sale

A MNE may apply the de minimis test if, in a jurisdiction, it has revenues below €10 million and profit (or loss) before income tax below €1 million. However, the circular letter clarifies that entities held for sale (not fully included in the group consolidation and not reported in the CbCR) must, in principle, be included when testing the €10 million threshold. If including such entities results in exceeding the € 10 million threshold, the de minimis safe harbour cannot be applied.

Safe harbour 2 – Simplified ETR test using ‘simplified covered taxes’ based on qualifying financial reporting

A key point clarified in the circular letter concerns the concept of “simplified covered taxes.” According to the circular letter, these are the income taxes recorded in the qualified financial statements of the jurisdiction. Although the CbCR includes information on “taxes paid and taxes accrued,” these figures are not considered reliable in view of this simplified ETR safe harbour test. This provides further clarity as to which figures may be used for this calculation.

Safe harbour 3 – Routine profits test (substance test)

The circular letter confirms what was already expected in practice: if a group generates a loss before income tax in Belgium, it automatically meets the routine profits test, meaning no domestic top-up tax calculation is required. This is subject to the general condition that the losses do not originate from non–at arm’s length transactions between group companies. 

4. Subject to QDMTT or IIR? Beware of the surcharge for insufficient advance tax payments

Groups that know they will be subject to a QDMTT or IIR top-up tax (e.g. because no safe harbour applies and the ETR falls below the 15% minimum tax) must also consider potential tax increases due to no or insufficient advance tax payments during the financial year. Groups may already make specific advance tax payments during the FY to avoid such tax increase. For a calendar year reporting period, an advance taxpayment for FY 2025 can still be made up to 22 December 2025. 

Example 1 – IIR top-up tax: A Belgian UPE has a low-taxed foreign entity that cannot rely on a safe harbour and is not subject to a domestic top-up tax locally. Based on the IIR rules, Belgium may impose a top-up tax up to 15%. In addition, a tax increase for having made no or insufficient advance tax payments during the financial year may also become due. The UPE may avoid the tax increase by making specific advance tax payments during the year in relation to the Belgian IIR top-up tax.

Example 2 – QDMTT top-up tax: MNE Group X has two Belgian entities, A and B, with the following simplified key figures. The group cannot rely on any safe harbour mechanisms in Belgium: 

Because advance tax payments were made, both for the Belgian corporate income tax (“CIT”) and for the QDMTT top-up tax, no tax increase will apply.

(*) 15% minimum tax on the total qualifying income of 200 for Belgium, minus the expected Belgian CIT.

(**) In principle, a 6,75% tax increase applies equal to 1,013 (for entity A) and 0,675 (for entity B), but the advance tax payments give rise to a 9% credit equal to 1,013 (A) and 0,675 (B), which fully offsets the tax increase.

(***) In principle, a 6,75% tax increase applies equal to0,34. However, the advance tax payments give rise to a 9% credit equal to 0,34, reducing the tax increase to zero

5. Intragroup compensation for QDMTT or UTPR top-up tax

If a MNE is subject to the QDMTT (or UTPR) top-up tax in Belgium, this top-up tax will in principle be levied on the group entity with the highest net qualifying income in Belgium (see item 2 above). However, the MNE may allocate the portion of the top-up tax attributable to each Belgian entity, for which compensating payments are made between the group entities (which must be tax-neutral).

Example: MNE X has two BelCo’s A and B with the following simplified key figures. The group cannot rely on any “safe harbour” rules:

(*) Entity A has the highest net qualifying income and is therefore, in principle, liable for the top-up tax. However, the top-up tax arises from the fact that B has no Belgian CIT due. Entity A therefore charges a compensation equal to the portion of the top-up tax attributable to B. This compensation must be treated in a tax-neutral manner for both A and B.

6. Local entity with a different financial year than the UPE

In practice, we notice that some Belgian entities have a financial year which does not coincide with that of the UPE. This often raises the question of which financial year should be used as the reference period for Pillar 2 purposes.

The Belgian legislation and circular letter are already clear on this point: the reporting period / income year is the period covered by the consolidated financial statements of the UPE. Only when no consolidated financial statements are prepared by the UPE,the calendar year apply as the reporting period. In other words, Belgian group entities must follow the financial year of the group’s consolidated financial statements for Pillar 2 purposes, and not their own financial year.

7. Joint ventures: a common pitfall

Although joint ventures (“JVs”) in Belgium are considered as group entities under Pillar 2, they are excluded from the safe harbour calculations because their qualifying income, losses and adjusted covered taxes are not fully included in the group’s CbCR. As a result, even where an MNE meets one of the three safe harbour tests in a particular jurisdiction, these tests do not apply to JVs or their associated entities. Consequently, a separate calculation must be carried-out for the JVs in relation to the three transitional safe harbour tests.

8. Flow-through entities: limited news, but significant impact 

When the MNE structure includes “flow-through entities”, such as a Belgian partnership or a German Co KG. GmbH, it is important to clearly assess the associated Pillar 2 implications. The circular letter clarifies that the definition of a ‘flow-through entity’ for Pillar 2 purposes is autonomous and therefore differs from the interpretation used under other Belgian tax rules, such as Belgian withholding tax. 

9. Qualified refundable tax credits

Good news: the Belgian research and development tax credit remains a qualified refundable tax credit under Pillar 2. The reduced refund period, from 5 years to 4 years, is retained and unused credits can still be carried-forward. The option to carry-forward the R&D tax credit remains important where the use of the credit would push the effective tax rate below the 15% minimum tax for a given year.

10. Treatment of (excluded) dividends from ownership interests

The circular letter clarifies the treatment of (excluded) dividends and capital gains/losses on ownership interests when determining qualifying income or loss per entity. This is important, as qualifying income is based on the net result before consolidation and elimination of intragroup transactions. In other words, dividends received (including those that are exempt) are included in this net result. Since intragroup dividends are often locally tax-exempt for the recipient, the intention is to continue facilitating this through: 

• Excluded dividends are excluded from the net result. Such dividends include, for example, received or accumulated dividends from an ownership interest of at least 10% that has been held for a minimum period of one year.
• Dividends from ownership interests of less than 10% that have been held for less than one year are therefore not excluded from qualifying income (so-called short-term portfolio participations).
• For ownership interests of less than 10% that are held for more than one year, Belgium allows the choice to either exclude or not exclude these dividends from the net result. 

If a dividend is excluded, any tax paid that relates to this dividend must be deducted from the ‘covered taxes’ for purposes of calculating the ETR.

Example: A Belgian group entity (“BelCo”) receives a dividend from a 100% non-EU subsidiary (held for at least one year) located in a country with no or low CIT. Although the participation condition for the 100% Belgian dividend participation exemption (“DPE”) is met, the dividend will not qualify for the 100% DPE because the so-called taxation condition is not satisfied at the level of the foreign subsidiary. As a result, the dividend becomes subject to 25% Belgian CIT at the level of BelCo. However, for Belgian Pillar 2 purposes, the dividend and the related CIT will be excluded from the calculation of the qualifying income  and from the covered taxes (since the ownership interest is at least 10% and held for at least one year).

• Capital gains and losses on ownership interests of less than 10% are never eligible for exclusion from the calculation of the group entity’s qualifying income (even if the acquisition value of the shares exceeds € 2,5 million).

11. Pillar 2 versus Trump: side-by-side approach?

The global minimum tax has come under pressure this year following President Trump’s statement that the United States will not accept Pillar 2 taxation on U.S. subsidiaries of U.S. groups. The U.S. position is clear: no Pillar 2 tax (IIR or UTPR) should be imposed on U.S. entities owned by a U.S. UPE. The solution currently agreed upon between the G7 and the U.S. is the so-called ‘side-by-side approach’, under which the U.S. tax system would be recognized as a ‘side-by-side regime’ (“SbS regime”) within the Pillar 2 framework and applied in parallel with the Pillar 2 rules of other countries. A proposal is now being considered to exempt groups with a UPE in a jurisdiction (read: the United States) operating an SbS regime from Pillar 2 taxation (IIR and UTPR), both at the level of the UPE and at the level of U.S. subsidiaries. It remains to be seen how this will ultimately further develop.

12. Undertaxed Profit Rule (“UTPR”) under pressure

A procedure concerning the UTPR surcharge is currently pending before the Belgian Constitutional Court, initiated by The American Free Enterprise Chamber of Commerce. On 17 July 2025, the Constitutional Court subsequently decided to submit a preliminary question to the EU Court of Justice concerning the validity of the UTPR surcharge. In summary, the applicants argue that the Belgian UTPR rules impose a disproportionate burden on Belgian entities of MNE groups by requiring them to pay tax on profits earned by entities outside Belgium, even where those profits have no direct nexus with Belgium, and should therefore be annulled.

How can Moore Belgium assist you with Pillar 2?

The publication of the circular letter marks an important milestone in Belgian Pillar 2 legislation. The first Belgian QDMTT return, due by 30 June 2026, will be a new administrative challenge for many groups. Moore Belgium already assists numerous clients with the preparation, review and/or filing of the Belgian QDMTT return. We also support MNEs with international Pillar 2 compliance and advisory matters.

Should you have any additional questions on this matter, please feel free to reach out to our experts or your usual contact person at Moore Belgium.