Belgium Raises Taxes to Tackle Debt

Photo: Brussels Times

The Belgian government has approved a new package of tax measures agreed in last month’s budget deal, aiming to stabilise public finances and curb rising debt levels. Finance Minister Jan Jambon confirmed the decision on 24 December, marking the start of a gradual fiscal adjustment beginning in 2026.

Against a backdrop of growing budgetary pressure, the government is relying on higher tax revenues to restore confidence in Belgium’s fiscal policy amid an uncertain international economic environment.

VAT increases and consumption taxes

From March 2026, value-added tax on sports, cultural and leisure activities will increase from 6% to 12%, with limited exemptions remaining in place. The same rate hike will apply to overnight stays in hotels and campsites, as well as takeaway food and beverages.

At the same time, VAT on non-alcoholic drinks in the hospitality sector will be reduced from 12% to 6%, partially offsetting the broader impact of higher consumption taxes.

Belgium’s debt burden under scrutiny

According to the national debt agency, Belgium’s federal debt has risen by €32 billion this year to €551 billion, equivalent to 106.8% of GDP. This places Belgium as the fourth most indebted EU member state relative to GDP, behind Greece, Italy and France.

The new government aims to save €9.2 billion over its mandate in order to meet budget targets and contain fiscal deficits. The approved tax measures are expected to play a central role in achieving these objectives.

Energy and financial sector taxation

Energy taxation will also be reshaped. Excise duties on natural gas and heating oil will gradually increase, while taxes on electricity will be reduced, reflecting a recalibration of fiscal policy amid the energy transition.

The financial sector will face higher levies, with the banking tax and the tax on securities accounts rising from 0.15% to 0.3%. Insurance taxes will also increase from 9.25% to 9.6% from 1 April, broadening the contribution of capital and financial assets to public revenues.

Stricter rules for businesses and individuals

From 1 January, the flat-rate deduction for copyright-related expenses will be abolished, except for holders of standard or enhanced arts work certificates. The prescription period for inactive bank accounts will be sharply reduced from 30 years to between five and ten years, a move that has already prompted a surge in enquiries to the tax authorities.

Small and medium-sized enterprises will also be affected. The dividend tax rate under the VVPRbis regime will rise from 15% to 18%, while liquidation reserves formed after 31 December 2025 will be subject to a higher withholding tax, bringing the effective total tax rate to 18%.

Further measures planned for 2027

Additional tax increases are scheduled for 2027, including a doubling of the air passenger tax, a freeze on payroll subsidies for companies at 2025 levels, and higher excise duties on petrol and diesel. These measures are expected to generate around €50 million in additional annual revenue.

Despite prolonged negotiations that delayed the budget approval and required temporary monthly financing at the start of the year, the agreement was finalised just before Christmas, allowing the government to move forward with its fiscal agenda.

As reported by International Investment experts, Belgium’s latest tax package signals a decisive shift toward stricter fiscal discipline, with a greater reliance on consumption and capital taxation. While the measures may weigh on households and businesses in the short term, they are intended to stabilise public debt levels and reinforce investor confidence in Belgium’s long-term fiscal sustainability.