Key takeaways
- The reduced CIT rate is 20% on the first €100,000 of taxable profit, versus 25% at the standard rate.
- The maximum saving is €5,000 per accounting year, reached as soon as profit exceeds €100,000.
- At least one director must receive gross annual remuneration of €50,000 since tax year 2026.
- Flat-rate benefits in kind may not exceed 20% of the director's total remuneration package.
- Newly incorporated companies benefit from a four-period exemption from the director remuneration condition.
The reduced CIT rate allows small Belgian companies to pay only 20% corporate income tax on their first tranche of taxable profit, where the standard rate reaches 25%. The difference represents a maximum annual tax saving of €5,000, which is far from negligible for a growing SME. The conditions that must be met simultaneously are, however, strict and have been tightened since tax year 2026. This guide covers the eligibility criteria, exclusions and consequences of non-compliance.
The reduced CIT rate: the mechanism and the size of the saving
Belgian corporate income tax has had two rates since the 2018 reform: a standard rate of 25% and a reduced rate of 20%, defined in Articles 215 and following of the Income Tax Code 1992 (ITC 92). The reduced rate applies only to the first €100,000 tranche of taxable profit; anything beyond that threshold is always taxed at 25%.
reduced rate
on the first €100,000 of profit
standard rate
on the total or the surplus above €100,000
maximum saving
per accounting year, capped regardless of profit size
The maximum saving is capped at €5,000 per year (5% × €100,000), regardless of how large the profit is above the tranche. For an SRL with €200,000 of taxable profit that meets all conditions, the calculation gives: €20,000 on the first tranche, then €25,000 on the balance, totalling €45,000 in CIT, versus €50,000 at the standard rate. The benefit remains a constant €5,000.
The cumulative conditions for accessing the reduced rate
The 20% rate does not apply automatically to all small companies. Several legal conditions must be met simultaneously, year by year. Failing any single condition results in the standard 25% rate being applied to the entire profit.
Cumulative conditions for the reduced CIT rate (Art. 215 ITC 92)
Qualify as a small company under Art. 1:24 of the Companies and Associations Code
Not exceed more than one of the three size thresholds over two consecutive financial years.
Pay minimum remuneration to at least one director
€50,000 gross per year since tax year 2026.
Not be an investment, treasury or financial company
These categories are expressly excluded by law, regardless of their size.
Have shares held mainly by natural persons
Companies whose capital is mainly held by another company are excluded.
Not hold participations exceeding certain thresholds
Conditions set out in Art. 215, para. 2 of the ITC 92.
These conditions are verified year by year. A company that benefited from the reduced rate in one year may lose it the following year if it crosses one of the thresholds or changes its shareholding structure.
Small company within the meaning of Art. 1:24 of the Companies and Associations Code
To qualify as a small company, a company must not exceed more than one of the following three criteria, assessed over two consecutive accounting years:
| Size criterion | Threshold not to exceed | |
|---|---|---|
| Annual turnover excluding VAT | €11,250,000 | |
| Balance sheet total | €6,000,000 | |
| Average number of employees in FTE | 50 people |
The vast majority of SRLs and SAs incorporated in Belgium meet all three criteria from the outset. However, small company status is reassessed each year: rapid growth can shift a company to large size and cause loss of the reduced rate.
The director remuneration condition
The condition most frequently unmet in practice is the minimum director remuneration condition. The company must pay at least one of its managers or directors a gross annual remuneration of at least €50,000 since tax year 2026. This threshold was €45,000 for prior tax years.
A few important clarifications:
- The condition is assessed on an individual director basis, not by combining the remuneration of several directors.
- Remuneration includes base salary and benefits in kind. Since tax year 2026, flat-rate benefits in kind may not exceed 20% of the director's total remuneration package.
- A temporary exception applies to newly incorporated companies: they are exempt from this condition for their first four accounting periods.
- Where the company's taxable profit is lower than the remuneration threshold, the condition is deemed met if the remuneration is at least equal to the taxable profit.
Companies expressly excluded from the reduced rate
Even if they meet the size and remuneration conditions, certain categories of companies cannot benefit from the 20% reduced rate. The main exclusions cover:
- Investment companies whose principal corporate object is to acquire and manage financial participations.
- Treasury companies whose assets consist mainly of financial investments, deposits or receivables.
- Financing companies, real estate holding companies and wealth management companies whose activity is patrimonial rather than operational.
- Companies in which more than 50% of the shares are held by one or more companies (rather than by natural persons), which typically covers subsidiaries majority-held by a parent company.
These exclusions, set out in Art. 215, para. 2 of the ITC 92, are designed to reserve the tax advantage for operational SMEs rather than holding structures or wealth vehicles. An intermediate holding company between the individual founders and the operating company may deprive the latter of the reduced rate if the shareholding conditions are not met.
Separate assessment: the financial consequences of non-compliance
The separate assessment provided for in Art. 219 of the ITC 92 applies where the company does not pay the required minimum remuneration to a director. That minimum is €50,000 where the taxable profit reaches that amount, or equals the entire taxable profit where it falls below €50,000. It is calculated on the remuneration shortfall, that is, the gap between that legal minimum and the remuneration actually paid.
The financial impact is twofold. First, the company is taxed at 25% on its entire profit instead of benefiting from the reduced rate on the first €100,000. Second, the separate assessment itself is added to the tax burden and, being a non-deductible expense (NDE), it mechanically increases the taxable base for CIT purposes.
For founders of an SRL in Belgium, the best approach is to integrate from the outset a director remuneration plan that reaches the €50,000 gross threshold, taking into account benefits in kind and the 20% rule. This is prepared at the financial plan stage, before incorporation.
Optimise your company's tax position from day one
Monsiegesocial guides you through the incorporation and domiciliation of your company in Belgium, two steps where initial choices directly influence your tax burden.
Further reading
The reduced CIT rate is part of a broader reflection on Belgian company taxation:
- Corporate income tax in Belgium: rates, calculation and quarterly advance payments: the complete guide to CIT, building the taxable base and advance payments.
- Deductible professional expenses for an SRL: reducing the taxable base before applying the rates, a complementary lever.
- Tax reform 2026: what changes for the self-employed and companies: context for the recent changes that raised the remuneration threshold to €50,000.
