We still have to wait for the concrete implementation of the coalition agreement. The technical modalities of the measures have yet to be worked out, as well as the date on which they will take effect. Some plans are vague, but what do we already know?
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Do not focus on a minimum pension of EUR 1,500 net
With the election promise of EUR 1,500 net minimum pension, the De Croo government seems to be more sympathetic to (future) pensioners than previous governments. But perception is not everything. In fact, this government also wants more people to work longer for their statutory pension.
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By early September 2021, the new Pensions Minister Karine Lalieux (PS) must present concrete reforms to the Council of Ministers to keep the rising costs of aging, especially for pensions, manageable by 2040.
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The central goal is to boost the employment rate to 80 percent by 2030. As in the Di Rupo and Michel government, the spearhead is to keep more people working longer. With regard to pensions, the coalition agreement therefore provides for the following measures:
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The step-by-step increase in the statutory retirement age set by the Michel government will not be reversed. Unless otherwise decided during the consultation on reforms in the government and with the social partners, the statutory retirement age will rise from 2025 to 66 years and from 2030 to 67 years.
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To discourage early retirement, the pension bonus will be reintroduced for everyone who continues to work while retiring.
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The three pension systems for employees, the self-employed and civil servants must converge, without affecting the rights that everyone has already built up in recent years. The calculation of self-employed pensions is adjusted so that they reach the same level as that of employees. But nothing is free: the self-employed currently contribute lower pension contributions and they are ‘asked for more solidarity in the financing of the system’.
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Both the lowest and the minimum pensions are going up, but the conditions for the minimum pension are getting stricter. Currently, the minimum pension is 1,291.69 euros for employees and self-employed persons and 1,392.95 euros for civil servants. That will be gradually increased to 1,500 euros. According to calculations by the Federal Pensions Service, 1.27 million workers will benefit from this increase. But not everyone is eligible:
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- The 1,500 euros is only for those who have a full 45-year career. The amount is calculated pro rata for those who worked less, as is already the case now.
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- The conditions for claiming the minimum pension are becoming stricter. It requires a career of at least 30 years as an employee or self-employed person and 20 years as a civil servant. That is why anyone who was an employee for 26 years and a civil servant for 19 years – and therefore has a career of 45 years – is not entitled to the minimum pension. People who have been unemployed for a long time or had time credit are currently also entitled to a minimum pension because those years are equated with career years. In the future, a number of years of effective work must be done during those career years. It has not yet been determined exactly how many years that should be.
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The pension ceiling, the maximum wage amount on which the pensions are calculated, will rise in line with the increase of the minimum pension. As a result, the highest pensions also improve. On the other hand, there is the ambition to ‘strengthen the solidarity between the highest and the lower pensions’. The coalition agreement is not more concrete, but it may mean that more taxes will be paid on the highest pensions.
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To discourage early retirement, the pension bonus is reintroduced for everyone who continues to work while he or she can take early retirement. Work is underway on soft runways and the part-time pension, in addition to the existing end-of-career schemes. There is no mention of a more advantageous pension calculation for demanding professions – a file in which the Michel government bit its teeth – is not mentioned in the coalition agreement.
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Pension inequality between men and women must be reduced as far as possible. An adjustment to the survivor’s pension should avoid discouraging those who become a widower from looking for a job. In order to avoid that a breakup is harmful to the pension of the partner who stayed at home for the children, the principle of the pension split is studied. The previous governments had already expressed this ambition, but the division of the statutory and possibly supplementary pension in the event of divorce is particularly complex.
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For the supplementary pension – which you save through your employer – the sector looks at how the costs can be reduced, so that they affect the potential return as little as possible.
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6 percent VAT on demolition and reconstruction
In the context of social housing policy, the new federal government wants to extend the reduced VAT rate of 6 percent on the demolition and renovation of buildings to the entire Belgian territory. Until now, this reduced rate only applied in 32 Belgian cities and municipalities, 13 of which are in Flanders. Elsewhere, as a consumer, you have to pay the usual VAT rate of 21 percent.
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Here too, we have to wait for the technical modalities, but the words ‘social housing policy’ indicate that restrictions can be imposed on the measure, for example in terms of surface area. The government wants to avoid that large villas are built at 6 percent VAT. Another possible limitation is that only the structural work or outer shell can be built at a reduced rate and not the finishing, such as a kitchen or bathroom.
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The construction sector demands that the measure not only apply to private individuals who demolish and rebuild a house, but also if they buy a house that has been rebuilt by professional builders after the demolition of old buildings.
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We also have to wait and see what the measure means for the Flemish demolition and reconstruction premium. Since 7 March 2019, private individuals who do not live in one of the 13 Flemish cities where the rate of 6 percent applies can apply for a demolition and reconstruction premium of 7,500 euros.
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Rich tax
‘The government will strive for a fair contribution from those people who have the greatest resources to contribute, with respect for entrepreneurship,’ says the coalition agreement. There is no mention of a specific levy in the text, but it has been heard in government circles that a tax on large financial transactions is possible. It would be a withholding tax, which is deducted at the time of the transaction. As a result, it is not necessary to create a property register.
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Yet another measure in the coalition agreement does seem to pave the way for that. The new government wants the bank balances of Belgian account numbers to be transferred to the CAP. That is the Central Contact Point that is coordinated by the National Bank. Now banks only have to provide the name of the account holder and the account number. If the balances are also passed on, the step has been taken to a (form of) asset register. Please note: the tax authorities cannot simply consult the reporting center, only if they have indications of tax fraud.
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- The maternity leave for fathers will be gradually increased from 10 to 20 days. This applies to all types of employees, including interim and short-term contracts.
- The federal states will have the option of turning their public holiday – 11 July in Flanders – into a paid public holiday.
- People with disabilities are less likely to lose their benefits if they start living together.
- The lowest benefits are raised ‘towards’ the poverty line.
- There will be an ‘individual training account’, which someone can use throughout his career. It is the intention that every full-time employee is entitled to an average of five training days per year.
- There will be a driver’s license with points for those who have repeatedly committed serious traffic offenses.
- All new company cars must be emission-free by 2026.
- There will be a framework whereby employees who are not entitled to a company car can also receive a mobility budget from their employer. The mobility budget now gives employees with a company car the option to exchange it for sustainable alternatives.
- The tax credit for childcare will be expanded. Today, for a child up to 12 years old, 18 years for children with a severe disability, you can contribute up to 11.20 euros per day in childcare costs (for crèche, childminder, pre- and after-school care and summer camp with the youth movement). The tax reduction depends on the income of the parents and amounts to at least 45 percent.
- The supplement on top of the tax-free allowance, so that a larger part of the income escapes tax, is increased for parents and grandparents and dependent brothers and sisters over 65 years of age.
- The tax regularization, with which dirty money can be whitewashed after paying a tax, will end on December 31, 2023.
- The ceilings for contactless payments will be further expanded. Now you can pay up to 50 euros with your bank card without having to enter your pin code.
- It is investigated how the costs associated with buying real estate or refinancing a home loan can be reduced. The costs involved are not specified. Anyone who buys real estate has to pass through the notary. But banks also charge costs if you take out a mortgage loan. A legal ceiling of EUR 500 already applies to file costs. With a refinancing that is half, unless you exceptionally refinance several times a year.
- In order to keep the energy bill for households and businesses under control, the government is ensuring that the federal portion of the electricity bill falls. The energy cost is only one third of your bill, the rest are costs for energy distribution and federal and Flemish taxes.
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