From the 2027 tax year (EI) – or for many companies from the 2026 accounting year (EC) – the conditions for access to the reduced rate of corporation tax are changing.
While the principle of the preferential rate of 20% on the first €100,000 of taxable profit has been maintained for SMEs, a recently passed bill has tightened certain requirements.
Reminder of the current system
To qualify for the reduced rate, the company must :
- Qualify as an SME
- Not to be a finance company
- Be more than 50% owned by individuals
- Provide adequate compensation for at least one executive
From AR 2027 onwards, two important modifications are added or adapted.
1. Increase in minimum executive compensation
Until now, a minimum annual remuneration of €45,000 was required.
This amount is increased to €50,000, with automatic annual indexation.
However, this increase does not apply in two situations:
- when the company already awards at least €50,000 in compensation to an executive ;
- when taxable profit is less than €50,000: in this case, remuneration equivalent to the profit remains sufficient, as before.
2. Introduction of a ceiling for benefits of any kind (ATN)
A new condition appears from AR 2027.
From now on, the company will lose entitlement to the reduced rate if the benefits of any kind, assessed on a flat-rate basis, exceed 20% of the total remuneration paid to executives during the financial year.
These include
- the company car
- provision of accommodation
- heating and electricity costs
Benefits not valued on a flat-rate basis (such as social security contributions paid by the company) are not included in this calculation.
Things to remember
- The reduced rate of 20% remains applicable on the first €100,000 of profits
- Minimum remuneration increased to €50,000 (indexed)
- Flat-rate NTDs may no longer exceed 20% of remuneration
These new rules must already be incorporated into the planning for the 2026 financial year.