As Belgian tech entrepreneurs, we work day and night to grow successful companies that become global champions in their categories. As an industry, we have become one of Belgium’s greatest contributors to job creation. We believe in Belgium’s potential and put all our energy into making our country’s ecosystem attractive (for founders, talent, and investors).

Collectively, we are signing this petition to ask for a change in the copyright taxation reform introduced by Finance Minister Vincent Van Peteghem. While we agree that our income tax regime needs simplification and that reform is desirable, we want to bring the government’s attention to the harm the current project will have on the Belgian tech landscape, and argue for a smarter outcome: one where copyright taxation is reformed without hurting Belgian tech.

 

What is currently on the table?

• The fiscal regime was reformed in 2008 to clarify the (uncertain) fiscal status of revenues coming from the transfer or licensing of copyright.
• In the last 10 years, the tech industry took advantage of the legal certainty and beneficial rates offered by the reform, and started compensating employees partially under that regime as a common practice.
• The applicability of the regime to software creation was officially confirmed in 2011. The ruling service of the tax administration confirmed the lawfulness of the practice in countless decisions, offering legal certainty to many employers. Indeed, the qualification
  of software development as a “creative work” protected by the Berne Convention (Article 2.1) is unanimously agreed between intellectual property specialists.
• As the payment of copyright compensation apparently gained popularity across different sectors of the economy, we were concerned to hear political discourse calling ‘abusive’ its application outside the narrow artistic sector - a position contrary to the relevant legal principles and to years of application by the tax administration.
• Given Belgium’s budgetary situation, the draft Program Act submitted by Finance Minister Vincent Van Peteghem would limit the copyright taxation regime to the artistic sector.
• We support the fight against fraudulent and abusive behaviors, but the draft reform would in reality exclude a vast number of knowledge workers who create valuable intellectual property daily, going way beyond its stated intent.

 

How will the current reform harm the Belgian tech ecosystem?

• If voted by Parliament in its current form, the majority of software developers working in Belgium would lose between 200-600 EUR net salary/month in direct income tax increases.
• This is of major concern as Belgium faces a significant shortage of software developers. Whether it’s about attracting foreign talent to Belgium or retaining national talent from emigrating, we collectively need to reduce the net pay gap with countries like the US, Switzerland, UK, or Netherlands.
• The cost structure of tech companies is >80% in personnel. Removing software developers from the copyright regime would increase the largest cost item for tech companies, R&D, in an overall context where costs are already increasing by 10% per year due to inflation.

 

What are we asking for instead?

• Repeatedly, precedent (e.g. EU Directives such as 2009/24/CE, Belgian fiscal administration,...) has established that software development is a “creative work” protected by copyright. We ask you to respect the legitimate expectations of tech companies and knowledge workers who have been lawfully applying these concepts for years.
• The broad scope of the copyright tax regime leaves difficult questions open - for instance, estimating the fair percentage of an employee’s remuneration that rewards copyright. The existence of ‘grey zones’ lead many companies to request a ruling decision to avoid exposing employees to tax risks, but may also have led to abuses. The ruling service has developed best practices over the years, which have no general binding nature. We ask that the government consolidate its ‘case-law’ in a tax circular highlighting legitimate remuneration practices. This would help professionals looking for
  guidance and could deter abusive behaviors.
• Software editors, just like book publishers or movie producers, support high upfront investments to finance the development of creative works that are widely distributed, where future returns are highly uncertain. We ask to keep a level playing field between economic operators facing similar challenges, risks and rewards.
• After years of deep integration of copyright revenue into salary structures, employment agreements, work rules, payroll systems, etc., any substantial change should happen after a long enough transition period. The announced change for 1 January 2024 does not allow most employers to absorb the reform, especially following salary increases of more than 10% in January 2023.
• We further expect changes to the copyright tax regime to be synchronized with an overall income tax reform to avoid hurting the creative sector disproportionately.

 

Let’s face it. Belgium is not part of the best tech ecosystems in the world (yet) and we are fighting to change that. While trying to build the companies and jobs of tomorrow, we feel it’s our duty to raise the alarm when reform will do structural harm to an entire sector. We measure how difficult the state of the country is and the extent of the crises affecting our fellow citizens, but we simply ask to play our role as actors of job creation and growth. With the biotech industry, Belgium already has a track record of successfully nurturing a center of excellence. Why not trust us to do the same in tech?

 

Help us compete globally. Reform copyright taxation without hurting Belgian tech.

 

(image from DALL-E : "a drawing of laid-off tech employees packing computers in a Belgian tech office")