End of compensations: how companies can limit the damage
With the reform announced by the Walloon government, productive investments by businesses could quickly end up in the fiscal viewfinder of municipalities through property tax and the tax on driving force. A risk that entrepreneurs can however limit thanks to a complete audit of their equipment and tools and other engines.
The gradual end of compensations
The compensation system was created in 2009 to compensate municipalities for revenue losses associated with tax exemptions (compensatory industrial tax, motor force tax, property tax) granted as part of the economic development plan for Wallonia.
Very concretely, the desire was to neutralize the losses suffered by Walloon municipalities due in particular to:
- exemptions from certain local taxes (additional municipal taxes, etc.)
- Exemption from real estate tax on new equipment and tools
- Exemption from the tax on motive power for certain new engines
One thing led to another, the compensation system will cost more and more the finances of Wallonia, which pays 140 million per year to municipalities.
Towards a return to industrial taxation?
As part of its savings plan, the current Walloon government MR—Les Engagus recently decided to reform this compensation mechanism, by cutting it by 45 million as early as 2026 and to cap it, in the long term, at 58 million per year.
The objective: to reduce costs by reducing compensations
According to our experts at ABV, this massive reduction in compensation makes it very likely that the current exemptions on the property tax on equipment and tools, as well as on the driving force, will be called into question.
Concretely, this means that companies may soon have to pay: • an increased property tax on their equipment; • the reintroduction of certain industrial taxes (driving force, compensatory tax); • an automatic increase in the tax base if the indexation freeze is lifted.
Why an audit is becoming essential
In this context of fiscal uncertainty and the probable increase in property tax and driving force tax in the coming months, we advise our customers and industrial players to conduct a thorough audit of company taxation in terms of exemptions from property tax, equipment and tools, as well as the list of engines imposed under the tax on driving force.
For what benefit? In the past, this audit has already made it possible to clean up a company's tax base as much as possible, to identify obsolete equipment or duplicates, and to deregister materials and tools that were still incorrectly included in the land register — thus reducing future tax exposure.
The support of an expert is now an essential step in order to permanently protect companies against the rising costs that are about to come.
For the company, this audit should make it possible to secure existing exemptions, to optimize the tax base before legislative changes and to anticipate potential financial impacts on industrial equipment.