Belgium’s latest adjustments to the withholding tax (WHT) regime has sparked substantial debate among tax practitioners when it comes to the increase of the reduced rate on dividends under the VVPRbis mechanism. At first glance, the reform seems to signal a tightening of the long-standing advantages associated with single-person management companies (PSCs or personal service companies), a structure deeply embedded in Belgian professional practice. Given the model’s prevalence among executives, consultants and highly autonomous service providers, any shift in its tax treatment quickly captures the attention of both advisers and clients. 

This article unpacks the significance of the recent changes, explains their practical impact, and examines whether the increased WHT rate genuinely alters the strategic value of management companies. Beyond the surface of the reform, tax professionals will find that the fundamentals of the model remain largely intact, even if the fiscal balance shifts modestly. 

A Targeted Reform to Dividend Taxation 

The centerpiece of the 2025 reform is the rise in the reduced withholding tax rate applicable under the VVPRbis regime, from 15% to 18%, with a parallel adjustment to the liquidation reserve regime.  

Although this represents a notable increase, the Belgian legislator has framed the measure as part of a broader political effort to ensure “fairness” in corporate income distribution rather than a direct attack on management companies. 

For tax professionals, the key takeaway is that the relative advantage of distributing profits via dividends remains present. Even at 18%, the combined corporate income tax (CIT) and withholding tax (WHT) burden is still significantly lower than the marginal taxation of employment income. The reform narrows the spread but does not eliminate it. 

Adjusted Conditions for Reduced Corporate Income Tax Rates 

Earlier legislative changes also tightened access to the reduced 20% CIT rate for SMEs. The minimum director’s remuneration has been increased, and a new ceiling now caps benefits in kind at 20% of gross annual salary. Exceeding that limit results in losing the reduced CIT rate.  

This shift underscores the government’s intention to discourage aggressive optimization through remuneration structuring. However, for advisers working with legitimate PSC models, the conditions remain manageable. They require closer alignment between remuneration strategies, corporate governance, and compliance planning, but not a wholesale restructuring of the model. 

Continued Attractiveness of the PSC Model 

Despite higher WHT and stricter SME conditions, the underlying economic appeal of single-person management companies remains strong. Belgium offers a rare environment where PSCs are explicitly recognized in law and widely accepted in practice, unlike in neighboring jurisdictions such as France, Germany or Spain, where such arrangements are often reclassified as disguised employment.  

The model continues to deliver: 

• Clear contractual flexibility governed by private law rather than labor law. 

• Administrative simplicity for clients, avoiding payroll withholding obligations and employer social security contributions. 

• Strategic profit management for service providers, who retain significant control over the timing and form of income extraction. 

For many high-autonomy professionals, this framework still offers a uniquely efficient way to balance operational freedom with fiscal optimization. 

The Real Value Proposition: Structural and Para-Fiscal Flexibility 

The reform does not alter a core structural benefit: dividends remain exempt from social security contributions. This alone preserves a substantial differential between dividend extraction and employment income. 

Additionally, management companies allow for retaining profits within the entity for long-term planning: investments, pension build-up, real estate acquisition or the creation of financial portfolios (including digital assets).  

For many professionals, this is the real anchor of the model. The option to delay income, smooth taxable events, and use corporate reserves for estate-style planning provides an advantage that remains unaffected by the WHT adjustment. 

From the client perspective, the cost differential versus direct employment also continues to be pronounced. A gross salary of EUR 100,000 translates to approximately EUR 128,000 for employers once social charges are added, whereas equivalent service fees paid to a PSC avoid these payroll overheads. 

Compliance Considerations and the Risk of Requalification 

Although the reform does not fundamentally reshape the model, tax professionals should continue to advise clients on maintaining robust governance to avoid requalification into employment. Belgian authorities primarily assess: 

• the presence or possibility of hierarchical subordination, and 

• consistency between contractual arrangements and actual working practices. 

Where service providers operate with genuine autonomy and documentation is coherent, the risks remain manageable and predictable. Compared with emerging intermediary labor models that are increasingly scrutinized across the EU, PSCs continue to offer a more mature and stable risk profile. 

Looking Ahead 

The increased WHT rate represents a tightening, not a turning point. For tax professionals advising clients on PSC structures, the focus should now shift to fine-tuning remuneration mixes, assessing eligibility for reduced CIT rates, and ensuring that dividend strategies remain optimal under the new thresholds. 

Management companies continue to be a bedrock of Belgian professional structuring, offering unmatched flexibility for independent executives and consultants. While the fiscal margin has narrowed slightly, the underlying commercial, administrative, and para-fiscal rationale remains intact. In a labor market seeking flexibility and agility, the PSC model is likely to retain its central role, provided that governance remains strong, and advisers remain proactive in adapting to evolving tax landscapes.