Back in May 2015, Belgium notified the Commission that it planned to introduce a specific income tax regime for diamond traders because it had found difficulties in applying the general income tax regime to that particular sector. In Belgium, income tax is generally paid on business profits but for wholesalers in rough and polished diamonds, the income assessable is derived from a valuation of the stock of diamonds. As the valuation process is highly complex, there is often litigation between diamond traders and the tax administration.

The new regime will allow a methodology for calculating income tax which does not involve the tax authority valuing the diamonds. The Commission has examined the new methodology, which involves calculating the trader’s gross profit based on a fixed percentage of turnover and has found that it is in line with EU State Aid rules and does not favour diamond traders over other businesses. More details of the regime can be found in the European Commission’s press release.