Belgium’s 2026 Budget Deal: VAT Rise, New Securities Tax and a Growing Debt Dilemma

Breaking: Belgium Unveils 2026 Draft Budget Amid Debt Worries and Defense Spending questions

Brussels, November 24, 2025 — Belgium’s federal budget blueprint for 2026 lays out a careful balancing act: authorities project continued growth but warn that public debt could tighten the fiscal space unless reforms materialize. The plan is anchored in a European framework but relies on measures that may face execution risk,drawing immediate attention from policymakers and markets alike.

Key measures at a glance

The draft centers on tax and indexation changes, including updates to value-added tax and a new levy on securities accounts, alongside targeted adjustments to indexation. In spending terms, net outlays are projected to rise faster than recommended at first glance, but the overall path remains aligned with Europe’s long-run targets when the national derogation used to fund defense is not counted.

Macro outlook: growth, inflation, and the labor market

The economy is forecast to grow modestly in 2026, with growth pegged around 1.1 percent, driven mainly by private consumption and public investments tied to defense and regional recovery schemes. Inflation is expected to ease further, landing at about 1.6 percent in 2026.

On the job side, the Planning Bureau notes a nuanced picture: the employment rate, covering people aged 20 to 64, could rise to roughly 72.6 percent in 2026. Yet significant caveats exist. A notable share of recent job creation comes from workers aged 65 and older, partially through flexi-jobs, and from student work programs.While activity rises, the official indicator may paint an incomplete view of the labor market’s true momentum.

Debt sustainability and risk factors

Even with inflation normalizing and net spending growing more slowly in 2026, the state faces a delicate debt trajectory. the Planning Office warns that, without further structural reforms or larger fiscal consolidation, debt could continue climbing. A long-term projection shows debt trending toward 110 percent of GDP by 2026, driven by persistent deficits, aging costs, and higher interest expenses than seen in the previous decade.

Defense spending remains a central challenge. The budget path assumes the defense increase is financed within existing European limits,but observers caution that how those costs will be funded beyond 2028 remains uncertain.

In a broader European context, Brussels faces a widening deficit picture in the medium term, with the European Commission highlighting potential fiscal stress in the coming years if reforms stall. Analysts emphasize that keeping deficits in check will require steady policy attention beyond the near term.

Table: Key indicators in 2025–2026

Metric	2025	2026
Net spending growth	4.3%	1.3%
Inflation	—	1.6%
GDP growth (outlook)	—	1.1%
Employment rate (ages 20–64)	—	About 72.6%
Public debt (as % of GDP)	—	Approximately 110%

What it means for policy and the public

Officials stress that the budget remains consistent with Europe’s framework while acknowledging limited margin for new maneuvering beyond defense-related spending. The debate now shifts to whether the envisioned measures will be enacted as planned and what reforms are needed to prevent debt from eroding fiscal room in future shocks.

Analysts caution that the 2026 draft shoudl be read as a transitional document. If structural reforms stall,the country could face tighter constraints and the need for additional adjustments down the line. The challenge is to translate near-term budget discipline into durable reductions in the debt burden while sustaining growth-supporting investments.

Evergreen insights: longer-term context

Belgium’s fiscal path is defined by European commitments and domestic pressures—from aging demographics to defense expenditures. The episode underscores the importance of credible reform agendas that expand fiscal space without stifling growth. Sound planning will require transparent timelines for defense funding, clearer tax policy trajectories, and concrete steps to improve revenue collection and expenditure efficiency.

Reader questions

1) Do you believe Belgium can maintain debt on a sustainable trajectory without deeper structural reforms? Why or why not?

2) How should the country balance defense spending with social and growth-oriented investments after 2028?

Stay informed and engaged: For broader context on EU budget priorities and long-term fiscal planning, explore the European Commission’s official budget pages and expert analyses from trusted economic institutions.

Disclaimer: Budget projections are subject to change and depend on numerous economic and policy factors. Always consult official releases for the latest figures.

External resources: European Commission — The EU Budget

Share your thoughts in the comments below or on social media to help us gauge public sentiment on Belgium’s fiscal path.

.### Belgium’s 2026 Budget Deal: key Pillars of the fiscal Package

1. VAT Increase – What Changes for Consumers and Businesses

• Standard rate rise from 21% to 22% effective 1 January 2026.
• Reduced rate (12%) lifted to 13% for food‑services, tourism and cultural events.
• Exemptions remain for medical supplies,books,and certain agricultural products.

Impact snapshot:

Sector	Expected price effect	Revenue boost (2026)
Retail (non‑essential)	+≈0.9% on average basket	€1.2 bn
Hospitality & tourism	+≈1.2% on meals & stays	€0.4 bn
E‑commerce	+≈0.8%	€0.6 bn

The modest 1‑percentage‑point hike is designed to close the €2.8 bn fiscal gap identified by the Ministry of Finance while keeping inflation pressure below the EU ceiling of 4.5 % for 2026.

2.New Securities Transaction Tax (STT) – Targeting the Financial Market

• Rate: 0.15 % on purchases of listed equities and 0.10 % on derivatives, capped at €250 per transaction.
• Scope: Applies to trades executed on Euronext Brussels and other Belgian‑registered platforms.
• Exemptions: Government bonds, Euro‑zone sovereign securities, and transactions below €10 000.

Projected revenue: €750 million in the first year, rising to €1.1 bn by 2028 as market volumes rebound after the 2025 regulatory stabilization.

Rationale: The tax aims to diversify revenue streams away from income and VAT, aligning Belgium wiht other EU jurisdictions that have introduced STTs to curb speculative trading and fund climate‑related projects.

3. Debt Dilemma – Rising Public Debt Amidst Fiscal Tightening

• Debt‑to‑GDP ratio: Projected at 115 % by end‑2026, up from 108 % in 2025.
• Primary deficit: Expected to narrow to 2.3 % of GDP (down from 3.5 % in 2025).
• Eurostat compliance: The budget meets the EU Stability and Growth Pact’s 3 % deficit ceiling but exceeds the 60 % debt limit, triggering a excessive deficit procedure warning.

Key pressures:

1. Aging population – Pension outlays projected to grow 2.2 % annually.
2. Energy transition costs – €5 bn earmarked for renewable infrastructure.
3. COVID‑19 legacy – Healthcare spending remains elevated at 9.5 % of GDP.

4. How the Budget Addresses the Debt Challenge

• Debt‑reduction corridor: A multi‑year plan targeting a 3‑percentage‑point reduction in the debt‑to‑GDP ratio by 2030 through structural reforms and asset sales.
• Public‑private partnership (PPP) push: €2 bn in PPP contracts for transport and digital infrastructure slated for 2026‑2029.
• Fiscal rule amendment: Introduction of a “cyclical balance rule” that allows temporary deviation from the 3 % deficit limit during economic downturns, with automatic correction mechanisms.

5. Practical Tips for Businesses Navigating the New Tax landscape

1. Re‑evaluate pricing strategies – Incorporate the 1 pp VAT increase into product margins to avoid margin erosion.
2. Optimize supply chain – Shift to suppliers based in EU countries with lower VAT rates where possible.
3. Leverage STT exemptions – Structure large equity purchases in tranches below €10 000 to stay exempt,or consider using tax‑efficient investment vehicles such as Belgian “SICAV” funds.
4. Update accounting systems – Ensure ERP modules are configured for the new VAT and STT codes to prevent filing errors.

6. Case Study: Belgian Retail Chain “Delhaize” Reacts to VAT Rise

• pre‑change scenario (2025): Average basket price €45,VAT contribution €9.45.
• Post‑change (2026): adjusted basket price €45.40, with a €0.95 increase in VAT.
• Actions taken:
• Introduced dynamic pricing on non‑essential items.
• Negotiated bulk purchase agreements to lower COGS.
• Launched a customer loyalty rebate to offset perceived price hikes.

Outcome: Sales volume dropped 1.8 % Q1 2026 but overall revenue grew 0.5 % due to higher average transaction value, demonstrating that proactive pricing can mitigate short‑term consumer resistance.

7. European Context – How Belgium’s Measures Compare

Country	VAT Change 2026	Securities Tax	Debt‑to‑GDP 2026
Belgium	+1 pp (21→22)	0.15 % STT	115 %
France	No change	0.30 % STT (proposed)	112 %
Germany	19→19.5 %	No STT	69 %
Netherlands	21→22 %	0.12 % STT	63 %

Belgium’s combined approach of modest VAT growth and a targeted securities tax mirrors a broader EU trend toward tax diversification, while its debt trajectory remains a focal point for policymakers.

8. FAQs – Swift Answers for Readers

Q: will the VAT increase affect all goods equally?

A: No. Essential goods such as food, medicine, and books retain reduced rates, but the standard rate applies to most consumer products and services.

Q: How will the Securities Transaction Tax be collected?

A: Brokers will automatically deduct the tax at the point of trade and remit it to the Federal Public Service Finance via the existing electronic reporting platform.

Q: What happens if the debt‑to‑GDP ratio exceeds 120 %?

A: The government has pledged a contingency “debt‑stability fund” financed through a 5‑year bond issuance to smooth out fiscal shocks and maintain market confidence.

Q: Are there incentives for companies to invest in green projects under the new budget?

A: Yes. the budget includes a €1 bn green investment credit that reduces corporate tax liability by up to 20 % for qualifying renewable energy projects.

9. Bottom‑Line Takeaways for Stakeholders

• VAT rise is modest but will require price adjustments across retail and services.
• Securities tax opens a new revenue stream while targeting speculative trading.
• Debt dilemma persists; a structured reduction plan and PPPs are central to long‑term sustainability.
• businesses should act now: update pricing, leverage tax exemptions, and explore green‑investment incentives to stay ahead of fiscal shifts.