The Federal Government reached its 'Easter agreement' at the end of last week. The federal plan includes more investment in defence and justice, stricter family reunification rules, and the revision of unemployment benefits.
Defence investments are set to increase to 2% of GDP this year. Achieving this will require about €17 billion over the legislative term. Initially, funds will be sought from taxes on frozen Russian assets at the financial service provider, Euroclear, dividends from government participation, and potential asset sales.
Moreover, discussions with the Regions have been planned to identify which investments can count towards the 2%, according to Finance Minister Vincent Van Peteghem (CD&V). More structural measures for new revenue will be introduced in the 2026 budget.
An additional €150 million will be invested in the Ministry of Justice this year, partly to reduce prison overcrowding. "We will invest in modular units for prisons," stated Justice Minister Annelies Verlinden (CD&V). The government will also implement measures to repatriate more detainees who are irregularly residing in the country.
Limited benefits
From 1 January 2026, unemployed individuals will lose benefits after two years. "This is a major reform," said Prime Minister Bart De Wever (N-VA). "We were almost the last country in the world where inactivity could be a lifestyle choice."
However, there will be an exception for unemployed individuals undergoing training as care workers. "They can receive benefits for three or four years until they graduate," said Health Minister Frank Vandenbroucke (Vooruit).
For those in other "critical training programmes", there will be a transitional arrangement. "If they start before 1 January, they will retain benefits throughout their training," Vandenbroucke added.
Monitoring sick leave
The government will also focus on reducing the number of long-term sick individuals and strengthening their return to work policy. Part of this includes increasing monitoring of doctors prescribing unusually high amounts of sick leave. Medical professionals who incorrectly prescribe sick leave may face financial sanctions, although the details of this are yet to be revealed.
Moreover, doctors' notes will be collected in a database. Initially, only sick notes for two weeks or longer will be included, but by the end of this year, it should contain all certificates. From 1 July, no more paper certificates will be prescribed.
Additionally, a reporting centre will be set up to allow employers to report doctors they suspect of prescribing fraudulent notes.
To encourage employers to make more of an effort to prevent the need for sick leave, they will be required to contribute 30% of the sickness benefit of an incapacitated employee during the second and third months after the first four weeks of guaranteed income.
Asylum and pensions
Minister of Asylum and Migration Anneleen Van Bossuyt (N-VA) introduced several reforms, including stricter family reunification rules. Income thresholds will be raised, and waiting times will be longer.
Other asylum rules will also be made stricter. "Those already granted protection in another Member State will no longer receive shelter in Belgium," stated Van Bossuyt. "Parents who receive a negative decision cannot reapply in their children's names."
Ahead of Friday's negotiations, it was announced that the highest pensions would not be indexed for a few years. This measure was ultimately not implemented. The highest pensions will receive the indexation amount of the minimum pension. "We could not accept the non-indexation of some pensions," said Vandenbroucke.
Transport and construction
The Federal Government also finalised a series of tax measures within the transport and construction sector. Regarding transport, hybrid cars will remain tax-deductible for longer, to encourage the transition to (partly-)electric vehicles. There will be a transition period with 75% deductibility until the end of 2027, after which there will be a reduction to 0% from 2030 onwards. However, only the greenest hybrid cars will qualify.
In terms of construction, the VAT on housing projects which involve demolition and reconstruction or rebuilding will be reduced from 21% to 6%, according to the cabinet of Finance and Pensions Minister Jan Jambon (N-VA). Construction federation Embuild considered the decision to be an "important tax break" for the renewal and expansion of the housing stock.
Budget-wise, 2025 will be a transitional year. "We will start preparing the budget for 2026 as soon as possible," said De Wever. "We will need to make more historic decisions."
