120% deduction for e-invoicing: how can you benefit? 💰

The Belgian government is making the mandatory transition to electronic invoicing a little easier with an attractive tax incentive starting January 1, 2026. Businesses investing in e-invoicing software can temporarily deduct not only 100% but even 120% of their costs . This means that for every €100 spent, you can deduct €120 in costs.

But how exactly does this measure work? Who is eligible for this benefit, and which expenses are eligible? This guide clearly explains the increased expense deduction, so you can maximize your benefits from this tax break.

What exactly is the increased cost deduction for e-invoicing?

The increased expense deduction is a temporary tax measure to encourage businesses to transition to electronic invoicing in a timely manner. Instead of the normal 100% deduction for business expenses, you can deduct 120% for e-invoicing software.

A concrete calculation example

Suppose you invest €1,200 per year in Cashfeed for full e-invoicing automation. Normally, you can deduct this €1,200 as a business expense. With the increased deduction, you can deduct €1,440 (120% of €1,200).

With a corporate tax rate of 25%, this results in an additional tax benefit of €60 (20% of €1,200 × 25% tax rate). This is on top of the normal tax deduction you would have received anyway.

Why this incentive measure?

The government recognizes that the mandatory transition to e-invoicing places a financial burden on many businesses. New software, implementation costs, staff training—it all adds up. The increased deduction should partially offset these costs and encourage businesses not to wait until the last minute.

Moreover, the measure fits into Belgium's broader digitalization policy. By promoting e-invoicing through Peppol , the government is preparing businesses for future digital obligations and increasing the economy's efficiency.

Temporary nature of the measure

It's important to realize that this is a temporary incentive . The increased deduction is valid for a limited period to facilitate the initial transition. Once e-invoicing becomes the norm, this additional deduction will likely disappear and return to the normal 100%.

Who is this tax benefit for? (And who is excluded)

The increased cost deduction is not available to everyone. The legislature deliberately chose to target the measure at smaller businesses, which are relatively hardest hit by switching costs.

Small businesses and self-employed persons

The measure is primarily intended for small businesses, sole proprietorships, and the self-employed. These are entrepreneurs who often still use traditional invoicing methods and for whom the investment in new software is relatively more significant.

Specifically, the increased deduction applies to businesses that meet the criteria of a "small business" under the Companies and Associations Code. This means you may exceed a maximum of two of the following three thresholds:

• Average number of employees: 50

• Annual turnover (excl. VAT): €9,000,000

• Balance sheet total: €4,500,000
  
  

Large companies are missing out

Large corporations are not eligible for the 120% deduction. The reasoning is that these companies have more resources and often already have advanced digital infrastructure. For them, the standard 100% expense deduction is considered sufficient.

Public law legal entities

Governments, public institutions, and public legal entities are not eligible for the increased deduction. This is logical, as they do not pay corporate or personal income tax themselves.

Pay attention to the year limit

If your business exceeds the small business criteria during the fiscal year, you won't lose the benefit retroactively. The question is: did you meet the criteria at the time of the investment? If so, you'll retain the increased deduction for those specific expenses.

Which costs qualify for the 120% deduction?

Not all costs related to e-invoicing automatically qualify for the increased deduction. Legislators have established specific criteria.

Electronic invoicing software

The core of the measure concerns software specifically designed for sending, receiving, and processing electronic invoices in accordance with legal requirements. This includes:

• Subscription costs for e-invoicing platforms such as Cashfeed

• Licenses for Peppol connectivity

• Software for converting invoices to UBL format

• Modules for automatic invoice validation and routing

Implementation and integration costs

The costs of implementing e-invoicing software and integrating it with your existing systems are also eligible. Consider:

• Configuring connections with your accounting software

• Data migration of existing invoice data

• Testing and validating the e-invoicing workflow

• Adjustments to your ERP system for Peppol compatibility

Education and training

The costs of training your staff to use the new e-invoicing software are also eligible for the increased deduction. This can include both external training sessions and internal training days, provided they are specifically focused on e-invoicing.

What is left out?

Certain costs do not qualify for the 120% deduction:

• Hardware (computers, servers, tablets) - this is subject to a separate investment deduction

• General accounting software without specific e-invoicing functionality

• Consultancy for general digitalization

• Costs not directly related to e-invoicing

Mixed software packages: proportional deduction

Many modern platforms like Cashfeed offer more than just e-invoicing. They also offer payment automation, expense management, and financial reporting. In that case, you'll need to calculate proportionally what portion of your costs relates to e-invoicing.

The FPS Finance accepts reasonable estimates based on functionality or usage time. Cashfeed can help you with this by providing a detailed cost breakdown that clearly distinguishes the e-invoicing component.

The fine print: depreciation and the investment deduction

With larger investments in software, there are some additional tax considerations that you need to understand to get the most out of it.

One-time costs versus subscriptions

For subscription fees (such as with Cashfeed), it's simple: you deduct 120% of the annual fee in the year you pay it. These fees aren't capitalized but expensed immediately.

For one-time software licenses you purchase, things are more complex. You must capitalize these on your balance sheet and depreciate them over several years. The increased deduction then applies to the annual depreciation cost.

Depreciation period for software

Software is typically depreciated for tax purposes over 3 to 5 years. Suppose you buy an e-invoicing software license for €6,000 and depreciate it using the straight-line method over 3 years. You can then depreciate €2,400 annually (120% of €2,000).

Combination with other tax benefits?

A frequently asked question is whether you can combine the 120% expense deduction with the investment deduction for digital assets. The answer is: no, you have to choose. The investment deduction is 13.5% for digital investments and can be combined with normal depreciation.

In practice, the 120% increased deduction is more advantageous for smaller software costs. For very large investments, it's worth calculating both scenarios with your accountant.

Retention obligation and documentation

To prove your entitlement to the increased deduction, you must keep the necessary documentation. This includes:

• Invoices from the software supplier with a clear description

• Contracts or license agreements

• Proof that the software is effectively used for e-invoicing

• In case of proportional deduction: calculation of the distribution

Keep these documents for at least 7 years, the standard retention period for tax documents in Belgium. Of course, they can be stored completely digitally in the cloud, using a tool like Cashfeed.

How Cashfeed helps you meet the requirements

To benefit from the 120% expense deduction, you must meet all the requirements. Cashfeed is designed to do this automatically.

Full Peppol compliance from day one

Cashfeed is a certified Peppol Access Point. All invoices you send and receive through the platform automatically comply with the legal requirements for electronic invoicing. This is a prerequisite for the increased deduction.

Clear invoicing and documentation

Cashfeed provides transparent invoicing, clearly specifying the e-invoicing component. This makes it easy for your accountant to correctly process the increased deduction in your annual accounts.

For mixed functionality, Cashfeed provides a detailed breakdown upon request, showing what percentage of costs relate to e-invoicing versus other functionalities such as payment automation.

Support for fiscal accountability

The Cashfeed team works closely with accountants and accounting firms. We provide all the necessary documentation and can advise your accountant on how to correctly process the increased deduction in your administration.

Optimizing your tax benefit

By choosing a flexible subscription model instead of large one-time investments, you maximize the immediate tax benefit. The 120% deduction applies immediately to your annual costs, improving your cash flow compared to capitalized software that you have to depreciate over years.

Future-proof platform

A key requirement for the increased deduction is that the software is used effectively for legally required e-invoicing. With Cashfeed, you're guaranteed compliance, even as legislation evolves. The platform is continuously updated to the latest standards.

Frequently Asked Questions

For which period does the 120% cost deduction apply?

The increased expense deduction is a temporary measure that currently applies until the end of the 2028 tax year (income year 2027). The government deliberately chose this period to give businesses ample time to transition to mandatory e-invoicing as of January 1, 2026. After this period, the deduction will return to the normal 100%, unless the legislature decides to extend the measure.

What if my software package does more than just e-invoicing?

Then you must make a proportional calculation. Only the portion of the costs related to e-invoicing is eligible for the 120% deduction. The normal 100% deduction applies to the remaining functionality. Cashfeed can help you with this by providing a detailed cost breakdown. The FPS Finance accepts reasonable estimates based on functionality or usage, provided they are properly documented.

Are consultancy costs also eligible?

Yes, consultancy fees for implementing e-invoicing are eligible for the increased deduction. This applies to consultancy specifically aimed at setting up and optimizing your e-invoicing workflow. General IT consultancy or advice on broader digitalization is not included. Make sure the invoice clearly states that it concerns e-invoicing consultancy.

What is the difference with the increased investment deduction for digital assets?

Both are tax incentives for digitalization, but they work differently. The investment deduction (13.5% for digital assets) is a one-time deduction on top of your normal depreciation. The 120% cost deduction, on the other hand, increases the depreciation base itself. You can't combine the two—you have to choose which is more advantageous for your situation. For smaller, recurring software costs, the 120% deduction is usually more attractive.

How do I actually process this in my accounting?

For subscription costs like Cashfeed, you simply record the invoice as a business expense, but you increase the amount by 20% for tax purposes when preparing your tax return. Your accountant will do this through an adjustment in your taxable balance sheet. For activated software, you increase the depreciation basis by 20%. It's wise to discuss this with your accountant or bookkeeper, who has experience with this specific deduction.

Has the measure already been definitively approved?

Yes, the 120% cost deduction for e-invoicing software has been officially approved and incorporated into the program law. The measure is effective and applicable to all eligible costs from the moment it takes effect. You can therefore use it with confidence. However, always check the latest information on the FPS Finance website or with your accountant, as tax regulations are subject to change.