In 2005, Belgium introduced a unique system of a deduction for risk capital (notional interest deduction, NID) by means of the Law of 22 July 2005 and the Royal Decree of 17 September 2005. In addition, in order to eliminate another burden for new and further investments in Belgium, the capital duty on capital contributions to Belgian companies has been abolished. This in-depth article discusses the reasons for the introduction of the NID and comprehensively analyses the various aspects of this regime. The abolition of the capital duty and the compensating measures necessary to guarantee budgetary neutrality is also addressed in detail. In addition, the article considers various other interesting tax features that may increase the attractiveness of the NID regime, as well as possible adverse tax consequences of foreign controlled foreign company (CFC) regimes. Finally, the authors present some NID practical applications.