Personal Income Tax in Belgium

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Personal Income Tax in Belgium

Disclaimer: Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Belgian tax law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

Below is information on:

• Who must pay income tax in Belgium?
• Double Taxation
• Standard Income Tax Rates & Social Security
• Tax treatment of expatriates assigned to Belgium
• The Tax Year & Tax Returns

Who must pay income tax in Belgium?

Liability for income tax in Belgium depends on whether an individual is for tax purposes a resident or a non-resident.

Residents for tax purposes

Tax residence is a question of facts and circumstances:

• Individuals who have their principal home in Belgium are residents. This criterion relates to the physical presence of the individual in Belgium
• Individuals whose "seat of fortune" is located in Belgium are also residents. "Seat of fortune" generally means the place from where the assets of an individual are managed. This place of management of the assets does not necessarily coincide with the place where the assets are effectively located

Tax residents of Belgium are:

• Individuals who are registered with a Belgian commune, unless proven otherwise
• Individuals whose households are located in Belgium

Non-residents for tax purposes

Non-residents are individuals who do not satisfy the tax residency test. Non-residents may still be liable for various income taxes. These include tax on income that is connected to Belgian real estate such as rents or capital gains, and any earned income relating to work in Belgium.

Double Taxation

Double tax treaties exist that may provide tax relief where a Belgian tax resident also pays income tax in another country.

• For the countries with which Belgium currently has double taxation treaties: Click here

Standard Income Tax Rates & Social Security

Employees and self-employed individuals pay progressive income tax. The top rate is approximately 53.5 percent (including communal tax) and starts at a salary level of €32,270 (2007 figures).

In addition, social security must be paid on earned income. For employees, part of the social security is paid by the employer, and a smaller part by the employee. The employer's social security contribution amounts in general to 35 percent, while the employee's social security is 13.07 percent, both uncapped.

The social security tax for the self-employed is capped at approximately €13,000 per year.

Benefits in kind

Some benefits in kind are taxed favourably:

• The free use of a house or apartment
• The free personal use of a company car
• Incentive stock options on employer's shares
• Incentive stock options are either taxed at grant date on a lump sum basis, or when the option is exercised on the actual profit

Tax treatment of expatriates assigned to Belgium

Expatriates may qualify for a special tax regime. If expatriate status is granted by the tax authorities, the person is considered as a non-resident of Belgium for tax purposes.

In addition, an expatriate may receive the following allowances free of income tax, capped at €11,250 (managers) or exceptionally at €29,750 (scientists, managers working in "coordination centres"):

• Cost of living
• Cost of housing
• Tax equalisation
• School fees (uncapped)

Since the qualifying expatriate is treated as a non-resident, his foreign-sourced income is not taxed in Belgium. Earned income connected to an activity that is carried out outside Belgium is therefore not taxed (this is the travel exclusion).

The Tax Year and Tax Returns

The tax year runs from 1 January to 31 December.

Income tax is deducted from salary by employers at the time of pay. As tax is also deducted on other kinds of income (for example rental income, maintenance payments, pensions, etc.) individuals then have to fill in a tax return. The exact time depends on where they are in the population register and when the tax office sends out the return. Generally, residents must file their tax return before 30 June of the year following the income year. Tax returns filed electronically may be filed later.

Non-residents may usually file their tax return later on in the year.

• See the TAX-on-web portal for more details and to file online (in French, Dutch & German)

Note: An identity card number is necessary in order to declare taxes online. Those who do not have a Belgian identity card may request an access code at the following address:

• FPS Information and Communication Technology
  At: Rue Marie-Thérèse 1-3 1000 Brussels
  Tel: 02 212 96 00
  Fax: 02 212 96 99
  e-mail
  Website

Further Information

• Invest in Belgium has information on personal income tax
• The Federal Ministry of Finance: advice on completing a tax return
• The Federal Ministry of the Economy, SMEs, Self-Employed and Energy – gives the tax rules (change to Dutch or French for details)
• The Belgian Institute of Accountants, Tax Experts and Auditors (in French & Dutch)
• Flanders Investment and Trade: Flemish government site

Prepared by Fabrice Ketoff, SA Tax Consult NV
Avenue du Dirigeable-Luchtschiplaan 8, 1170 Watermael-Boitsfort, Brussels
Tel: 02 678 17 74, Fax: 02 675 38 88, www.taxconsult.be