From tax rates through to special expat status, here is the updated guide to the Belgian taxation system.
Expats and Belgian citizens alike suffer from one of the highest taxation rates in the EU. It amounts to an effective tax rate (including social security) of well over 50 percent for the highest earners. This compares to an average 45 percent in Europe.
An expatriate working in Belgium will typically be liable for Belgian income tax. Additionally, property tax, gift and inheritance tax may be relevant. In most circumstances there are no capital gains taxes or wealth tax for individuals in Belgium, thus pushing the tax burden firmly onto the employee.
Residents of Belgium pay personal income tax on their total income from all worldwide sources on a sliding scale. The basic exemption for fiscal year 2014 (revenue of 2013) is EUR 7,070 regardless of marital status, with further exemptions for dependent children and a spouse. For 2013, marginal income tax starts at 25 percent, rising to 30 percent for income over EUR 8,590, 40 percent over EUR 12,220, 45 percent over EUR 20,370, with a top limit of 50 percent for incomes above EUR 37,330. Residents also pay municipal and regional taxes and municipal taxes typically range between 0 and 8 percent. For non-residents, an average 7 percent municipal tax is taken into account, irrespective of whether the municipal taxes are levied in the commune.
Income tax is paid on the taxable base, which is determined from salary less compulsory social security contributions (paid either in Belgium or abroad). Professional expenses can be deducted either directly with supporting documentation or more usually on a lump sum basis depending on the height of the salary.
The Belgian tax year for personal income tax begins on 1 January and ends on 31 December. You will typically receive a tax return (déclaration/aangifte) during May relating to the previous year’s income. This must normally be returned by the end of June (you will find the exact date on your tax return). If you use the ‘Tax-on-Web’ online filing system, you are traditionally allowed a couple days extra. Employers are responsible for withholding tax on a monthly basis – this is known as the Précompte Professionnel/Bedrijfsvoorheffing. Similarly, the self-employed or paid company directors have to pay tax monthly in advance via a collecting agency or bank.
Other Belgian Taxes
Homeowners pay a local property tax (précompte immobilier/onroerende voor heffing), which is calculated on the presumed annual rental value attributed by the authorities to the property (revenue cadastral/kadastraal inkomen). The tax paid varies according to the commune and the region. In the Flemish region it is generally 2.5 percent of the annual deemed rental income, while in the Walloon and Brussels region it is approximately 1.25 percent.
Special Expatriate Tax Status
Expatriates who satisfy specific conditions come under a special taxation regime and pay Belgian tax only on income related to professional duties carried out in Belgium. A foreign executive assigned temporarily to Belgium may qualify, but the conditions are tough. Employment must be by an international group or in a scientific research center, and must be temporary. Also, the expatriate’s center of personal and economic interest must not be Belgium.
In determining the latter, the authorities take the following into account: the ownership of real estate, personal property or securities abroad; a life assurance contract written abroad; the inclusion of a diplomatic clause in the Belgian rental agreement for accommodation; continued affiliation to a group pension scheme abroad; renewal of credit cards issued by banks abroad; continued affiliation to a social security scheme abroad; or continuing to act as an officer of a foreign company. If you qualify for the above, there are specific allowances and deductions available.
VAT in Belgium
Most goods and services have VAT levied on them. The standard rate is 21 percent while there are lower rates for certain categories of goods and services. Daily and weekly publications and some recycled goods attract a zero rate, while a 6 percent rate applies to most basic goods, such as food, water supply, books and medicines. Another rate of 12 percent is applied to social housing and food served at restaurants.
To find your local tax office, please check your annual income tax return or go to annuaire.fiscus.fgov.be for more information.
SPF Finance Ministry
Service Public Fédéral Finances/Federale
Ministère des Finances/Ministerie van Financien
02 572 5757 (Contact centre) | 8am to 5pm | www.minfin.fgov.be