Belgium: Personal Taxation
Expat Special Tax Regime
This page was last updated on 16 Jan 2019.
Belgian personal taxes are very high and this deters some employees and companies from residing there. Accordingly the Government has granted a special tax regime to foreign employees with a specialist skill, an academic background or management expertise if they are required by a Belgian corporation. These incentives encourage multinationals to invest in Belgium by minimizing salary costs for foreign executives.
Technically, the foreign employee’s position must be temporary, though in practice the special tax regulations can apply for an unlimited time period. The foreign employee should apply for non-residential financial status within six months of arrival and must prove that their primary economic interests are maintained outside Belgium.
The expatriate special tax regime has the below attractive characteristics (at the time of writing). (NB separate rules apply if the executive is paid on a gross basis.)
- Activities conducted outside Belgium: The portion of income that relates to activities conducted outside Belgium is not taxable in Belgium since the applicant qualifies for taxation as a non-resident.
- Moving expenses: Any income from the employer to reimburse the employee for moving expenses is not taxable in Belgium.
- Losses incurred on the sale of a house or car: Any income from the employer to reimburse the employee for losses incurred by the sale of a house or car (where such a loss was necessitated by the employees' move to Belgium) is not taxable in Belgium.
- Cost of living allowance: Any increase in income that the employer pays the employee in order to compensate for a higher cost of living in Belgium is not taxable in Belgium. This amount is limited to 5% of the gross salary paid to the employee in the foreign jurisdiction.
- Housing allowance: Any accommodation that the employer provides the employee is not considered a benefit in kind and will not be taxable in Belgium. The same applies where the employer grants the employee a housing allowance. The amount must not exceed 12% of the employee's gross salary.
- Tax allowance: Any sum the employer gives the employee to compensate for the higher tax rates they would otherwise have had to pay in the foreign jurisdiction is not taxable in Belgium.
- Maximum value of allowance: The total deductible allowance (excluding non-recurring expenses and recurring expenses listed below) has a fixed maximum amount. The maximum allowance is:
- €11,250: if the employee works for a commercial or industrial company
- €29,750: if the employee works for a co-ordination centre or research laboratory.
- Children’s school fee allowance: Any income the employer grants the employee to cover children’s' school fees whether in Belgium or abroad is not taxable in Belgium. The amount is unlimited and is not included in the €11,250 (or €29,750) limit on allowances.
- Travel expenses: Any income the employer grants the employee to cover travel expenses incurred by children travelling abroad to school is unlimited and not included in the €11,250 (or €29,750) limit on allowances.
- One-off relocation expenses: Any income the employer grants the employee to compensate for one-off relocation expenses is not taxable in Belgium. It is also unlimited and not included in the €11,250 (or €29,750) limit on allowances.
- Return visits to home country: Any income the employer grants the employee to cover return visits to the home country is not taxable in Belgium.
- Emergency trips: Any income the employer grants the employee to cover emergency trips is not taxable in Belgium.
- Passive income: Passive income (i.e. investment income)is not taxed.