Taxation in Belgium

Expatriates and Belgian citizens alike suffer from one of the highest taxation rates in the EU. In November 2009, the Organisation for Economic Co-operation and Development confirmed once again that Belgium has one of the highest tax burdens in Europe. It amounts to – including social security – 57.3% for a single earner. This compares to an average 44.5% in Europe. An expatriate working in Belgium will typically be liable to 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 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 2012 (revenue of 2011) is 6,570 EUR regardless of marital status with further exemptions for dependent children and a spouse. For 2011, marginal income tax starts at 25%, rises to 30% over EUR 8,070, 40% over EUR 11,480, 45% over 19,130 EUR with a top limit of 50% for incomes above EUR 35,060.

Residents also pay communal and regional taxes at rates between 0% and 8.5% of the total income tax payable. The most common rate is 6%.

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 salary. The 2010 rate for this standard professional deduction is a maximum EUR 3,670.

The Belgian tax year for personal income tax begins on 1 January and ends 31 December. You will typically receive a tax return (declaration/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 don't receive a return, request one from the Ministry of Finance before 1 June or risk a penalty!

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. This is a requirement rather than an option but also has the benefit of avoiding a big annual tax shock.

Other taxes
Home owners pay a local property tax (précompte immobilier/onroerende voorheffing) which is calculated on the deemed rental value attributed by the authorities to the property (revenue cadastral/kadastral inkomen). The tax paid varies according to the commune and generally lies between 20% and 50% of the revenue cadastral.

The tax paid varies according to the commune and generally lies between 20 and 50 percent of the revenue cadastral.

Special expatriate status
Expatriates who satisfy specific conditions come under a special taxation regime and pay Belgian tax only on income connected with professional duties carried out in Belgium. A foreign executive assigned temporarily to Belgium may so qualify but the conditions are tough. Employment must be by an international group or in a scientific research centre, and must be temporary. Also, the expatriate's centre 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; continuing to act as an officer of a foreign company.

If you qualify to the above, there are specific benefits and deductions available which vary depending on income, personal circumstances and your home country. Professional advice is recommended.


VAT
Most goods and services are taxed at 21% with a lower rate of 6% applying to necessities such as food and transport, and for the time being to certain home renovations though this is under close scrutiny.

Contact
Ministère des Finances/Ministerie van Financien
Central Administration of Direct Contributions
CAE Tour des Finances - Boîte 32
Boulevard du Jardin Botanique 50
1000 Brussels
02 210 2211

www.minfin.fgov.be
Information office (from anywhere in Belgium): 0257/257 57
Available during office hours from 8am to 5 pm

Local Tax Offices
Communal and regional taxes depend upon which commune you live in. For Brussels it is 7% and for both Antwerp and Liège it is 8%. To find your local tax office, please check your annual income tax return or go to annuaire.fiscus.fgov.be for more information.

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