Belgian residents and non-residents are taxed on their employment income, movable income, property income, and miscellaneous income. Other taxes that may be relevant are gift and succession taxes (see the Other taxes section for more information).
Belgian residents are taxed on their worldwide income, but their foreign-source income is exempted with progression in Belgium if it is taxable, taxed, or effectively taxed (depending on the wording of the double tax treaty [DTT]) in another country according to the applicable DTT. Please note that in some cases exempted income may be subject to local taxes (e.g. exempted income from Bahrain, China, Congo, France, Germany [only for employees], the Netherlands, Rwanda, San Marino, Singapore, and the United Kingdom).
Belgian non-residents are taxed on their Belgian income source only.
Employment income is widely defined and includes all fringe benefits provided by an employer (e.g. the private use of a company car, bonuses, stock options, commissions, tax equalisation reimbursements, cost of living allowances, housing allowances).
Personal income tax is calculated by determining the tax base. Taxation on a sliding scale is applied to successive portions of the taxable income. Rates vary between 25% and 50% (plus local taxes). See the Taxes on personal income section for more information.
In determining the tax base, employee compulsory social security contributions paid either in Belgium or abroad are fully tax-deductible. Professional expenses can also be deducted from the taxable income (either on an actual basis, or on a lump sum basis). Income tax is calculated on that base, after allowing for part of that base to be exempt from tax (the so-called personal tax exemption - see Personal exemptions in the Deductions section for more information).
In addition to these standard personal deductions, some non-business expenses may reduce tax liability (such as gifts made to recognised institutions, child care expenses for children younger than 12 years old, titres-services/dienstencheques, reduction for own dwelling, etc.).
Since income year 2014, expatriates living in Belgium as well as other non-residents are only entitled to personal deductions (at the federal income level - such as deduction for child care expenses, tax reductions for gifts made to recognised institutions, etc.) if they earn at least 75% of their income in Belgium. Tax reductions at the regional level are only granted to non-residents who earn at least 75% of their income from Belgian sources and who remain resident of another European Economic Area (EEA) country. See the Deductions section for more information.
Special tax regime
Foreign executives or specialists working temporarily in Belgium and qualifying for the non-resident special tax status do not have to include in their gross taxable income reimbursements for additional expenses incurred from their transfer to or employment in Belgium. The additional expenses listed below may be reimbursed tax free on the basis of actual amounts or by means of lump-sum allowances:
- One-time moving expenses and the costs of setting up a house in Belgium.
- Ongoing expenses, e.g. cost-of-living, housing allowances, school fees, home leave allowance, travel expenses of children studying outside Belgium, exchange losses, and tax equalisation (up to a certain limit).
Such ongoing expenses will be, within certain limits, exempt from tax to the extent that the total annual amount (excluding school fees and one-time expenses) does not exceed EUR 11,250 (EUR 29,750 in the case of executives working at a research centre or scientific laboratory).
Moreover, professional duties performed outside Belgium by non-residents are proportionately exempted (the so-called travel exemption), but declaration must be made for the total worldwide income earned within the employer’s group.
The private use of a company car is considered a taxable benefit in kind, but is exempted from employee social security charges.
The yearly benefit in kind on which the employee or company director is taxed is equal to 6/7 of the catalogue value of the car (to be understood as the list price of the car for a sale to an individual when it was new, including options and the actually paid VAT, but excluding any discounts and rebates) multiplied by a percentage linked to the car’s CO2 emission rate (the 'taxable percentage').
In addition, the benefit in kind takes into account the age of the car, by multiplying the catalogue value with a percentage in function of the age of the car (based on the first registration of the car). The benefit in kind decreases by 6% per annum, with a maximum of 30% decrease.
The base taxable percentage to apply to the catalogue value of the car is 5.5% for a diesel car with a CO2 emission rate of 88 g/km and for a petrol car with a CO2 emission rate of 107 g/km. This base taxable percentage of 5.5% is then increased/decreased by 0.1% for each CO2 gram/km above or below the CO2 emission thresholds of 88 g/km and 107 g/km (with a minimum percentage of 4% and a maximum percentage of 18%). In no circumstance can the benefit in kind be lower than EUR 1,340 per annum (amount for income year 2019).
The following formula will be applied to determine the taxable benefit in kind (figures 2019):
- Diesel cars:
[(5.5% + (CO2 emissions of the car - 88)) * 0.1 %] * catalogue value * age % * 6/7 (minimum 4% and maximum 18% of the catalogue value)
- Petrol, LPG, and natural gas cars:
[(5.5% + (CO2 emissions of the car - 107)) * 0.1 %] * catalogue value * age % * 6/7 (minimum 4% and maximum 18% of the catalogue value)
- Electric cars: Catalogue value * 4% * 6/7
Mobility allowance, or 'cash for car'
Since 2018, employees may be able to exchange (under certain conditions) their company car against cash, which will increase their net income.
Both parties (employer and employee) need to agree with this exchange. The corresponding annual cash amount would equal 20% of 6/7 of the catalogue value of the most recent company car, increased by 20% for employees who also have a fuel card. Some conditions to benefit from this cash-for-car system have been modified as of 1 March 2019.
In addition to the cash-for-car system, the government has introduced a mobility budget in order to stimulate employees that have a company car to opt for different means of transportation. If offered by the employer, the mobility budget gives the employee the opportunity to change one's car in exchange for a budget based on the total cost of ownership of the car handed in. With this budget, the employee can choose a less polluting car, sustainable means of transportation, and/or a cash payment. The mobility budget is subject to a favourable tax and social security regime that differentiates depending on the options chosen by the employee. This system has entered into force on 1 March 2019.
Stock options accepted in writing within 60 days of the offer date
Stock options accepted in writing within 60 days of the offer date are taxed to the beneficiary on the 60th day following the offer date. The taxable basis of a stock option listed on a stock exchange is determined as the closing market price of the day preceding the offer date of the option.
The taxable basis of a stock option accepted in writing within 60 days and not listed on a stock exchange is the sum of
- The 'taxable time value': 18% of the stock fair market value at the time of the offer for options that have a life of five years maximum. For options that have a life of more than five years, the value will be increased by 1% for each year or part of a year in addition to the five years. Under certain conditions, the above mentioned percentages are reduced by 50%. No social security contribution is due on the taxable time value of the stock option.
- The 'taxable intrinsic value': The positive difference between the fair market value of the stock at offer date and the exercise price, after deduction of possible applicable Belgian employee’s social security contributions.
Stock options accepted in writing after the 60th day following the offer and stock options that have not been formally accepted
Stock options accepted in writing after the 60th day following the offer date and stock options that have not been accepted in writing are taxable at exercise. The taxable basis for such options consists of the positive difference between the fair market value of the underlying shares at exercise and the exercise price paid, after deduction of possibly applicable Belgian employee’s social security contribution.
Please note that a reporting and withholding obligation is now applicable in any case to Belgian companies when benefits (in cash or in kind) are granted directly by a foreign affiliated company to their employees/company directors. In practice, this means that the Belgian company must report on the employee's salary slips/summary statements all benefits granted by a foreign-related company even if there is no recharge of the costs and no intervention of the Belgian employer. The reporting obligation is applicable since 1 January 2019. The withholding tax (WHT) obligation is applicable since 1 March 2019.
Profits from a business or profession also include capital gains on the sale of business assets, although a favourable tax treatment applies if these assets have been held for more than five years. Self-employed expatriates do not qualify for the special tax regime described above.
Capital gains are not taxable to individuals in Belgium, provided they are realised within the framework of the normal management of the individual's private estate. Capital gain taxes for private individuals are levied only on sales to a foreign (non-EEA) company of substantial holdings in a Belgian company and on sales of property in certain circumstances.
Capital gains and foreign-source investment income cashed outside the country are not taxable for non-residents working in Belgium.
Since 1 January 2017, all stock exchange transactions are subject to a stock exchange tax. See Stock exchange tax in the Other taxes section for more information.
Since 1 January 2017, dividends paid or attributed via a Belgian financial institution are subject to WHT at a flat rate of 30% (17% is also applicable on dividends in some restrictive cases). The first EUR 800 are exempted from tax.
Since 1 January 2017, the WHT rate on most movable income, such as interest, is fixed at 30%.
The first EUR 980 of interest on a savings account is exempted from taxation (limit applicable to each taxpayer in case of a joined account). Interest from saving accounts exceeding that threshold remains taxable at 15%.
Owners occupying residential houses are taxed on the notional rental income. Properties rented out are taxed on the notional rental income or on the net rental income received (after deducting lump-sum rental expenses). Non-resident expatriates are liable to tax on Belgian real estate.
The ‘Cayman tax’ is a tax charge on certain income from certain legal constructions (which are deemed to be transparent) in the hands of Belgian individuals (and Belgian entities subject to legal entities tax).
The legal constructions include, among others, foreign trusts, foundations, undertakings for collective investments or pension funds when not publicly offered, low-taxed or non-taxed entities, etc. to which the Belgian individual (or Belgian entity subject to legal entities tax) is, in one way or another, linked as a founder, effective beneficiary, potential beneficiary, etc.
Under these new provisions, the income of certain legal constructions becomes taxable in the hands of the private individual before distribution of the income. Consequently, the owner may be taxed on income that one has not yet received.
The taxpayer has to mention on one's yearly tax return the existence of a legal construction (including additional information) of which one (or one's spouse or one's children) is the founder or the third beneficiary.