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 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, Japan, Macedonia, Mexico, the Netherlands, Norway, Poland, Rwanda, San Marino, Seychelles, Singapore, Switzerland, the United Kingdom, and Uruguay).
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, childcare expenses for children younger than 14 years old, titres-services/dienstencheques, reduction for own dwelling, etc.).
Non-resident taxpayers are only entitled to personal deductions (at the federal income level - such as deduction for childcare 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
The Law introducing the new expat regime was published in the Official Gazette on 31 December 2021. It is applicable as of 1 January 2022.
The essential characteristics of the new regime can be summarised as follows:
- Separate, although in many regards identical, regime for executives and for qualifying researchers.
- Limitation in time to five years, with possible extension for another three years.
- Open to employees and company key individuals directly recruited abroad or seconded to Belgium within international groups of companies.
- Open to both foreign and Belgian citizens, whether employee or company key individuals (except for researchers what regards the latter).
- Required minimum gross annual taxable income of EUR 75,000 (not applicable to researchers).
- Precondition of lack of submission to Belgian income tax in the 60 months preceding the start of professional activities in Belgium (whether as resident or as non-resident).
- Precondition of previous place of residence more than 150 kilometres away from the Belgian border. both
- Possibility for the employer/company to pay up to a maximum 30% of gross annual taxable income as tax-free expense reimbursement (a payment that comes on top of the gross salary). This amount is exempt from both social security contributions and income tax.
- Limitation of the 30% lump sum tax-free expense reimbursement to EUR 90,000 per annum.
- Possibility for the employer/company to reimburse on top of the lump sum 30% specific other expenses, such as moving expenses, (very) moderate installation costs, and school fees.
- New regime is individual centric, not company centric (i.e. it can be continued with another employer in Belgium, provided all conditions are still met).
- Formal request to be made by the employer/company and by the employee/company key individual within three months from the arrival in Belgium.
- Entry into force: 1 January 2022.
- Expats who were less than five years under the old special tax regime on 31 December 2021 may (under certain conditions) still opt-in in the new regime (with an overall time limitation of eight years) or choose to stay in the old regime until 31 December 2023 (provided they continue to meet all required conditions).
- Fading out of (transitory measures) of the old regime on 31 December 2023.
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 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 67 g/km and for a petrol car with a CO2 emission rate of 82 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 67 g/km and 82 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 1,540 per annum (amount for income year 2023).
The following formula will be applied to determine the taxable benefit in kind (figures 2023):
- Diesel cars:[(5.5% + (CO2 emissions of the car - 67)) * 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 - 82)) * 0.1 %] * catalogue value * age % * 6/7 (minimum 4% and maximum 18% of the catalogue value)
- Electric cars: Catalogue value * 4% * 6/7
The list of the so-called 'false hybrid cars' is updated annually. This has an impact on the determination of the taxable benefit in kind for the beneficiary and on the corporate tax deductibility.
Since 1 March 2019, 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.
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 employees/company directors working for the benefit of the Belgian entity. 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 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% (15% 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 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.