New expat tax regime
A 'new' special tax regime has been introduced for qualifying expatriates arriving in Belgium as of 1 January 2022. This regime replaces the 'old' special tax regime in place since 1983. In order to allow a smooth transition, the Belgian tax authorities have issued a circular letter that provides for a two-year transition period during which the 'old' regime can still be continued. The 'old' special tax regime will, in any case, stop on 31 December 2023. Expatriates who benefited from the special tax regime can therefore continue to benefit from the 'old' regime until 31 December 2023 provided they continue to meet the required conditions. In some case, they may opt-in for the 'new' regime. Employees starting as of 1 January 2022 may not apply for the 'old' regime. They can, however, apply for the 'new' regime, provided they meet the conditions.
The essential characteristics of the 'new' expat 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 75,000 euros (EUR) (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.
- Possibility for the employer/company to pay up to a maximum 30% of gross annual taxable income as tax and social security free expense reimbursement (a payment that comes on top of the gross salary).
- Limitation of the 30% lump sum tax and social security 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, installation costs (maximum of EUR 1,500), 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 are less than five years under the current regime 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.
- Fading out of (transitional measures of) the 'old' regime on 31 December 2023.
Tax measures in response to COVID-19
As a result of the COVID-19 crisis, the Belgian government has introduced various tax measures of which some examples are listed below. For more details, see PwC's COVID-19 Updates.
Individuals with a CBE number or companies that can prove that they are facing difficulties directly resulting from the coronavirus spread, subject to additional conditions, can request for payment arrangements, such as payment by instalments, waiver of interests for late payments, and/or discounts on fines, for wage withholding taxes (WHTs), value-added tax (VAT), personal income tax (PIT), corporate income tax (CIT), income tax on legal entities, and non-resident income tax.
It has also been decided that the tax credit related to the advance tax payments to be made for the third and fourth quarters of tax year 2021 will (temporarily) be increased (see Payment of tax in the Tax administration section in the Corporate tax summary for more information).
Double tax treaties (DTTs)
There is no general 'force majeure' tolerance for cross-border employment.
Belgium has, however, concluded specific agreements with France, the Netherlands, Germany, and Luxembourg, which implement a mutual 'force majeure tolerance' for cross-border workers in relation to COVID-19 (travel) restrictions. These agreements have been extended until 30 June 2022.
As of 14 March 2020, the presence of a worker (who normally works in Luxembourg) teleworking at home in Belgium will not be taken into account in the calculation of the 24 days (2020 and 2021) or 34 days (2022) in a calendar year. This is the day count calculation that tax residents of Belgium, who (under normal circumstances) work in Luxembourg, can work outside the territory of Luxembourg without attributing taxation power to Belgium.
Similarly, the Belgian and French authorities consider that the current situation related to the coronavirus meets the characteristics of a force majeure situation. Therefore, it was decided that, as of 14 March 2020, the presence of a French frontier worker at one's place of residence (in particular for teleworking) will not be taken into account for the calculation of the 30-days period by reference to which tax residents of France who usually work in Belgium can work outside Belgium.
Please note that there is no administrative tolerance foreseen for foreign executives working in Belgium under the 'old' special tax regime with respect to the foreign travel that is impacted solely because of COVID-19 measures.
From a social security point of view, according to the European Union (EU) regulation for social security nr 883/2004, employees who works at least 25% of their time in the country of residency are covered by the social security system in that country. Employees who perform less than 25% of work in their country of residence are usually covered by the social security system in the country where their employer is located. In June 2020, due to travel restrictions linked to COVID-19, the European Union adopted guidelines indicating that changes in the work pattern of employees due to COVID-19 should not be taken into account for the determination of the country responsible for social security. This measure has been extended until 31 December 2022. No further extension is expected after that date.
- Introduction of a mandatory reporting (as of 1 January 2019) and withholding (as of 1 March 2019) requirement in the hands of a Belgian entity in case affiliated foreign companies grant taxable benefits (in kind or in cash) to employees or directors working for the benefit of the Belgian entity.
- Introduction of a new reporting obligation as of 1 January 2022 for companies to report the actual amount (real value) of cost proper to the employer that are reimbursed on the basis of supporting documents.
- According to the latest administrative instructions of the National Security Office (NSSO), social security contributions are due on all benefits related to the work performed by the employee in the framework of one's employment contract with the employer. This adjusted NSSO position applies a very broad, and possibly questionable, interpretation by stating that employees of a Belgian subsidiary only receive a benefit that is granted by a foreign parent company because of their employment with the Belgian subsidiary and that, consequently, such benefit should always be considered as salary subject to Belgian social security contributions, even when there is no intervention of the Belgian employer in the grant of the benefit and no recharge of the costs to the Belgian employer.
- The tax on securities accounts that reach or exceed EUR 500,000 per account holder has been abolished with effect as of 1 October 2019 after a decision of the Belgian Constitutional Court and will be replaced by a solidarity tax of 0.15% on securities accounts that reach or exceed EUR 1 million (held by Belgian resident taxpayers in Belgium or abroad and by non-residents in Belgium).
- Resident taxpayers who own real estate abroad must report their foreign property in their Belgian tax return. Since 2021, they must submit a declaration to the Administration of Measurement and Valuations, which will determine the deemed rental value of the foreign real estate.
- The tax authorities, following a judgement of the Court of Cassation (15 Oct 2020), now accepts to mitigate double taxation of foreign source dividends by means of a foreign tax credit (FTC). This FTC is available for French-source dividends and may be applied for other foreign-source dividends, provided that the tax treaty between Belgium and this other country is drafted in a manner strictly similar to the Belgian-French treaty.