Expatica news

New tax legislation will impact net salary of expats in 2014

Expatriates benefiting from the special expat tax status are taxable in Belgium on Belgian-source income only and income relating to working days outside of Belgium is excluded from the taxable basis (‘foreign travel exclusion’).

A new set of rules amends the method for calculating non-resident individual income tax in respect to the personal tax allowances. The important consequences of these measures are the following:

  • the category of ‘non-residents with an abode in Belgium’ will be abolished;
  • expatriates benefiting from the special tax status who have a foreign travel exclusion exceeding 25 percent per year will no longer be entitled to the personal tax allowances;

In Belgium, non-resident taxpayers are normally not entitled to personal tax allowances, except for the following categories:

  • Non-residents who have an abode in Belgium for the whole taxable period (i.e. non-residents who reside in Belgium with their family the whole calendar year);
  • Non-residents whose Belgian-source income is at least 75% of their total income;
  • Non-residents who can invoke an ‘extended non-discrimination clause’ included in a tax treaty signed by Belgium (i.e. with the Netherlands, France and Luxembourg).

Expats benefiting from the special tax status are considered as deemed non-resident taxpayers and are entitled to the personal tax allowances if they belong to one of the above three categories.

As the category of ‘non-residents with an abode in Belgium’ will be abolished, expats benefiting from the special tax status having an annual foreign travel exceeding 25 percent will no longer be entitled to the personal tax allowances.

Considering the fact that most foreign executives travel quite a bit for their work, this will be a big change for those who spend more than a quarter of their working time abroad during the calendar year. The income tax that will be additionally due for those expats, is the following (indexed rates for income year 2014 – tax year 2015):
 

  • Single: EUR 1,873.55
  • Married and spouse has no earned income: EUR 6,503.10
  • Married, spouse has no earned income and 2 dependent children: EUR 7,528.65

 

Source: Taxpatria

Photo credit: Tax Credits (coins).