finance
Taxation in Belgium 28/04/2008 00:00
From tax rates through to special expat status, here is Expatica's updated guide to the Belgian taxation system.
Expatriates and Belgian citizens alike within the system suffer from one of the highest taxation rates in the EU.
In 2006, the Organisation for Economic Co-operation and Development revealed that Belgium has the highest tax burden - including social security - in Europe at 55.4% for a single earner. This compares to an average 42% in Europe. An expatriate working in Belgium will typically be liable to Belgian income tax. Additionally, property tax, gift and succession duty may be relevant. For most circumstances there is 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 2008 is 6,040 EUR regardless of marital status with further exemptions for dependent children and a spouse. For 2008 marginal income tax starts at 25%, moves to 30% at over 7,420 EUR, 40% over 10,510 EUR, 45% over 17,610 EUR with a top limit of 50% for incomes above 32,270 EUR.
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 supporting documentation or more usually on a lump sum basis depending on salary. The 2008 rate for this standard professional deduction is a maximum 3,320 EUR.
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 be returned by mid July (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 the 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 Belgium 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, and importantly 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 (for anywhere in Belgium): 02 788 5156
For Brussels, Antwerp and Liège, taxes depend upon which commune you live. You will find your local number in the White Pages – look first under Ministères/Ministeries, then look under Finances/Financien, then Contributions Directes/Directe Blastingen, and you will find your communal office listed.
Tax Consultants
Ernst & Young
02 774 9111
www.ey.be
PricewaterhouseCoopers
02 710 4211
www.pwcglobal.com
Tax Consult
Jean Francois Golenvaux
02 675 50 05
www.taxconsult.be
Van Passel Mazars & Guerard
09 265 8320
www.mazars.com
Updated April 2008
[Copyright Expatica 2006]
Subject: Belgian taxation
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