Discover how income taxes in Belgium work, including the latest income tax bands for 2021 and how to file your Belgian income tax return.
Discover how income taxes in Belgium work, including which types of earnings you’ll need to declare, the latest tax rates and how to file your income tax return. This guide includes advice on the following:
- Income tax in Belgium
- Earnings subject to income tax in Belgium
- How to file your tax return in Belgium
- Income tax rates in Belgium
- Income tax in Belgium for foreigners
- Tax refunds in Belgium
- Tax fines in Belgium
- Income tax advice in Belgium
Finding your way around the many tax codes, exemptions and deductions available can be a challenge for foreigners who need to file in Belgium, especially as most information is only available in French, Dutch or German. To assist you, Taxpatria provides expat-focused financial services, including an updated (unofficial) English version of the tax return.
Income tax in Belgium
The income tax system in Belgium
Workers must pay income tax on money earned through employment in Belgium. Belgium has some of the highest income tax rates in Europe, with earnings over €41,060 taxed at 50%.
The Belgian Ministry of Finance (Service Public Fédéral Finances) oversees income tax in Belgium.
Workers in Belgium have income tax deducted automatically from their salaries but still need to file an annual tax return. Self-employed people are responsible for declaring their income on their tax return.
Income tax contributions do not include social security in Belgium. Workers generally pay 13.07% of their income in social security contributions, while self-employed people pay an average of 22%.
The Belgian government is increasingly looking to crack down on tax evasion. Data released in 2019 showed that the authorities had authorised audits of 3,600 taxpayers’ bank accounts since 2011.
In 2018, the government imposed sanctions of just over €1bn after investigating 1,600 cases of suspected tax evasion.
Who pays income tax in Belgium?
Your income tax eligibility in Belgium varies depending on whether you’re considered a resident or non-resident for tax purposes.
If you’ve moved to Belgium and the authorities consider your primary home and income to based in the country, they will consider you a tax resident. This means you’ll need to pay income tax in Belgium on your worldwide earnings.
If you are a non-resident, you’ll only need to pay income tax on your Belgian earnings.
Earnings subject to income tax in Belgium
Taxes on income and salary in Belgium
- Employed income: workers in Belgium pay income tax on their earnings. Income tax rates are charged in four tiers between 25% and 50% system (more on this later).
- Self-employed income: self-employed workers, freelancers, sole traders and people with a stake in a partnership pay income tax at the same rates as workers. Find out more in our guide to self-employed taxes in Belgium.
- Business income: company owners must pay corporate tax on their business profits. Corporate tax was reduced from 29% to 25% at the start of 2021.
Taxes on employment benefits
If you are given benefits by your employer (such as health insurance, a company car etc), these may be subject to tax.
In most cases, you’ll pay tax based on the ‘taxable value’ of the benefit – the amount that you’d normally have to spend to obtain the benefit. There are some exceptions, however.
If there are benefits that you use exclusively for work purposes (e.g. IT equipment), you may be able to reduce your taxable burden to nil or be reimbursed by your employer. More substantial benefits (such as company cars) have specific tax calculations based on their value, emissions and the degree to which they’re used for non-work activities.
Taxes on savings and investments
How much tax you’ll pay on saving and investment income depends on your residency status and whether the investment is regulated or unregulated.
For regulated savings accounts, you can make up to €990 a year in interest before paying tax. Non-regulated accounts are subject to tax from the first euro.
Taxes on rental income
Real estate income is subject to income tax (if you own the property as an individual) or corporate tax (if you own the property as a company).
How to file your tax return in Belgium
Income tax deadlines in Belgium
The Belgian tax year runs from 1 January to 31 December, and tax returns must be filed the following summer. This means that in the summer of 2021, you’ll need to file your tax return for 2020. All workers in Belgium must file an annual tax return, even if they have a salaried job with one employer.
Online tax returns
You can file your tax return by post or online. Online filing can be more straightforward, as the forms will come pre-filled with information received from your employer and you’ll be informed if you’ve missed any important fields. It’s also possible to save your progress and return later.
Once you’ve completed one online tax return, you’ll no longer be sent a paper form in the post in subsequent years.
Income tax forms in Belgium
If you choose to file a paper return, you’ll receive this in the post around May or June. The submission deadline varies from year-to-year and can be extended, but this will be stated on the tax return. Those who file online usually benefit from a later deadline, as do non-residents.
If you haven’t received your tax return five weeks before the deadline, you should contact your local tax office, the address of which you can find on your previous tax bill.
Simplified tax returns
Some residents won’t need to fill out a full tax return, and will instead receive a simplified return when they log in to their online tax account.
This will include an estimated calculation of the tax due. Simplified returns are commonly provided to the likes of retirees, those on unemployment allowance or students with limited income.
Income tax rates in Belgium
The Belgian government sets income tax rates on an annual basis. In recent years, they’ve been set based on four distinct bands: 25%, 40%, 45% and 50%.
For the 2020 tax year (for which tax returns must be submitted in 2021), the rates are as follows:
|Belgian income tax bands||Belgian tax rate|
|Up to €13,440||25%|
These rates apply to earnings within each band. So if you earn €30,000, you’ll pay 25% on the amount up to €13,440 (taking into account your tax-free allowance), 40% on the amount between €13,441 and €23,720 and then 45% on the remainder.
There are a number of online calculators available that allow you to calculate your net earnings. Some options are as follows:
Personal tax allowance and deductions in Belgium
All residents in Belgium have a personal tax allowance, which is updated each year and varies based on how many children you have.
The basic allowance for childless workers is €8,990, so any earnings below this amount won’t be subject to income tax.
|Every extra child||€5,820|
|Extra allowance per child under 3 years old||€610|
General tax credits
A range of tax credits are available in Belgium, though the rules vary depending on what you’re claiming for. You can claim tax credits on the following:
- Charity donations;
- Capital and interest payments on a mortgage loan;
- Pension and life insurance contributions;
- Childcare expenses
Dependent spouse allowance
You can allocate a part of your professional income to your spouse if your spouse’s income does not exceed 30% of your combined professional income. This measure is known as the dependent spouse allowance.
Employees, as well as company managers, assisting spouses and all self-employed individuals can include a standard business expense deduction in their annual individual tax return.
In 2021, the lump sum business expenses are calculated at a rate of 30%, with a maximum deduction of €4,880.
Using the standard deduction on your tax return is only beneficial if your actual expenses are less than the lump sum or if it is too difficult or impossible for you to prove your expenses. In all other cases, you should try to prove your actual expenses.
Self-employed income tax allowances in Belgium
Self-employed people can deduct their social security contributions and business expenses when filing a tax return. You can deduct expenses on an actual or lump sum basis.
Any expenses you offset on your tax bill must relate to a professional activity and be declared at their actual cost. While you can deduct most expenses at their full cost, car-related expenses (75%), restaurant bills (69%), and representation costs (50%) are only partly-deductible.
If you want to claim your expenses on an actual cost basis, you’ll need to keep track of all of your expenses incase you’re required to provide evidence when you file your return.
Self-employed workers are allowed to submit a lump-sum deduction of up to €4,880, as explained above. Those who submit their expenses as a lump sum won’t need to provide evidence such as expense receipts.
Income tax in Belgium for foreigners
How Belgian residency affects your tax status
The Belgian tax system distinguishes between resident and non-resident taxpayers when it comes to determining how much income tax you’ll need to pay. You’ll usually be classified as a tax resident if your family home and main source of income are both in Belgium.
Workers classified as Belgian residents for tax purposes are taxed on worldwide income. This means that they must pay income tax on earnings anywhere in the world. Non-residents, meanwhile, are only taxed on income earned in Belgium.
Foreign workers in Belgium are subject to the same income tax rules and rates as Belgian nationals, though some can benefit from a special expat tax scheme.
Expat tax incentives in Belgium
The incentive allows foreign executives, specialist staff or research staff working temporarily in Belgium to be considered non-residents for tax purposes.
This has major benefits:
You can attribute some costs to the employer rather than the employee for tax purposes.
You can split costs between ‘one time’ and ‘ongoing’ expenses. One-time expenses include the cost of establishing a home and any losses incurred as a result of moving to Belgium.
Ongoing expenses include the cost of living and housing allowances (such as a moving allowance, settling-in allowance and home visit allowance). They also include the likes of school fees for your children, any tax equalization costs and costs incurred for emergency trips.
One time expenses are unlimited, whereas ongoing expenses are capped at €11,250 (or €29,750 for expats working in a research laboratory or co-ordination center).
One of the biggest benefits of the special tax status is that you can effectively gain non-resident status. Because of this, you only pay income tax on money you’ve earned in Belgium.
For those who travel for work, this can make a significant difference. This is because you won’t need to declare any income you earn on days spent outside of Belgium for income tax purposes.
Real estate income (for example from letting out a house) will only be subject to taxation if the income is derived from property in Belgium.
Foreign investment income
Executives are not usually taxed on foreign investment income unless it comes from a Belgian source. However, dividends and interest in Belgium are generally subject to a withholding tax rate of 30%.
Who qualifies as a non-resident taxpayer?
To obtain the special status, you must be working in Belgium temporarily and your main residence must remain in your home country. Expat workers are usually considered tax residents once they’ve registered for tax and are on the local population register. To be classified as a non-resident taxpayer, you will need to prove your home and main source of income are in a different country.
This could be the case if you’re looking to work in Belgium for a fixed period and your spouse lives abroad. If you’ve moved to Belgium and your partner and children live with you, however, you’re highly unlikely to be able to claim non-residency.
The following types of foreign worker automatically classify as non-residents:
- Foreign diplomatic and consular agents assigned to Belgium;
- Other members of foreign diplomatic and consular missions in Belgium and family members living with them;
- Officials, agents and representatives of foreign states, regional entities or public law institutions
Tax as a non-resident
If you earn money in Belgium but are classified as a non-resident, you’ll only pay Belgian income tax on earnings from Belgian employers or if you spend more than 183 days a year in Belgium. Self-employed income only qualifies for tax if the source of that income is a Belgian employer.
Non-residents with properties in Belgium and those who receive 75% or more of their total worldwide income in Belgium can qualify for the same deductions and tax allowances as Belgian residents.
Who can apply for special tax status?
The special status only applies to foreign executives, specialised staff or research staff. Those eligible must prove that they perform activities that require a special knowledge and responsibility.
To gain the special status, you must fit the following criteria:
- Your work in Belgium must be temporary;
- You must work in a specialized research center or for an international company;
- Your main residence and primary financial interests (such as bank accounts etc) must remain in your home country
How to apply for special tax status
To obtain the special status, you must file an application within six months of starting your job in Belgium. For example, if you arrive in Belgium on 12 May and start working on 1 June, you must file the application before the end of November.
If you’re planning on working in Belgium, it makes sense to contact a tax adviser to verify whether you may qualify for special status.
Tax refunds in Belgium
Belgian workers who believe they’ve overpaid can apply for a refund up to three years after paying the tax year in question. The time it takes to investigate and process a refund varies on a case-by-case basis, but it can take six months to a year.
Tax fines in Belgium
Workers who fail to submit their tax return on time risk fines ranging from €50 to €1,250 and a tax surcharge of between 10% and 200%.
The penalties vary depending on how late the return is and the degree to which the worker is deemed to be avoiding paying tax. The highest penalties are handed out to persistent offenders.
Income tax advice in Belgium
If you have a complicated tax situation or need help getting to grips with which allowances and exemptions you can claim, it can make sense to take advice from a professional.
You can find an accountant (expert-comptable or compte fiscal in French, accountant or belastingconsulent in Dutch) through our listings or on website of the Instituut van de Accountants en de Belastingconsulenten (French or Dutch only).