As an expat moving to Belgium, it can be helpful to get your head around the various taxation measures in your new country, from income tax rates to how corporate tax and VAT work.
This guide to the taxes in Belgium provides an overview on the following:
- The tax system in Belgium
- Federal taxes in Belgium
- Local taxes in Belgium
- Taxes on goods and services (VAT) in Belgium
- Who has to pay tax in Belgium?
- Belgian tax system for foreigners
- Income tax rates in Belgium
- Tax on property and wealth in Belgium
- Inheritance tax in Belgium
- Company taxes and VAT rates in Belgium
- Tax advice in Belgium
The tax system in Belgium
Tax rates in Belgium are some of the highest in Europe. The Belgian tax rates amount to an effective rate of more than 50% for the highest earners (once social security is factored in), in comparison to an average of 45% in the rest of Europe.
If you are a foreigner living or working in Belgium, you will generally be liable to pay Belgian taxes and file a tax return. Property owners may also find themselves liable for the likes of property tax, gift tax and inheritance tax.
Belgium has more than 90 agreements in place with other countries to prevent residents from having to pay additional income tax in their home country.
The Belgian government has been ramping up its efforts to stamp out tax avoidance. In December 2018, the government recouped €248 million in unpaid tax, taking the total for the year to nearly €400 million. This is amidst speculation of a hike in tax fines in 2020.
Federal tax in Belgium
Some Belgian taxes are collected and charged at state level, while others are managed by individual municipalities.
Income tax, corporate tax and VAT are subject to the same rules across the country. The national government generally collects tax revenues.
Other taxes vary significantly depending on where you live in Belgium. For example, inheritance tax rates differ in the Brussels, Flanders, and Wallonia regions.
Local taxes in Belgium
Municipal taxes on utilities including TV, rubbish collection and water are levied by the relevant regions/provinces and municipalities (communes/gemeenten) at rates of up to 9%, which is paid as part of your income tax.
The exact amount you’ll need to pay is set at a local level. For example, each of the 19 municipalities in Brussels sets its own rate.
Non-residents don’t pay municipal tax, but instead pay a federal tax at a flat rate of 7%.
Taxes on goods and services (VAT) in Belgium
In Belgium, VAT is called Taxe sur la Valeur Ajoutée (TVA) or Belasting over de Toegevoegde Waarde (BTW). This applies to most goods and services.
The standard rate is 21%, but there are lower rates for some categories of goods and services. A rate of 12% is applied to food served in restaurants and social housing, while a rate of 6% applies to most basic goods, such as food, water supply, books, and medicine.
A 0% rate is available on daily and weekly publications and recycled goods.
Can you get a refund on VAT?
If you’re selling goods to another VAT-registered business elsewhere in the EU, the customer will pay VAT at their own country’s rate.
This also works the other way around, so if you buy goods from another country within the EU, you’ll pay VAT at Belgian rates.
When making a cross-border transaction, you will need the customer’s VAT number. You can check this through the European Commission.
Who has to pay tax in Belgium?
How much tyou’ll need to pay in Belgium depends on whether you’re a resident or non-resident.
If you live in Belgium for at least six months (183 days) of the year and are registered with your local commune, then you are classed as a resident and have to pay Belgian income tax on your worldwide income.
Your taxable income is the income left after deductions for the likes of social security contributions, personal allowance, and professional costs.
Belgian tax system for foreigners
If you live in Belgium for fewer than six months (183 days) per year, you will only be taxed on income you’ve earned in the country, including rents and capital gains.
Expatriates who satisfy some conditions can apply for a special taxation regime and only pay Belgian income tax on their income in Belgium (rather than their worldwide income), even if they’re classified as a Belgian resident.
While this can be helpful for some expats, recent reforms mean foreign executives with non-resident tax status who live with their family in Belgium no longer benefit from several personal allowances, unless they earn at least 75% of their total taxable professional income during the Belgian tax year. More information is available from Belgium’s Ministry of Finance.
Income tax rates in Belgium
Residents of Belgium pay personal income tax on their total earnings from all worldwide sources on a sliding scale. The current tax brackets (for 2019/2020’s tax return) are as follows:
|Belgian income tax bands||Belgian tax rate|
|Up to €13,250||25%|
Your income is determined by your salary less any compulsory social security contributions (paid either in Belgium or abroad).
Everyone is entitled to a personal tax-free allowance, which currently stands at €8,860 (this rises if you have children).
Professional expenses can also be deducted on an actual cost basis by providing supporting documentation, or on a lump sum basis.
The maximum lump-sum deduction, or Belgian tax refund, for employees is €4,530. You can also work out how much tax you will have to pay using this online Belgian tax calculator.
Social security in Belgium
Social security payments are on top of your earned income. If you’re working, the employer pays part (currently around 35%) and you pay another, smaller part (around 13.07%) of your salary.
Self-employed workers must arrange their social security payments themselves. Self-employment social security contributions generally work out to around 22% of your annual income, rising to 14.16% if your income is greater than €54,398.
How to file your tax return in Belgium
The Belgian tax year runs from 1 January to 31 December. All residents of Belgium and non-residents taxed on Belgian-sourced income have to file an annual return.
You will typically receive a tax return around May-June (déclaration/aangifte), relating to the previous year’s income. This must normally be returned by the end of June, although you will find the exact date on your tax return.
You can usually have some extra time if you use the Tax-on-Web online filing system. Non-residents file their return at the end of September or beginning of October.
If you don’t submit your return by the deadline you can face a fine, and the tax authorities may estimate how much tax you need to pay. You can track the progress of your tax return through the government’s finance application, Minfin.
Self-employed income tax
Self-employed people pay the same rates of income tax as employed workers in Belgium.
To pay tax, self-employed workers and freelancers must register with the tax office and, if necessary, the VAT office. This is possible through a one-stop-shop or business counter (guichet d’entreprise in French, ondernemingsloket in Dutch).
There are offices throughout Belgium. You can find the nearest office on the FPS portal. You will need to keep accounts, receipts and make declarations of income and pay your bills on time.
Tax on property and wealth
Property owners must pay an annual tax, based on ownership as of 1 January each year. The amount is calculated on the presumed annual rental value (revenue cadastral/kadastraal inkomen) that is attributed to the property by local authorities.
The tax paid varies according to the commune and the region.
If you live in the Flemish region, it is generally 2.5% of the annual rental income; in the Brussels-Capital Region, it is 2.25%; and in the Walloon region, it is approximately 1.25%.
Inheritance tax in Belgium
Inheritance tax applies on the total value of the estate of a person settled in Belgium, or any property owned in Belgium if they are not settled there.
How much tax you’ll pay varies from region to region. It is paid to the region in which the deceased was a tax resident for the majority of the last five years of their life.
Belgium operates a three-year rule for gifting movable and immovable property. This means that if you give something to an heir and then die within three years, they’ll then need to pay inheritance tax on the value of the gift.
The rate of gift tax varies between regions. In Wallonia, it’s levied at 3.3% to 5.5% and in Brussels from 3% to 40%, depending on the value of the gift and whether the recipient is an heir.
Company taxes in Belgium
The basic rate of company tax in Belgium as of 2019 is 29%, plus a 2% crisis tax. This means the total effective rate of tax for most companies is 29.58%.
A 25% rate of corporate tax will apply from 2021, and the crisis tax will be abolished completely.
For companies with profits of less than €100,000, the rates are 20% (plus the 2% surcharge, totalling an effective rate of 20.40%).
Tax advice in Belgium
Doing your taxes in Belgium can be a complex matter. The information given here provides a general overview, but you should always get professional advice from a Belgian financial expert regarding your individual tax situation.
The Ministry of Finance (Service Public Fédéral Finances) provides information on all aspects of taxation, most of which is available in Dutch and French, or you can call +32 (0)2 572 5757 (8:00 to 17:00).
You can find an accounting expert (expert-comptable/compte fiscal/accountant/belastingconsulent) through the website of the Instituut van de Accountants en de Blastingconsulenten (French or Dutch only).