Belgian tax law changes impact non-residents

January 7, 2014

In March 2014, Belgium introduced new laws which will have an effect on the tax position of some Belgian non-residents.  

Previously, non-resident taxpayers were not entitled to personal tax allowances unless they were:

With effect from 2014, a Belgian abode is no longer a relevant factor.  This will have an effect on individuals eligible for the special tax status for foreign executives temporarily employed in Belgium who previously qualified for personal tax allowances solely by virtue of having an abode in Belgium.

In practice, with effect from  2014, any non-resident who cannot benefit from the treaty provision mentioned above and who has foreign source income of more than 25% of his total income for will no longer be entitled to personal allowances.

Personal tax allowances are determined by reference to a person’s family situation (e.g. spouse, dependent children) .For a couple with 2 children, the loss of personal tax allowances will result in an additional income tax burden of approximately 7,600 EUR .

The rules also require that joint income of both spouses or partners is taken into account when applying the 75% income test.

The new law also introduced a partial regionalisation of Belgian income taxes transferring some tax reduction entitlements to the Belgian regions. Tax reductions are applied with respect to expenses incurred for amongst others home insurance against fire and theft, energy saving initiatives, roof isolation and mortgage loans.  

For non-residents to benefit from regional tax reductions, they are required to be tax resident in another EEA member state. Non-residents coming from a non-EEA member state will not have any tax reduction entitlement. 

Resources

For further information or to discuss the consequences of the above, please contact Gunther Valkenborg on +32 2 743 43 39 at  Loyens & Loeff Brussels – www.loyensloeff.com.

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

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To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

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If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

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