On 1 January 2022, a new tax regime came into force in Belgium for inbound employees, directors and researchers. The new regime provides for greater legal certainty (as opposed to the “old” ex-pat tax regime) for employers and qualifying employees/directors.
Employees and (certain) directors performing a professional activity in Belgium are eligible for the new regime, if they meet certain criteria. The individual must be recruited abroad by a Belgian company, Belgian establishment of a foreign company or by a non-profit organisation. The regime also applies to individuals made available by a foreign company (part of a multinational group) to a Belgian company, Belgian establishment, or non-profit organisation.
A qualifying employee or director must:
- Earn a gross annual Belgian income of > € 75,000 (before deduction of social security contributions); AND
- During the 60 months prior to the start date of their employment in Belgium, they must not have:
- been a Belgian tax resident;
- lived within 150 km of the Belgian border;
- earned a professional income taxable in Belgium under the Belgian non-resident income tax.
Exemptions for researchers
Inbound researchers (employees only) are subject to specific conditions. For example, the €75,000 threshold does not apply. However, the researcher must hold a qualifying degree or have 10 years of relevant professional experience.
How is tax residency status determined?
The Belgian tax residency status (tax resident or non-resident) must be determined in line with the general rules of the Belgian Income Tax Code, note that the “old” Belgian expat tax regime no longer applies.
Tax and Social Security treatment
As per the new tax regime, the following payments are tax-exempt costs to the employer:
- A lump-sum payment (for recurring expenses) capped at 30% of gross remuneration, with an annual maximum of € 90,000;
- Specific expenses incurred by the employee, including:
- relocation costs
- first installation costs during the first six months
- school fees
The tax regime applies for a period of five years, with the possibility of applying a three-year extension to this.
The National Social Security Office (“NSSO”) confirmed that they follow the position of the tax authorities, they will accept that the allowances granted under the new regime should not be subject to employer and employee social security contributions. Please note this is subject to final legislative approval.
Application to apply the new regime
An application must be filed with the Belgian tax authorities within three months following the start of employment (or the expiry of the initial five-year period in case of an extension request).
Each year the employer must provide the tax authorities with a list of named individuals who benefited from the special regime within the company.
It is important, both for expats benefiting from the “old” expat tax regime as well as for any new employees to assess the tax and social security impact of the new special tax regime and to take proper action where required, for example, evaluating whether an opt-in may be beneficial, reviewing of contractual clauses in employment agreements, etc.
Transitional period and the possibility to opt-in
Expats who currently benefit from the “old” Belgian expat tax regime can opt-into the new regime until July 31 2022, providing they met the conditions of the new regime at the time of their first employment in Belgium and they have been in Belgium for less than five years.
Taxpayers whose opt-in request is approved will benefit from the new regime from January 1, 2022.
Please note that for benefiting from the “old” Belgian expat regime but who do not opt-in before 31 July 2022, or whose opt-in request was denied, or who do not meet the conditions of the “new” regime, they can continue to benefit from the “old” expat regime until December 31 2023.
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This article was produced by Laurine Vanherck, Senior Associate at Loyens & Loeff, Belgium, a CELIA Alliance member firm.
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. "CELIA Alliance" and "CELIA" are not trading names. For more information about the CELIA Alliance click here.
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