Belgium: new tax rules for expatriates in Belgium

The program law of 27 December 2021 adapted the special tax regime for foreign executives coming to work in Belgium. The very advantageous system, which sometimes led to not paying taxes for foreign executives, has been replaced by a system in which executives will have to pay taxes, but will still be able to benefit from an attractive cost system. The law also introduced a similar attractive new system for foreign researchers.

Employers must apply for a tax ruling to recognize executives and researchers as falling under the scheme, which applies:

For incoming executives

  • The employee is hired outside Belgium by a company that is part of a multinational (including non-profit organizations);
  • The employee must receive a gross annual salary of at least €75,000, including benefits of all kinds and bonuses;
  • The employee must not have been subject to Belgian income tax (as a resident or non-resident) during the five years prior to hiring and must not have lived less than 150 km from the Belgian border ;
  • The employee no longer needs to have special qualifications and Belgian nationals are also eligible.

For incoming researchers

  • They must hold certain diplomas and/or professional experience (at least 10 years) and work in a laboratory or a company that conducts one or more research and development programs;
  • The employee is hired outside Belgian territory by a Belgian company. This Belgian company, permanent establishment or asbl does not necessarily have to be part of a multinational;
  • No minimum wage is required.

Only employees can benefit from the special tax regime. Corporate officers who are at the head of the company are excluded.

Under the old regime, expatriates were considered non-residents for Belgian income tax purposes, which meant that in most cases they became “stateless”. Expatriates are generally no longer tax residents in their country of origin when they settle in Belgium. However, under the new system, expats moving to Belgium with their family members will, as a general rule, become Belgian residents for tax purposes. This means that they will be taxed on their worldwide income, but they will be able to claim treaty protection for income taxed abroad.

In order to maintain the attractiveness of Belgium for expatriates, a fixed percentage of 30% of the gross taxable salary of the Expat will be treated as “expenses specific to the employer”. No personal income tax will be due on this part of the salary. However, the 30% is limited to a maximum of EUR 90,000.

Costs related to moving to Belgium, furnishing the house and children’s school fees remain reimbursable. All other specific cost systems for expatriates are removed.

Employers must apply for the special regime within 3 months of the Expat’s arrival. They will also have to submit annually to the tax authorities a list of expatriates who use the special regime.

The application of the tax regime is limited to a maximum of 5 years, but can be extended for an additional 3 years for certain situations. In the event that the Expat changes employer, he can maintain the special regime if the conditions are still met, and the new employer will have to submit a new request to the tax authorities.

The new system comes into effect on January 1, 2022. However, expatriates using the old system can continue to use it until December 31, 2023. From 2024, the old system will be abolished. Expatriates who have benefited from the old system for a maximum of 5 years on January 1, 2022 have the possibility until July 31, 2022 to request the application of the new system for a renewed period of 5 years.

Key Action Points for Human Resources and Corporate Lawyers

  • See if your company’s foreign executives or researchers can benefit from this special regime.
  • Use this system as an opportunity to attract foreign executives and researchers to your company.
  • Make sure eligible expats within your company using the old system opt into the new system by July 31, 2022.
  • Prepare for the abolition of the old system from 2024.
  • Make sure to submit the list of expatriates benefiting from the special regime.
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