by Karlien Van Melkebeek and Hannelore Durieu
Every year, there are more and more expats in Belgium benefitting from a special tax regime. In the 2022 budget agreement, the Belgian government decided to limit the tax advantages for expats, effective from 1 January 2022. This will be done by anchoring the system in law and specifying stringent criteria for the regime. The new regulation incorporates a number of important changes.
The new regulations will apply to “immigrant taxpayers” and “immigrant researchers”. Immigrant taxpayers may be employees or company executives. Immigrant researchers are always employees. People in these categories can opt for the special tax regime if various criteria are met.
A taxpayer or researcher who has moved to Belgium must:
Note that if the person was recruited directly from abroad, it is no longer a requirement for the Belgian company to be part of an international group.
No link with Belgium:
During the five years prior to starting work in Belgium, the employee or executive:
Note that there is no longer a requirement for foreign nationality
Minimum salary for “immigrant taxpayers”:
Immigrant taxpayers must have a minimum gross salary of 75,000 euro per year. This gross salary refers to the salary for the work done in Belgium, before social security contributions, but including holiday pay, annual bonus, benefits in kind, other bonuses and other taxable incentives.
This threshold does not apply for immigrant researchers. Instead, they are subject to a diploma requirement. They must be able to show a specific master’s certificate in science or the equivalent of ten years professional experience.
Legal fiction for non-residents discontinued
Employees or managers who fall under the new expat regime will no longer automatically be considered as non-residents of Belgium for tax purposes. Under the new regime, normal residence regulations will apply (Art 2 WIB92). An expat living in Belgium with their family will be treated for tax purposes as a Belgian resident and be taxed in Belgium on their worldwide income. They will also be able to apply for protection via Belgium’s double taxation agreements with other countries. To be considered as a non-resident, an expat must submit a declaration of tax residence in another country. This ensures that expats will no longer end up “invisible” from a tax point of view.
A major advantage of the expat regime is that many of the costs associated with taking up employment in Belgium are considered costs to the employer. These are then classed as tax-free expenses and are not subject to social security contributions.
Following the example of the Netherlands, a fixed percentage of 30% of the gross salary will be designated as the employer’s own costs. This flat-rate compensation for expenses will be limited to a maximum of 90,000 euros per year.
The 30% rule is an upper limit. The employer can also claim for costs below this limit. If the employer’s costs come to more than 30% of the salary, the excess above 30% will be taxed as salary.
In addition to the 30% regulation, a number of other exceptional costs that are also included in the current regime will be approved, specifically:
There is no flat rate foreseen for these exceptional costs: the employee or company manager must be able to document their expenses.
The new legislation also introduces time limits for the expat regime. In principle, the new expat status will be granted for five years. If certain conditions are met, it can be extended once for three years.
Once the five-year/eight-year period has expired, the expat regime and its fiscal benefits will cease to apply.
To benefit from the new tax regime, the employer must submit an electronic application to the tax administration within three months following start of the employment in Belgium. A signed declaration “of agreement” from the employee or executive concerned must be included with the application. The tax administration will return a decision on the application within three months. If the application is approved, the new tax regime will apply as from the start of employment in Belgium.
Every year, at the latest by 31 January, the employer must submit documentation to the tax authorities listing the expats they employ who fall under this regime, so that the tax authorities can check that each expat still meets the minimum salary conditions
From 1 January 2022, the new expat regime will apply for “immigrant taxpayers” and “immigrant researchers”.
Individuals currently under the present expat regime can decide to switch to the new regime providing they meet the criteria. For people who cannot submit a valid application to switch, or whose application is rejected, there will be a transition period of two years, as specified in the update to the circular of 8 August 1983.
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In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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