by Karlien Van Melkebeek
In a previous article we announced the signing of a new double tax treaty between Belgium and the Netherlands. In all likelihood, the treaty will not come into force until 1 January 2025 at the earliest. Nevertheless, we would like to discuss some important changes. Below we explain the changes for Belgian residents who receive professional income from the Netherlands.
For Belgian employees working for a Dutch employer or on Dutch territory, it is important to check where their remuneration may be taxed.
The article for employees has not been changed in the new treaty. The rule is still as follows: remuneration received by a Belgian resident can be taxed in Belgium, unless the employment is carried out in the Netherlands. Assuming that the employment is physically carried out in the Netherlands, this part of the remuneration will be taxable in the Netherlands. However, if three conditions are cumulatively met, the entire remuneration can still be taxed in Belgium. These conditions are:
Physical presence in the Netherlands for less than 183 days in a 12-month period;
The salary is not paid by or on behalf of an employer in the Netherlands;
There is no pass-through to a permanent establishment or fixed base of the employer in the Netherlands.
An amendment to this article would have been welcome to solve the current problem of homeworking among frontier workers. Since the Corona crisis, homeworking has become increasingly common. However, when a Belgian employee working for a Dutch employer works from home (in Belgium), the consequence is that the wages for the days worked from home are taxable in Belgium.
Home working in cross-border employment therefore has important tax consequences. During the Corona crisis, a temporary agreement was reached whereby homeworking would not have tax consequences under certain conditions. However, this agreement expired on 30 June 2022. The same applies to social security. As a result of homeworking, the applicable social security system may change from the country of work to the country of residence. This has already been resolved, under the influence of the European Union, as of 1 July 2023.
Belgium and the Netherlands are still discussing the situation of frontier workers and it has been decided not to wait for the signing of the double tax treaty to reach an agreement.
For residents of Belgium who hold a directorship in a Dutch company, the remuneration they receive is taxable in the Netherlands. However, under the new treaty, the scope of such directors' fees is limited to fees received in the capacity of a director of a company (in other words, only fees for a formal directorship are covered). Under the current treaty, this scope was broader and included remuneration for executive and managerial activities as well as commercial, technical or financial activities. Under the new Treaty, such remuneration is referred to in the article on income from employment.
The current double tax treaty contains a special article for artists and sportsmen. Under this article, the income of artists and sportsmen can be taxed in the country where the activities in question took place. A Belgian artist who performs in the Netherlands will be taxed on the income earned in the Netherlands for this performance. However, this creates a lot of administrative work for sportsmen and women and artists.
The new double tax treaty no longer contains a separate article for artists and sportsmen. This means that the normal rules for self-employed persons and employees now apply. A Belgian artist or sportsman will not have to pay tax in the Netherlands for short performances in the Netherlands, but the Belgian rules will continue to apply.
The current double tax treaty contains a separate article for teachers and students who work temporarily in the source state. As a general rule, Belgian teachers who work in the Netherlands for up to 2 years are not taxed in the Netherlands but in Belgium.
The new treaty will abolish the special article for teachers. Teachers will now be subject to the normal rules for employees, which means that they will in principle pay tax in the country where they work. This has the advantage of creating more equality and of ensuring that taxes are paid in the country where social security contributions are paid.
With regard to students, this provision has been maintained in the new Treaty.
Do you live in Belgium and work in the Netherlands? If so, you should contact one of our specialists to find out whether the new double tax treaty will change your specific situation.
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.
Read our latest insights and news releases to stay abreast of changes in your industry.