Belgium: New Tax Rules for Expats in Belgium

The Programme Act of 27 December 2021 has adapted the special tax regime for foreign executives coming to Belgium to work. The very beneficial system, which sometimes led to foreign executives not having to pay taxes altogether, has been replaced with a system in which executives will have to pay taxes, but can still benefit from an attractive costs system. The Act also introduced a new and similar attractive system for foreign researchers.

Employers have to request a fiscal ruling in order to recognise the executives and researchers as falling under the system, which applies to:

For the incoming executives

• The employee is hired outside Belgian territory by a company that is part of a multinational (including non-profit organisations);
• 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) in the five years preceding the recruitment and must not have lived within 150 km from the Belgian border;
• The employee must no longer have special qualifications and Belgian nationals are also eligible.

For the incoming researchers

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

Only the employees can benefit from the special tax regime. Company directors who are the head of the company are excluded.

Under the old regime, Expats were seen as non-residents for Belgian income tax purposes, having as a consequence, that in most cases they become “stateless”. Expats are usually no longer tax residents in their country of origin when they move to Belgium. However under the new system, expats who move to Belgium with their family members will, as a rule, become Belgian residents for tax purposes. This means that they will be taxed on their worldwide income but will be able to claim treaty protection for income taxed abroad.

In order to keep Belgium attractive for expats a lump sum percentage of 30% of the gross taxable salary of the Expat will be treated as “expenses proper 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 90 000 EUR.

Expenses related to the move to Belgium, the furnishing of the house and the school costs for the children remain refundable. All other specific cost systems for expats are abolished.

Employers will have to request the application of the special regime withing 3 months after the arrival of the Expat. They will also have to submit annually, a list to the tax authorities of Expats who are using the special regime.

The application of the tax regime is limited to a maximum of 5 years, but may be prolonged by another 3 years for certain situations. In case the Expat changes employers, he/she can maintain the special regime if the conditions are still fulfilled, and the new employer will have to submit a new request to the tax authorities.

The new system enters into force from 1 January 2022. However, Expats using the old system can keep on using this until 31 December 2023. As from 2024, the old regime will be abolished. Expats who have enjoyed the old system for a maximum of 5 years on 1 January 2022 have the option until 31 July 2022 to request the application of the new system for a renewed period of 5 years.

Key Action Points for Human Resources and In-house Counsel

• See whether foreign executives or researchers in your company can apply for this special regime.
• Use this system as a possibility to attract foreign executives and researchers to your company.
• Make sure that eligible Expats within your company using the old system opt for the new system before 31 July 2022.
• Prepare for the abolishment of the old system as from 2024.
• Make sure to submit the list of Expats benefiting from the special regime.