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International assignees Working in Belgium Creating value for your business through people Country – Belgium

Human Resources Services

International Assignment Taxation Folio

Last Updated: April 2018 This document was not intended or written to be used, and it cannot be used, for the purpose Menu of avoiding tax penalties that may be imposed on the taxpayer.

Country: Belgium

Introduction: International assignees working in Belgium 4 Step 1: Understanding basic principles 5 Step 2: Understanding the Belgian tax system 8 Step 3: What to do before you arrive in Belgium 21 Step 4: What to do when you arrive in Belgium 24 Step 5: What to do at the end of the year 25 Step 6: What to do when you leave Belgium 26 Step 7: Other matters requiring consideration 27 Appendix A: Overview of income tax rates 29 Appendix B: Overview of personal allowances 30 Appendix C: Typical tax computation 32 Appendix D: Tax-free allowances on a gross 34 remuneration package Appendix E: Belgium contacts and offices 36

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International Assignment Taxation Folio 3

Introduction: International assignees working in Belgium

International assignees taking up detailed advice should be sought This Reform provides employment in Belgium are frequently before any specific decisions are made. increased fiscal autonomy to uninformed about the Belgian tax and Further information can be obtained the Regions (Flanders, social security system to which, in from our offices as listed in Brussels and Wallonia), most cases, they will become subject. Appendix E. implying significant changes with respect to the calculation th This memorandum is designed to The 6 Reform of the State has method of personal income assist both international assignees and introduced major modifications in the taxes in Belgium since income their employers in identifying the tax Belgian tax system impacting both year 2014. and social security implications of residents and non-residents taxpayers assignments to Belgium. It is not since income year 2014. intended to be complete. More

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Step 1: Understanding basic principles

The scope of taxation in of publicly traded outlined in Belgium Belgian or foreign paragraphs 27 to 32 securities. are fiscally 1. An international considered 'non- assignee taking up Additionally, a new residents' and benefit employment in “wealth tax” of 0,15% from special tax Belgium will has been introduced treatment. As non- generally become as from income year residents, they are liable to income tax 2018 on securities liable to pay Belgian under Belgian law. accounts with an tax only on income Other taxes that may combined and related to work be relevant are average value of EUR carried out by them property tax, and gift 500.000. in Belgium. and succession duty. Capital gains taxes 2. Residents of Belgium Residence and domicile for private are subject to individuals are levied personal income tax 4. Residence is the only on sales to on their total relevant factor in foreign companies worldwide income determining income (outside the EEA) of from all sources tax liability. Under substantial holdings where non-residents Belgian law, an in Belgian companies are only taxable in individual is and on sales of Belgium on their considered as a property in certain Belgian source Belgian tax resident circumstances. income (see if he has established paragraphs 4 to 7 his domicile in Since 2017, Belgian below for the Belgium, and – if his resident taxpayers residence criteria). domicile is not must also pay a tax located in Belgium – on stock exchange 3. Certain expatriates if his seat of fortune transactions for any who satisfy certain is located in Belgium. disposal or purchase conditions as

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The domicile is the population record of applicable to certain determined by facts and a Belgian municipality foreign executives circumstances and is are deemed to be (see below). generally defined as the Belgian tax residents place where an (refutable presumption). 6. Generally, an individual effectively international assignee is and enduringly resides, 5. Domicile in civil law is considered to be a where his family lives essentially the same as Belgian resident if: and where his personal residence in income tax law and is the term used – as a married person (or contacts are maintained. legally cohabitant), The seat of fortune on when considering liability to inheritance his/her family the other hand can be accompanies him/her defined as the place tax. An international assignee domiciled in to Belgium (irrefutable where an individual presumption); or manages his estate or Belgium can become where the centre of his liable to Belgian – as a single person, business activities are inheritance tax on he/she establishes located. The tax worldwide assets even his/her permanent when he/she is deemed residence of married home in Belgium. taxpayers is located at to be non-resident in the place of the de facto Belgium for income tax family residence. purposes due to the

Individuals registered in application of the special tax regime

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A taxpayer may be in principle, no tax on A special tax regime is considered to be tax- any investment income available to certain resident in more than except interest and foreign executives and one country based on dividends paid by a specialists working each internal country Belgian company, temporarily in residency rule. Where which are generally Belgium. Under this this happens, a tax taxed at a flat rate of regime, executives are treaty between the 30% (or in some considered as non- countries in question particular cases 15% if residents for Belgian may provide a solution conditions are met). tax purposes (see to avoiding double With respect to below paragraphs 27 to taxation. Most tax interest, exemptions 32). treaties consider the from withholding tax following elements to be may apply to non- relevant in determining resident taxpayers the place of residence: under local Belgian rules. In this respect, – the permanent home; the EU Savings – the centre of economic Directive introduced a mandatory exchange of activity; information regarding – nationality. interest paid to foreign EU nationals. This Belgian non-residents exchange of information system is 7. Belgian non-residents applicable in Belgium are taxed in Belgium on since 1 January 2010. their Belgian source No (withholding) taxes income only, i.e. are due on the first – Belgian-source EUR 960 of interest on income from savings accounts employment: in (figure for income year principle, only 2018). The amount employment income exceeding this borne in Belgium or threshold is taxed at a relating to Belgian rate of 15%. work days (>183 days)

is taxable.

– Belgian-source property income: taxation on property income located in Belgium only;

– Belgian-source investment income:

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The tax year and yearly after the assessment to non-residents who do tax filing obligation notice is sent out. not earn at least 75% of their worldwide 8. The Belgian tax year 10. The legal due date for professional income in runs from 1 January to the filing of the resident Belgium during the 31 December. Where an tax returns is, in calendar year (except for individual is resident in principle, end of June residents of France, Belgium for only part of (paper version), and Luxembourg and the a calendar year, his/her mid-July if filed Netherlands, who can income in that period is electronically via “Tax- benefit from a prorata of treated as if it related to on-Web”. The filing this notional transfer). a full calendar year. deadline of the non- However, since resident tax returns is 13. Although couples are assessment year 2018, not fixed but usually taxed separately, tax the personal tax falls during the third returns and assessments deductions/reductions quarter of the tax year. are issued in joint are reduced prorata names. temporis based on Husband and wife his/her period of 11. Tax on husbands’ and residency in Belgium wives’ incomes is during the concerned calculated separately. calendar year. For non Legal cohabitants are residents of Belgium, it considered as married is anticipated that from an income tax similar legislation will perspective. enter into force soon. 12. Where only one partner 9. Income of year X must receives earned income, be reported in a tax a notional transfer to the return (either on paper other partner of 30% of or electronically) the the earnings is allowed year X + 1 (e.g. income up to a ceiling of EUR year 2018 – tax year 10.720 (income year 2019). An assessment 2018), so that each is note is sent by the tax accorded a basic authorities the year minimum deduction following the tax year and benefits from a (year X + 2). Any lower tax bracket. In balance of tax due must case one partner be paid to the tax receives professional authorities within two income lower than EUR months after the 10.720, this notional assessment notice is transfer is also sent out. Excess applicable under the payments of tax are same limits. This reimbursed by the tax notional transfer is authorities two months however not applicable

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Step 2: Understanding the Belgian tax system

Tax treatment of Methods of calculating tax municipal taxes at rates employment income 15. Personal income tax is that range between nil Basic principles calculated by and 9% of the total income tax payable. 14. Employment income is determining the tax base and assessing the tax Non-residents have to defined broadly and pay a similar additional includes all fringe due on that base. Taxation is charged on a tax at a fixed rate of 7% benefits provided by an of the total income tax employer. In addition to sliding scale to payable. A typical tax salary, taxable successive portions of net taxable income. For computation is employment income presented in Appendix includes bonuses, income year 2018, the C. commissions, cost-of- Federal tax rates range living allowances, between nil and 50%. 17. In determining the tax foreign service 16. The tax calculation base, compulsory social allowances, housing contains two major security contributions, allowances, tax components, notably the whether paid in Belgium equalisation federal personal income or abroad, are fully tax- reimbursements, private tax and the regional deductible. Additionally, use of company car, etc. personal income tax. professional expenses The award of equities Since income year 2014, can be deducted from (RSUs, free shares, stock the Belgian regions are the taxable basis either options, etc.) in indeed entitled to retain on an actual basis by connection with surcharges on “Reduced producing the relevant employment in Belgium Federal personal income vouchers or on a lump- is taxable. For stock taxation”, and also grant sum basis. The options, a lump-sum tax reductions/tax maximum deductible method has been laid credits. The tax liability lump sum amount for down for valuing may therefore differ income year 2018 is benefits arising in the (although slightly at this EUR 4.720 on a gross framework of qualifying stage) depending on the taxable salary of EUR stock option plans. Region in which the 15.733 (the maximum Detailed advice on the residence of the amount for directors implementation of stock taxpayer is located on equals to option plans should be the 1st of January of the EUR 2.490 for income sought from our local respective tax year. year 2018). offices. Residents also pay

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18. Personal income tax is benefits in Belgium, 22. This new rule limits calculated on that tax those non-residents severely the tax base, after personal must also have deductions/ allowances are taken maintained tax reductions previously into account. Further residency in another available to non- details on the tax rates Member State of the residents working in and personal tax European Economic Belgium. exemptions (such as Area. marital quotient, 23. Pursuant to the 6th deduction for children at 21. As from income year State Reform, with the charge, etc.) are 2017 tax exemptions exception of the provided in Appendix A and reductions will be (federal) deduction for and Appendix B. calculated on a pro-rata alimony payments, all basis in the event of a (other) “deductible 19. In addition to these change in tax residency expenses” have been standard personal status during the year. converted into (federal deductions, some This pro-rata calculation or regional) tax personal expenses give concerns both Belgian reductions. Since right to additional tax resident tax payers and income year 2014, the deductions/reductions non-resident tax payers federal tax deduction for at Federal or at Regional (if entitled –cfr. 20). a taxpayer’s own level. These expenses dwelling has become a are for example gifts regional tax reduction at made to recognized the highest applicable institutions, child care tax rate (maximum expenses for children 50%). Since income year younger than 12 year 2015, the tax reduction old, titres-services/ for the own dwelling has dienstencheques, tax been fixed at 45% for reduction for own mortgage loans dwelling, etc. concluded as of 1 January 2015. Since 20. Since income year 2014, then the Regions can expatriates living in apply changes to the tax Belgium as well as other benefit for mortgage non-residents are only loans. The Brussels entitled to personal Region has decided to deductions (at the keep the tax reduction at federal income level) 45% until 31/12/2017, provided that they earn while the Walloon and at least 75% of their Flemish Region decided worldwide professional to limit it to 40%. income in Belgium. Moreover, in order to be entitled to Regional tax

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For mortgage loans Withholding taxes concluded as of 1 24. You will in due course January 2016 the be required to file an Walloon region has annual tax return, either replaced the tax at a special regional tax reduction for the own office for non-residents dwelling by the “Cheque (as beneficiaries of the Habitat” (a tax special tax regime) or at reduction that can be the local tax office of the transformed into a tax municipality of credit and where the residence. Tax amount is determined in withholdings will function of the taxable normally be made by income and family your employer at source situation of the on a monthly basis. taxpayer) and as of 1 January 2017, the Brussels region abolished the tax reduction for the own dwelling and replaced it by a higher exemption of registration duties. Given that additional rules apply specifically to each Region, this should be analysed on a case by case basis.

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25. If, while working in income that can be of an international Belgium, you are kept excluded for services group. Employment on the payroll of a rendered abroad. can be in a control and foreign employer and coordination office of a the salary cost is not Special expatriate tax multinational group of deducted from the regime companies. Belgian-source profits of Principle: – employment in a Belgian permanent 27. Under certain establishment of your Belgium must be conditions, a foreign temporary in nature; foreign employer, there executive assigned is in principle no temporarily to Belgium – the centre of the requirement for your within an international expatriate’s economic employer to deduct group of companies may and personal interests withholding tax at qualify for a special must not be in source each month. taxation regime. The Belgium; However, the tax executive will be treated authorities could as a non-resident for – the expatriate may not consider that tax must Belgian tax purposes, have Belgian be deducted at source liable to Belgian nationality. each month even if the personal income tax on 29. Various factors set out foreign employer has no his/her Belgian-source in a practice note dated Belgian permanent income only. establishment but the 8 August 1983 apply in salary cost is cross- Conditions: determining whether or not the centre of an charged to a Belgian- 28. Expatriates who may expatriate's interests is incorporated company. qualify for the special abroad. These may be tax regime are 26. If you benefit from the divided into two groups: management personnel, special taxation regime as described below in research personnel and Those relating to the personal paragraphs 27 to 32 and foreign personnel position of the expatriate, such as: without managerial if your employer is  ownership of real estate, required to withhold responsibilities who are personal property or income tax at source on so highly specialised that recruiting such securities abroad; your remuneration, it workers in Belgium is may, at its own risk, take  the existence of a life very difficult, if not into account for the assurance policy taken out impossible. To qualify, computation of the abroad; withholding taxes, the certain criteria have to excluded non-taxable be met:  continued membership of a group pension scheme or an expense allowances – – employment must be equivalent savings or pension albeit only to the extent in a qualifying entity. plan abroad; that they do not exceed This includes scientific the limits of EUR 11,250 research centres or  renewal of credit cards issued (or EUR 29,750 per laboratories or by banks in the country of annum in certain businesses under origin; limited cases) – and any foreign control or part

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Those relating to the expatriate's 31. An expatriate newly 33. A non-resident who work activity: transferred to Belgium changes his/her job in is presumed to be a Belgium to work for a  continued affiliation to a Belgian tax ‘resident' firm affiliated to a foreign social security once he/she has different international scheme; registered at the Belgian group will in principle  possibly, the existence of a municipality. An lose his/her non- application file must be short-term employment resident status. submitted to and contract; approved by the tax 34. However, under certain  the expatriate’s presence in authorities in order to exceptional circumstances it might Belgium to set up or benefit from the special still be possible to reorganise a business; tax regime (and therefore be considered continue to benefit from  the executive’s willingness as a non resident the expatriate tax status, to transfer his/her base of taxpayer in Belgium). but this will be operations in the service of This application request examined in depth by the group to another country must contain supporting the tax authorities on a if so requested; documents case-by-case basis. demonstrating the fact  continuing to act as an Benefits: that the conditions to officer of a foreign company benefit from the regime 35. Expatriates who benefit from the special taxation  the nature of his functions are met. The application regime are considered (executive or specialist). file must be submitted to the tax authorities non-residents for 30. The fact that an within 6 months from Belgian tax purposes expatriate has the arrival of the and are therefore purchased a house in expatriate in Belgium. taxable on their Belgian Belgium does not, in source income only. The itself, constitute proof 32. Although there is no special tax regime that he/she has decided defined time limit in the recognises that to reside permanently in benefit of the special tax payments made by an Belgium. The expatriate regime, the Belgian tax employer to an is not therefore authorities tend to expatriate fall into two precluded from claiming conduct systematic distinct categories: to be temporarily audits after 10 years to – base salary and foreign resident. verify that the conditions to benefit service premium, from this regime are still which are both taxable met by the expatriate. in Belgium to the extent that they relate Qualifying expatriates to services performed

moving to another in Belgium; and employer in Belgium

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– expenses reimbursed generally less favourable or transferred to by the employer, some for the expatriates. This Belgium, whether paid of which are not calculation also requires as lump-sum allowances taxable in the a good understanding of or as specific expatriate’s hands and the terms 'base salary' reimbursements of are tax-deductible by and 'tax equalisation', outgoings. The Belgian the employer (i.e. so- and an appreciation of tax authorities tend to called “tax free their limitations, accept as non-taxable allowances”). including the fact that those costs that an the amounts computed expatriate would not 36. The computation of tax- do not necessarily have incurred if he/she free allowances differs correspond to reality. had continued to work according to whether the in his/her home employee receives a 39. Paragraphs 40 to 55 country. salary and a separate, below cover the rules for identifiable an expatriate receiving a 42. A distinction is drawn reimbursement of salary and separate between recurring and expenses, or he/she is reimbursements of non-recurring costs. on a gross remuneration expenses. Paragraphs 56 package, inclusive of to 64 cover the rules for 43. Non-recurring costs and expenses. an expatriate on a gross expenses that are non- remuneration package. taxable include: 37. The first category includes expatriates An expatriate receiving – costs and expenses paid on a net salary salary and separate incurred in moving to basis, such as those reimbursements of Belgium; expenses benefiting from tax – the costs of preparing equalisation (in receipt 40. As long as an employer accommodation for of a base salary after can show that occupancy in Belgium; deduction of expenditure is its hypothetical home- responsibility, expense – costs and expenses country tax), or those allowances and other incurred in moving out benefiting from tax benefits that it awards of Belgium. protection. In these an expatriate will not be 44. Recurring costs and cases, an employer can taxable in his/her expenses that are non- pay allowances hands, and will continue taxable include: computed on the basis to be tax-deductible in of international the hands of the – the supplementary cost comparative studies, up employer. of accommodation and to the limits set out in additional cost of living paragraph 54, below. 41. An expatriate will not be compared with costs in taxed on allowances the home country; 38. The method of paid by the employer to calculating tax-free cover additional – school fees (primary allowances on a gross expenses that are and secondary remuneration package is incurred as a result of education only) of an fixed by the Belgian tax his/her being recruited international school; authorities. The result is

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– one annual travel costs Housing allowance 48. If the cost of for an expatriate and 46. This allowance is accommodation in his/her family to their intended to reflect the Belgium is higher than home country (air higher cost of the cost of comparable travel, economy class); accommodation in accommodation in the home country, the – loss incurred by Belgium compared to the costs that the excess may be properly his/her inability to rent expatriate would have reimbursed by the out, or to obtain a employer tax free. normal market rental incurred on comparable accommodation in for, accommodation 49. The cost of heating, retained in the home his/her home country. electricity, gas, water country; 47. Actual costs in the home and similar normal country can be used as living expenses may not – travelling expenses the basis for the be included in resulting from computing the above emergencies (death or evaluation, using receipts for rents paid, excess figure. Any serious illness of close lease agreements, and reimbursement of this members of his/her category of expense by family or spouse); the taxable or rateable value of property. Costs the employer is added to the employee's taxable – exchange-rate may alternatively be income. Therefore, only fluctuations; estimated using comparative tables or rent and rent-equivalent – tax equalisation; statistical publications payments (or 125/60 or such as Mica 380/60 of the indexed, – travel expenses of International Transfers registered cadastral children at school or ORC International income value for abroad to visit their Compensation Tables, expatriate house-owners parents, not exceeding provided it is group or those in receipt of two trips per year. policy to use these free accommodation directly owned or rented 45. Care should be taken to publications in by the employer) can be retain all supporting determining allowances taken into account in vouchers, which have to to be granted to computing this be produced to the employees sent abroad. allowance. Belgian tax authorities Alternatively, the allowance can simply be on request. The ways in which more- fixed as the difference controversial tax-free between actual rentals allowances are paid in Belgium and 12% determined are set out of the foreign base salary. below.

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Cost-of-living allowance Tax equalisation 55. Any excess therefore 50. Any increase in the cost 52. An employer may grant forms part of the of living in Belgium expatriates non-taxable employee’s gross taxable compared with the cost allowances equal to the pay. of living in an additional tax burden Expatriates on a gross expatriate's home resulting from their salary inclusive of expenses country can be employment in Belgium. reimbursed as a non- Precise, detailed 56. When an expatriate's taxable allowance. Such supporting evidence is contract provides increases, if relevant, required. him/her with a salary can be identified from inclusive of all expenses, figures provided by 53. Very frequently, Belgian the foreign base salary economic and statistical tax is higher than tax at has to be calculated and studies accepted by the comparable salary levels expenses analysed in Belgian tax authorities, in an expatriate's home order to identify those provided they are used country. In order to that are non-taxable. neutralise the as a matter of group 57. An expatriate's foreign policy. unfavourable effect on his/her net base salary may be School fees remuneration, it is calculated from salary scales used by the group accepted that the 51. For children aged six or in the home country. older in primary or employer may meet the additional tax burden. Failing these, the secondary education in Belgian gross salary is Belgium, school fees and Limits multiplied by a country the cost of local index provided by the transport are treated as 54. In any case, apart from school fees and non- Belgian tax authorities, non-taxable expense after deduction of an allowances. Payments by recurring costs and expatriate premium of an employer for board expenses, all other expenses are considered 10% (or 15% for non- and lodging in boarding European countries). schools and for the cost taxable to the extent The following country of private lessons are that they exceed all together: indexes apply for taxable fringe benefits. assessment year 2018: When children are – EUR 11,250 for educated abroad, the expatriates working in Country % Country % Country % additional costs arising commercial and Austria 100 Ireland 100 Sweden 80 due to the distance from Canada 100 Italy 90 Switzerland 100 industrial operating home, such as the cost units; or Denmark 100 Japan 60 Turkey 90 of full board and lodging Finland 85 Netherlands 100 United 90 in boarding schools, – EUR 29,750 for Kingdom France 85 Norway 100 United 100 may be accepted as a expatriates in States

tax-free allowance. recognised control and Germany 100 Portugal 75 However, each case is coordination offices or Greece 75 Spain 90 examined on its merits laboratories and

and supporting vouchers scientific research are essential. centres.

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58. The same types of tax- are paid on a gross travel, and progressive free allowances are basis, so that the non- lump sum professional available (under the taxable allowance is expenses (up to a same limits) to an equal to the positive ceiling of EUR 4.720); expatriate on a gross difference between the and remuneration package actual rentals paid in as are available to an Belgium and 12% of the – the foreign income tax expatriate who is foreign base salary. calculated on the base reimbursed separately salary in the home for expenses, but the Cost-of-living allowance country, after computation of the tax- 61. Once the foreign base deducting applicable free elements is salary has been local social security different, as shown in determined as explained contributions and paragraphs 59 to 64, in paragraph 57, above, standard tax below. the non-taxable allowances/deductions allowance representing available in the home Housing allowance the increase in cost of country. 59. To determine the non- living is fixed at 5% of taxable allowance, the foreign base salary, priority is given to actual subject to a ceiling of costs (for example, EUR 2.500. actual rentals paid in Belgium and in the 62. The restriction on the home country). Failing use of international this, the allowance can statistical publications, be fixed as the positive also applies to cost-of- difference between living allowances. actual rentals paid (or Tax equalisation 125/60 or 380/60 of the indexed, registered 63. The non-taxable cadastral income figure allowance for tax for expatriate house- equalisation is owners or those in calculated as the receipt of free difference between: accommodation directly – the Belgian income tax owned or rented by the on the base salary in employer) and 12% of the home country, the foreign base salary. before deducting the 60. International statistical 10% or 15% publications cannot be expatriation premium, used, unless they form but after deducting part of the employer’s Belgian personal social international security contributions expatriation policy. This (13,07%), the excluded is not practicable, proportion of salary however, when people relating to foreign

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Other deductions Exclusion for services 66. The following 64. In addition to the rendered abroad calculation is done to determine the exclusion allowances discussed in 65. In addition to the paragraphs 59 to 63 for services rendered non-taxable allowances abroad: above, other expense described above, allowances such as services rendered to a Annual taxable income home leave (normally company located outside multiplied by the travel not exceeding one trip Belgium and that can be exclusion percentage per year to the country identified as such are of origin), whether not subject to Belgian Number of recurring or non- taxes although pay Travel working days spent abroad recurring, may be details must be exclusion % deducted from the gross reported. In the absence = Total working salary to the extent that of identification, the days in the period they can be justified. proportion of overall pay Note that school fees relating to working days should be reimbursed by spent abroad will be 67. The "total working days the employer separately taxed in Belgium. It in the (tax) period” (in in order to avoid their should be emphasised Belgium and abroad) being taxable. An that an expatriate is may not normally example of how under the obligation to include Saturdays, allowances are report the total Sundays, Belgian public determined for an worldwide earned holidays, sick-days or expatriate on a gross income received from annual vacation (even if remuneration package is group entities even if the individual actually set out in Appendix D. salary paid abroad does worked during these not relate directly to days). his/her assignment in

Belgium, but relief for services rendered to the group outside Belgium is granted by the Belgian tax authorities. Please note that it is very important for each expatriate benefiting from the special tax regime to keep proof for each business travel day spend abroad of (1) his/her presence abroad and of (2) the professional character of the trip.

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68. In calculating the a resident and is benefitting from the number of working days likewise added to other special tax regime as abroad, the day of Belgian-source income well as other non- departure is considered such as real estate residents are only as spent in Belgium with income or directorship entitled to personal the exception that one- fees received from a deductions (basic day trips abroad are Belgian company. personal deduction, accepted as qualifying Investment income deduction for children at days spent abroad. The sourced in Belgium or charge, marital quotient, day of return is deemed abroad is excluded from etc.), and some tax to be spent outside taxable income but it reductions at federal Belgium. In addition, should be noted that, in level (child care weekends and public certain circumstances, expenses, donations..) holidays must be such income may be provided that they earn excluded even if they are subject to Belgian at least 75% of their spent abroad on withholding tax. worldwide professional business trips. income in Belgium 71. An expatriate will also (limited exceptions 69. In case of a tax audit, be able to deduct apply however to the expatriate must be compulsory Belgian or expatriates who remain able to provide, for each foreign social security residents of France, day claimed as a foreign and lump-sum business Luxembourg and the business day, double expenses from his/her Netherlands). Moreover, evidence of (1) his taxable income, in order to be entitled to presence abroad, and (2) calculated as a Regional tax benefits in the business nature of percentage of earned Belgium (such as the trip (assignment income, up to a ceiling services cheques, roof instructions, hotel bills, of EUR 4.720, in the isolation for own air tickets with boarding same way as a Belgian- dwelling…), those non- pass, passport visas, resident taxpayer. An residents must have etc.). In case this double expatriate also has the maintained tax proof cannot be option to deduct actual residency in another provided to the tax business expenses Member State of the inspector, each day instead of the lump-sum European Economic which cannot be amount. Area (which in practice supported by sufficient th is usually not the case). evidencing document 72. The 6 Reform of the will be rejected, and tax State, applicable since 74. The sections in the rest relief will not be granted income year 2014, has of this chapter for those days which limited however essentially relate to cannot be justified. drastically the other tax resident taxpayers. deductions/reductions Rates and deductions available to non- 70. The taxable income of a residents working in Belgium. non-resident is subject to tax at the same rates 73. Indeed, since income as the taxable income of year 2014, expatriates

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Social security collar workers) range of 8 August 1983) may, contributions and benefits between 25% and 28%. under certain conditions, be paid free 75. The Belgian social A special contribution security system provides of Belgian social security based on car CO2 for benefits to be paid to contributions. The emissions is due by the Belgian social security persons who work or employer where a have worked in Belgium. authorities explicitly company car can be used These benefits are state that the exemption for private purposes by from social security substantially financed an employee subject to by compulsory contributions applies Belgian social security. contributions from both where these allowances No employee CO2 are granted in employers and contribution is due. employees. Social connection with a transfer or secondment security covers old age In addition, a special pensions, monthly lump-sum from a foreign group unemployment benefit, social security company or where the person was directly sickness and disability contribution is withheld payments, family from the employee's net recruited abroad in allowance, industrial salary. It varies from nil order to be temporarily employed in Belgium. accident and health care to EUR 60.94 per month costs. The last of these depending on the Since 1 January 2012, are not covered in full quarterly amount of for expatriates and additional private wages subject to social benefitting from the insurance may be security contributions. special tax regime with advisable. There are also The final annual the limit of the costs minimum regulations contribution varies from proper to the employer on holiday entitlement. nil to EUR 731.28 and (CPE) of EUR 11,250, depends on the annual the amount exempt 76. Employee social security from social security can net taxable income contributions are reported in the be grossed-up to take withheld at source and employee’s tax return. into account the travel paid by employers to the exclusion percentage. Settlement between the National Social Security monthly contributions For example, if the limit Office, which is withheld and the final of EUR 11,250 is responsible for reached and the annual contribution due administering the social is calculated by the tax expatriate has a travel security system. authorities via the exclusion percentage of 20%, the amount income tax assessment. 77. Contributions are made exempt from tax is EUR as a percentage of gross 78. Expatriate allowances 11,250 and the amount salary, with no upper that are exempt from exempt from Belgian limit. At present, the Belgian income tax social security is equal employee's under the special tax to EUR 14.062,50 (EUR contributions are regime granted to 11,250/ 13.07% of gross salary, certain foreign (1-0.20)). and employer's executives (practice note contributions (for white-

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79. EU Regulation social security system of 81. Non-EU nationals 883/2004, last modified their home country employed in Belgium by by EU Regulation provided their work in a Belgian employer or a 465/2012, replaces the their home country is at Belgian place of former EU Regulation least 25% of their time business of a foreign 1408/71 since 1 May or turnover. employer are in 2010. Under this new principle subject to the EU Regulation, Employees who work in Belgian social security applicable in the two or more Member system. However, European Economic States for two or more workers assigned to Area (EEA), an employers remain Belgium from a non- employee may apply on always affiliated in the EEA country can also a form A1 (old form Member State of their remain under their E101) to remain subject residence. home social security to the social security Individuals who are scheme and being scheme of his/her home simultaneously exempt from social country, provided that security in Belgium if a employed in one he/she remains linked Member State and self – bilateral social security with his/her employer in employed in another agreement concluded his home country, and with Belgium can be Member State are only that the duration of subject to social security invoked. In this respect, his/her secondment of the country in which Belgium has concluded does not exceed 24 they perform their social security months. It is possible, employee activities. agreements with several for a temporary countries including the assignment, to extend EU Regulation US, Japan, Australia, this period for one year 883/2004 provides for a India, Canada, Quebec, and, in certain cases, to ten-year transitional etc. obtain special period during which the agreement from the existing employment Please note that since 1 social security situation remains January 2011 the authorities of both covered by the former Regulation 883/2004 also applies to third countries to allow a EU Regulation 1408/71 period of up to five years unless the employee country nationals. This from the outset (three would explicitly request implies that a third country national posted years for a secondment that the new Regulation from Denmark). applies. It is highly in Belgium (or in recommended to seek another EU Member 80. Under the Regulation State) who also works in advice when planning an 883/2004, residents of one or several other assignment to Belgium. EU Member States who Member States for more are performing than 5% of his working employment duties for time per country will be one employer in their subject to the social home country and in security of his place of Belgium normally residence (here : remain subject to the Belgium).

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82. There is a social security 80) remains applicable expempted for the first treaty with the United in this case. EUR 640. States under which US nationals seconded to Tax treatment of 86. Foreign interest and Belgium for periods of self-employment income dividends collected up to five years may 84. Resident individuals are abroad by resident elect to be excluded liable to Belgian income taxpayers must be from the Belgian social tax on the worldwide declared in their annual security system profits generated from tax return for the net provided they continue their business or amount (so after the to participate in the US independent profession. deduction of the foreign FICA system during that Profits from a business tax withheld at source) period. In certain or profession also and the flat-rate tax is circumstances, it may be include capital gains on paid on assessment. possible to apply for an the sale of business Please note that extension to the five- assets, although a pursuant to an arrest of year period. One favourable tax treatment the European Court of prerequisite is that US applies if these assets Justice, communal taxes expatriates may not be have been held for more should no more be on the payroll of the than five years. Self- applied on these foreign Belgian entity where employed expatriates do interest and dividends. they work, although the not qualify for the The treatment of income overall cost can be special tax regime from capital received by charged to the Belgian described earlier. expatriates who benefit entity. from the special taxation Tax treatment of regime is explained in 83. The US social security investment income paragraph 7. administration has to 85. Income from capital 87. Interest paid to non- provide a certificate of includes interest, residents is usually coverage showing that dividends or other forms the expatriate continues exempt from of investment. Interest withholding taxes in to be affiliated to the US and dividends paid out Belgium. Belgium social security scheme. and collected via a It will therefore be applies in this respect, Belgian financial the system of exchange helpful for a US institution are, in of information as employer intending to principle, subject to a second an employee to provided by the EU flat-rate tax of 30%. Savings Directive since 1 Belgium to make a Interest from ordinary January 2010. Further timely application to the savings accounts is relevant US authority so information can be exempted from taxation obtained from our that a certificate of up to a limit of EUR 960 offices as listed in coverage can be issued. (income year 2018). Any Appendix E. Please note that the rule interest exceeding this on simultaneous amount is subject to tax 88. For each taxpayer, the employment as at a rate of 15%. As from first EUR 960 of described above (point income year 2018, authorised savings bank dividend payments are account interest is

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exempt from the 15% Belgian resident Wealth taxes withholding tax and taxpayers fall within the 92. As from income year must not be reported in scope of this tax (non- 2018, the Belgian tax the tax return (income residents are excluded). authorities have year 2018). The tax applies to all introduced a tax on transactions (disposal 89. Local property tax securities accounts. For and acquisition for a individuals taxpayers (précompte immobilier - consideration) of who are residents of onroerende voorheffing) Belgian or foreign is assessed on 'cadastral Belgium, a flat 0,15% securities (including rate will be imposed on income', i.e. the deemed shares, bonds, certain qualifying rental value attributed share/bond certificates, to the property by the financial instruments etc.) realized by a that are held via their authorities. Some Belgian tax resident. Belgian and non-Belgian reductions are provided If the transaction is for occupancy. Property securities accounts. For handled via a Belgian individuals who are non tax is levied at a rate financial institution, the resident taxpayers of that varies according to reporting and the the municipality and Belgium, only the withholding of the taxes Belgian securities are location of the property. will be done Rates generally range taken into account for automatically by the the application of the between 20% and 50% later. The following tax of the 'cadastral income'. 0,15% taxation. The tax rates apply: on the securities account 90. Owners occupying - 0,12% on bonds is due only when the residential houses are average and combined taxed on the notional - 0,35% on other value (of the qualifying rental income (’revenu securities instruments held via the cadastral/kadastraal securities accounts) inkomen’). Properties - 1,32% on the reaches or exceeds EUR rented out are taxed on purchase of own 500.000 (per account the notional rental capitalisation shares of holder). income or on the an investment company.

effective net rental income received (after 93. A hidden wealth tax deduction of lump-sum Various forms of income exists also in the form of rental expenses). 'Non- 91. This category includes a transfer tax resident' expatriates are casual earnings, awards, (“registration duties”) liable to tax on Belgian alimony receipts and on the sale or transfer of real estate only. those capital gains that real property (buildings, Stock exchange transaction are taxable. Income land) other than newly- tax falling within this constructed houses and category is often taxed other buildings subject In 2017 the Belgian tax at fixed rates, mainly to VAT at 21%. Transfer on stock exchange 16.5% and 33%, plus taxes are levied by the transactions has been local tax. Regions and the rates enlarged. Note that only depend on each Region.

International Assignment Taxation Folio 23

94. For properties located in other conditions Resale or a transfer of the Walloon Region the are met. the real property by rate amounts to 12,5%. notarial deed within two Tax is computed on the If the conditions for this years following the date sale price, or the reimbursement are not of the duly certified deed assessed market value if met, resale or transfer of to purchase the property higher, and is paid by the property by notarial entitles the seller to the buyer. It should be deed within two years of reclaim 36% of the noted that a resale or the date of the duly transfer tax paid on the transfer of real property certified deed to acquisition. by notarial deed within purchase the property two years from the date entitles the seller to Church taxes of the duly certified deed reclaim 3/5 of the 97. There is no church tax in to purchase the property transfer tax paid on Belgium. entitles the vendor to acquisition.

reclaim 3/5 of the 96. A transfer tax of 12,5% is transfer tax paid upon levied on sales or acquisition. transfers of real 95. For properties located in property located in the the Flemish Region the Brussels-Capital Region. tax rate amounts to 10%. Tax is computed on the The Flemish Region has higher of the agreed sale however recently price and the fair market announced its intention value of the property. to reuce this rate to 7%. However, an exemption The first bracket of EUR of EUR 175.000 (for 15.000 for the purchase purchases as of 1 of a main residence that January 2017) is granted is the taxpayer’s sole for the acquisition by property is currently one or more natural exempt from transfer persons of a property tax. intended to become a main residence, Furthermore a provided it is the buyer’s reimbursement or sole property and the deduction, as the case taxable amount (i.e. may be, of the transfer purchase price and tax paid on the additional expenses) taxpayer’s previous does not exceed EUR home can be claimed (up 500.000. to a maximum of EUR 12.500) provided the This exemption is not new home is also granted for the purchased in the acquisition of Flemish Region and undeveloped land.

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Step 3: What to do before you arrive in Belgium

Work permits, residence need to earn a certain 100. A duty of prior formalities and "Limosa" minimum gross annual electronic notification is 98. If you are a European salary in order to be imposed for all Union (EU) national, granted a work permit. foreigners working (even temporarily) in you do not need a work 99. Depending on the permit to work in Belgium and who are duration of your stay in not subject to Belgian Belgium. If you are a Belgium and your national of a non-EU social security, including nationality, you need to seconded employees and country, you need a carefully check the work permit or a the self-employed. This required residence duty of notification is professional card (as a formalities before you self-employed person) referred to as the arrive in Belgium. Non- unless you are employed "Limosa" obligation. EU nationals who stay Notification is required (as an executive or in Belgium for a period researcher with a for any employee who is exceeding three months Belgian contract) in a employed in Belgium require applying for a temporarily or partially recognised coordination type D visa from the centre, which exempts and normally works in Belgian you from the one or more countries embassy/consulate in other than Belgium or is requirement to obtain a their country of origin. work permit. Other hired in a country other In the Belgian work-permit exemptions than Belgium. It also municipality where they applies to any self- also exist (in the form of will live, they need to be a limitative list), such as employed person, who registered and obtain a either sets up for business trips Belgian residence (exemption limited to temporarily in Belgium permit. EU nationals do in order to carry on one five days per calendar not require a visa but month) and for certain or more self-employed need to obtain a activities here, or managerial employees 'declaration of employed by Belgian temporarily or partially registration' from their carries on self-employed headquarters. If you do local authority in not qualify for an activities in Belgium but Belgium. Special rules normally works in one exemption, a work apply to family members permit has to be applied or more countries other (for purposes of ‘family than Belgium and does for. Highly qualified reunification’). employees and not permanently reside managerial employees

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in Belgium. Very limited 'treaty country', the rendered in or for the exceptions apply. ‘exemption with two countries, will progression’ principle produce tax savings. Employment contracts applies in Belgium to Where your non-Belgian 101. It is strongly advisable your overseas earned employer is located in a for all the terms and income provided the tax non-treaty country, your conditions of your treaty allows for such foreign income is assignment to Belgium exemption. The subject to tax in Belgium be set out in a written exemption with at half the normal rate, agreement before you progression reserve provided it has been are actually transferred means that income subject to foreign tax. to Belgium. which is exempted from taxation in Belgium Remuneration packages 102. The authority of your based on the double tax 106. We outlined above the employer to transfer you treaty concluded tax consequences of to a group entity in your between Belgium and receiving a salary and home country, or the other country will separate reimbursement elsewhere, will normally not be taxed in Belgium of expenses, or of being be included in your but will be taken into on a gross remuneration employment contract. account to determine package inclusive of 103. Consideration needs to the marginal tax rate expenses. Employers be given to whether you applicable to the other will need to examine the should apply for the income taxable in overall cost to both the special tax regime on a Belgium. Depending on company and the net or gross the other country, employee before remuneration package. income exempted from deciding which method taxation in Belgium may is appropriate. Generally 104. If you are an however remain subject speaking, the 'net' (international) assignee, to communal taxes. remuneration package is resident and employed Please note that the tax more tax-effective, as in Belgium, and you do authorities are now the recurring costs and not qualify for the looking more carefully expenses package for special expatriate tax at the conditions to be which the employer is treatment but carry out exempted in Belgium responsible will most a significant amount of based on the wording of likely reach the tax-free work outside Belgium, the tax treaty, and are ceilings of EUR 11,250 you may find it not granting this (or EUR 29,750 for advantageous to have exemption automatically control and separate employment anymore. Due to the coordination offices, contracts with your application of laboratories and Belgian employer and an progressive tax rates in scientific research associated group most countries, a payroll centres). In the case of company located abroad split between 'treaty gross remuneration (i.e. a split payroll). countries', which packages, this is accurately reflects frequently not the case. 105. Where your non-Belgian services and employer is located in a responsibilities

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107. As far as coordination offices are concerned, it is unlikely that the tax- free ceiling for allowances of EUR 29.750 will be reached without tax equalisation being built into the 'net' remuneration package.

108. The timing of payment of a bonus connected with an assignment to Belgium should be considered from the outset. If a bonus is paid after the assignment has terminated, it may be more beneficial from a Belgian tax point of view.

109. Stock options are taxed in Belgium at the time of grant, based on a lump sum valuation, provided that they are formally accepted by the beneficiary in writing within 60 days from the date of the offer. Options which are not so-accepted are taxed at the time of exercise. Special attention must be made when dealing with stock options in an international context in order to avoid double taxation. For options whose vesting is subject to an employment condition, taxable income will be sourced based on the territories where the duties were carried out during the vesting period.

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Importing personal 112. An application must be that the following means possessions filed with the local of minimising the tax 110. A full exemption from customs office before or burden can be value added tax (VAT) when goods are considered: and customs duties is imported. Five copies of the list of possessions – timing the arrival in generally granted when Belgium; personal possessions, being imported are including a car, are required. – avoidance of dual imported by a private 113. The imported goods residence and double individual transferring cannot be sold or let taxation; his/her normal place of within the 12-month – deriving full benefit residence from another period following their country to Belgium. from the tax exemption duty-free importation. on investment income, 111. To be eligible for the Important points to in cases where the exemption, the goods remember special tax treatment must be owned by the applies. importer and have been 114. Employers and used at least six months expatriates are advised before the residence is to consult a home transferred to Belgium. country tax adviser and a Belgian tax adviser before the assignment takes place, so

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Step 4: What to do when you arrive in Belgium

Establishing 116. Registration with the employment in Belgium residence/domicile social security begins). authorities should be 115. As an international 118. The application file assignee intending to done by your employer. You must select and must include a formal reside and work in request by the employee, Belgium, you must go register with a 'Mutuelle/Mutualiteit'. and sufficient through certain information to enable formalities with the local The local authority where you live will the tax officers to verify authority where you are whether expatriate and to reside. Depending on inform the local tax inspector of your arrival. the company meet all your nationality (EU or the qualifying non-EU) the set of Application for conditions for non- documents you need to non-residence status resident status and that submit for registration the non-taxable expense will be different. Non- 117. The administrative allowances being EU nationals need to be formalities associated claimed are justified. able to present their with the special tax work permit, for regime are mainly the 119. The Belgian offices of responsibility of the instance (unless they PwC will be pleased to qualify for a work- employer. Provided you provide clients with permit exemption). The meet the various further advice on the conditions, the employer duration of your application procedures residence in Belgium is required to file a and the documents and (more or less than three formal application with information needed to the Director for months) is also support a successful important in Foreigners (Directeur application. See determining the type of Etranger – Directeur Appendix E for further Buitenland) at the registration or information. ‘declaration’. In the case Ministry of Finance of registration for more (Federal Public Service than three months, you Finance) within six

will receive an electronic months of your arrival (the six-month deadline residence permit once the registration runs as from the first procedure is finalised. day of the month following that in which

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Step 5: What to do at the end of the year

General 121. Similarly, if you work 120. No specific formalities within the framework of are required from you as the special tax regime, it is advisable to adjust the an employee at the end level of your of the tax year. It is withholding tax to meet nonetheless advisable your actual for you, if you are circumstances. appointed as a remunerated director of a Belgian company or

performing self- employed activities, to adjust your level of withholding tax or tax prepayments during the year to avoid a tax surcharge for insufficient prepayments.

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Step 6: What to do when you leave Belgium

Reporting your departure should in principle be Other issues 122. You must report your filed within three 126. To minimise your tax departure from Belgium months of the date of burden, we advise you to and the departure of departure. For those seek advice on the your family at the who benefit from the timing of your population register at special tax regime, the departure. Care should the town hall in the tax return for the period be taken to avoid double municipality where you 1 January to the date of taxation arising from reside. departure from Belgium dual residence status if needs only to be filed you leave Belgium to 123. Where applicable, your the following year. work elsewhere but employer must report leave your family in 125. A certificate of your departure and the Belgium for a period of cessation of departure should be obtained from the local time (e.g. to complete contributions to the the children’s authority to enable social security education). authorities and you household possessions must also advise your to be removed to EU 127. Any payments or 'Mutuelle/Mutualiteit' (and other) countries bonuses received after accordingly. without VAT or import departure from Belgium, duty being charged. No but related to the 124. The tax office dealing tax authority certificate previous Belgian with your tax returns is required to permit employment will be should also be advised household chattels to be subject to tax in of any change of address taken out of Belgium. Belgium. Planning for so that tax return forms any such payments

covering the final tax should be undertaken period in Belgium can with care. be sent out for completion. Tax returns for the period 1 January

to the date of departure

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Step 7: Other matters requiring consideration

First and last year in notarial deed. All inheritance tax Belgium Belgian notarial return at the value 128. If your earnings in deeds must be that the donated your first or last year registered, which assets have at the in Belgium cover a means that Belgian time of death. period of less than 12 gift taxes become due. 133. Inheritance tax is months, total income paid by heirs or for the period is not 131. There are, however, legatees on the net grossed up to the 12- exceptions to this amount inherited by month equivalent in principle: manual each recipient from calculating gifts and indirect the estate of any progressive rates of gifts can be made deceased person who tax. This factor can without a Belgian is considered to be a be used to plan notarial deed, so that resident of Belgium. appropriate they are exempt from commencement and Belgian gift taxes. 134. Expatriates who cessation dates for an This is not possible benefit from the assignment. for immovable special tax regime are property, however. considered to be A from assessment non-residents for year 2018, the tax 132. Article 7 of the income tax. deductions/reductio inheritance taxation However, this status ns will however be codes (IHTC) of each applies only to direct applied pro-rata region nevertheless taxes and not to temporis. provides that gifts inheritance taxes. Timing of bonuses made no more than Therefore, the three years prior to question as to 129. The timing of the death of the whether an bonuses to donor and that were expatriate who dies expatriates merits not subject to Belgian in Belgium is subject careful examination. gift taxes are deemed to inheritance tax Inheritance and gift added to the estate of depends on the facts taxes the donor and of the individual therefore are subject case.

130. In principle, a gift to inheritance taxes. has to be made in Such gifts must be Belgium by way of a reported in the

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135. Tax rates vary the Region where the where the according to the deceased had his/her inheritance tax region where the gift fiscal residence. return has to be filed is registered. and, at the same The inheritance tax time, the rules 136. In the Flemish and law has recently been applicable for Brussels-Capital deeply reformed at calculating the Regions, registered Federal level and the inheritance taxes. gifts of movables new rules will enter assets are taxed at a into force as from 1 According to art. reduced flat September 2018. As 38(1°) IHTC, the registration rate of a result, important inheritance tax 3% (for gifts between changes in the return has to be filed spouses, children, regional inheritance with the inheritance grandchildren, taxes are expect to be tax office where the parents, implemented in a deceased had his/her grandparents and near future and last tax domicile. cohabitees) or 7% specific advice is (for gifts between highly recommended Article 38(1°) IHTC other individuals). In in this respect. also provides that, the Walloon Region, where the deceased registered gifts of 138. Since 2018, the had his/her tax movables assets are family home is not domicile in more taxed at a reduced subject to tax when than one region flat registration rate inherited by a direct- during the five years of 3.3% (for gifts line heir, spouse or preceding his/her between spouses, cohabitee (applicable death, the tax return children, to all Regions). has to be filed in the grandchildren, Region where he/she 139. A special form of had his/her tax parents, inheritance tax arises grandparents and domicile for the on the death of a longer period during cohabitees) and 5.5% Belgian non-resident (for gifts between those 5 years. who leaves property other individuals). in Belgium. Tax is 141. If the deceased was a 137. Inheritance tax rules chargeable on the non-resident, the differ according to gross value of the mortis causa tax the region where the property instead of return (‘droits de deceased had his/her on the net amount mutation lors du fiscal residence. The inherited by each décès/rechten van rate of inheritance recipient, at standard overgang bij tax depend on the rates of inheritance overlijden’) has to be amount inherited, tax. filed with the office in whose district the the link between you 140. Article 38 IHTC and the deceased and portion of property specifies the region representing the

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highest federal 142. This means that a rateable value is mortis causa transfer located ("kadastraal tax return requiring inkomen" or "revenu to be filed in, say, the cadastral"). The so- Walloon Region called "mortis causa according to article transfer tax" is 38(2°) IHTC will be calculated according taxed according to to the rates and rules the rules in force in applicable in the that Region, whether Region in which the or not the tax return tax return has to be mentions property filed. located in any other Region.

143. Foreign inheritance taxes paid on property situated abroad owned by a deceased Belgian resident can be deducted from Belgian tax payable on that property under certain conditions. In such situations, estate planning is essential.

144. The inheritance tax applicable on family business depend also on the Region. Under certain conditions, the net amount received upon the transfer by inheritance of a family business can be exempted from inheritance tax in the Flemish Region and the Walloon Region.

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Appendix A: Overview of income tax rates

Tax year 2019 – Year of income 2018

Personal income tax rates

Tax brackets in 2019 applicable to net taxable income after deduction of business expenses (disregarding possible additional tax exemptions):

Taxable income Not over Rate (%) Tax on bracket Cumulative tax (EUR) 0 12.990,00 25% 3.247,50 3.247,50 12.990,00 22.290,00 40% 3.720,00 6.967,50 22.290,00 39.660,00 45% 7.816,50 14.784,00 39.660,00 and above 50%

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Appendix B: Overview of personal allowances

Tax year 2019 - Year of income 2018 Basic tax-free allowances for each taxpayer (in EUR): if taxable income not over 45.750,00 7.730,00

if taxable income above 45.750,00 7.430,00

Any balance not used up by the income of one spouse can be transferred and applied against the income of the other spouse.

Marital quotient (see point 13): 30% up to a max. of EUR 10.720,00. Child allowances: The basic tax-free allowance is increased by a progressive scale of child allowances which are also tax-free (in EUR):

Per child Cumulative First child 1.580,00 1.580,00 Second child 2.480,00 4.060,00 Third child 5.050,00 9.110,00 Fourth child 5.620,00 1.4730,00 Fifth and additional children 5.620,00

Disabled children count as two children in the above scale.

For each child younger than three years old on January 1 of the tax year, the above amounts are increased by EUR 590,00, provided no children’s custody expenses are claimed in the tax return.

Allowances for other dependent relatives who form part of the household and do not have resources exceeding certain limits:

EUR 1.580,00 per dependent (double for handicapped dependant).

The above allowances are set against the lowest separate tax brackets.

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Net taxable income is determined after deduction of allowable expenses: Standard expense deduction:

For employees, the standard expense deduction amounts to 30% of the gross earnings up to a ceiling of EUR 4.720,00.

For remunerated directors, the deduction is a flat 3% and it may not exceed the ceiling of EUR 2.490,00.

In some circumstances, it may be possible for a salaried taxpayer to claim business expenses actually incurred instead of a standard allowance.

100% (limited to maximum EUR 11,20 per day) of duly evidenced payments to an approved kindergarten, independently registered child nurses, or schools (in respect of children under the age of 12) will allow the taxpayer to a tax reduction amounting to 45%. As of assessment year 2018, single parents can, under certain circumstances, benefit from an additional tax reduction for the abovementioned childcare expenses.

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Appendix C: Typical tax computation

Tax year 2019 – Year of income 2018 Married person with two dependent children (aged 3 or over); spouse has no taxable income; municipal tax of 7%. Lives in the Brussels Region

Tax computation EUR EUR

Salary after deduction of social security contributions 50.000,00 Computation of tax base 1. Gross taxable salary 50.000,00 2. Less: standard business deductions Flat rate: 30% (limited to EUR 4.720,00) (4.720,00)

Total standard business deductions: (4.720,00) 3. Difference = Tax base 45.280,00 Portion attributed to the spouse 10.720,00 Portion left to the taxpayer 34.560,00 4. Computation of tax on spouse’s portion 0% tax on 0 to 7.730,00 (exemption) * 0 25% tax on 7.730,01 to 12.990,00 747,50

State tax 747,50 Autonomy factor (747,50 x 24,957%) (186,55) Reduced state tax 560,95 Regional tax (560,95 x 32,591%) 182,82 Total tax (I) 743,77

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Tax computation EUR EUR

5. Computation of tax on taxpayer’s portion 25% on 0 to 12.990,00 3.247,50 40% on 12.990,01 to 22.290,00 3.720,00 45% on 22.290,01 to 34.560,00 5.521,50 Tax on tax free allowance (* 2 children at charge) (3.081,00)

State tax 9.408,00 Autonomy factor (9.408,00 x 24,957%) (2.347,95) Reduced state tax 7.060,05 Regional tax (7.060,05 x 32,591%) 2.300,94 Total tax (II) 9.360,99 Total tax (I) + Total tax (II) 10.104,76 Plus: Municipal tax: 10.104,76 x 7% 707,33 Plus a special social security contribution 537,82 Final tax 11.349,91

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Appendix D: Tax-free allowances on a gross remuneration package

Tax year 2019 – Year of income 2018 The expatriate is paid on a gross basis; tax-free allowances are deemed to be included in his/her gross salary and have to be determined. The expatriate is a UK national, married, spouse has no earned income, two children (older than 3). He/she is entitled to travel exclusion outside Belgium of 12,9% in 2018 (at least 75% of professional income acquired in Belgium)

1. Professional earnings EUR Salary and foreign service premium 94.000,00 2. Foreign base salary (94.000 x 90% ) / 1,1 76.909,09 3. Determination of allowances A. Cost of living (76.909,09 x 5% = 3.845,45) – limited to 2.500,00 B. Housing allowance Rent paid in Belgium 14.400,00 Less: 76.909,09 x 12% (9.229,09) Total housing allowance 5.170,91

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C. Tax equalisation (2); Foreign base salary before deduction of 10% premium: (94.000 x 90%) 84.600,00 Less: Belgian social security contributions: (84.600 x 13,07%) (11.057,22) Sub-total 73.542,78 Less: Exclusion for travel outside Belgium: (73.542,78 x 12,9%) (9.487,02) Tax base 64.055,76 Belgian taxes I. thereon 18.209,67 II. UK taxes on foreign base salary: 64.055,76 (cf. point 2 above) (3) (17.862,76) Difference (I) - (II) 346,91 Total tax-free allowances: (2.500.00 + 5.170,91 + 346,91) 8.017,82 Tax-free allowances not subject to social security :(8.017.82/(1-12,90%) 9.205,31

1. Country index applicable for the UK for income year 2018

2. Based on 2018 tax brackets

3. Average exchange rate GBP 1 = EUR 1,14168233

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Appendix E: Belgian contacts and offices

Websites HR Services web site: http://www.hrservices.be

PricewaterhouseCoopers Belgium web site: http://www.pwc.be Contacts Our specialists are pleased to help you; do not hesitate to contact them.

With over 100 specialised professionals in five cities around Belgium, PwCInternational Assignment Services offers the perspective and resources of a global organisation combined with detailed knowledge of local issues.

Nicolas de Limbourg Jan Goeman

Brussels Antwerp

Tel: [32] 2 710 74 18 Tel: [32] 3 259 31 54

Fax: [32] 2 710 74 92 Fax: [32] 3 259 30 99

Email: [email protected] Email: [email protected]

Christiaan Moeskops Philip Maertens

Brussels Brussels

Tel: [32] 3 259 32 36 Tel: [32] 3 259 31 77

Fax: [32] 2 710 74 92 Fax: [32] 3 259 3299

Email: [email protected] Email: [email protected]

Bart Elias

Brussels

Tel: [32] 3 259 31 56

Fax: [32] 3 259 32 99

Email: [email protected]

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Offices

Antwerp Belgium PwC Tel : [32] 3 259 3011 Generaal Lemanstraat 67

B-2018 Antwerp Brussels Belgium PwC Tel: [32] 2 710 42 11 Woluwe Garden

Woluwedal 18 B-1932 Sint-Stevens-Woluwe Ghent Belgium PwC Tel: [32] 9 268 82 11 Sluisweg 1

B-9000 Ghent Hasselt Belgium PwC Tel: [32] 11 37 53 85 Corda Campus

Kempische Steenweg 311/2.02 B-3500 Hasselt Liège Belgium PwC Tel: [32] 4 220 62 11 Rue Visé – Voie, 81 ABC

B-4000 Liège Charleroi Belgium PwC Tel: [32] 7 167 68 05 Avenue Georges Lemaître 38

B-6041 Gosselies

pwc.com

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