The new Expat Tax Regime in Belgium

Jana Iterbeke   |  

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As of January 1st 2022, the Federal Government of Belgium introduces a new tax regime for expatriates. The existing Expat Tax Regime, that offers an attractive taxation status for expats who meet certain conditions, exists already 38 years.

With this new version, the goal is to adapt the rules to the legal and tax needs of today and to have more legal certainty, since this new regulation will be incorporated in the Belgium Income Tax Code of 1992. The Federal Government also aims to promote Belgium as an attractive and competitive place to do business with this special regime, because it allows international companies to assign global talent to Belgium at an acceptable and competitive cost.

Most important changes

Firstly, the tax residency status will be determined in line with the general rules of the Belgian Income Tax Code. This means that an expat who lives in Belgium with his family, will be taxable in Belgium on his worldwide income, and not only on his Belgian source income. The expat will therefore have the Belgian tax resident status, and no longer the non-resident status.

Secondly, the benefits of the special tax regime will be limited. Thirty percent of the qualifying salary will be considered as tax exempt ‘costs proper to the employer’. This change makes the system more transparent and simpler to manage for international companies. However, the maximum for the thirty percent rule is €90.000. This means that the new regime will be less attractive for expats with a salary above €300.000 per year. Certain specific costs can still be reimbursed tax-free on top, for example relocation costs or school fees. The 30%-rule replaces the current travel exclusion and the non-taxable allowances.

Furthermore, to be entitled to the new regime, the expat needs to have a minimum remuneration of €75.000 per year. Only researchers do not have to meet this minimal salary, but they need to meet certain diploma requirements (a master or ten years experience).

Lastly, the tax regime will only apply for a limited period of five years, with the possibility to extend with three years if the qualifying conditions are still met. The new regime is also no longer exclusively linked to the employer: if there is a change of employer, the regime can continue to apply.

As of when?

The draft rules will in principle be effective as of January 1st 2022 for executives starting their activities in Belgium as of 2022. For expatriates currently subject to the existing special taxation regime, there will be a transitional period of 2 years. They can choose to change to the new regime as of January 1st 2022, or to continue the current regime for another two years.

Discuss your situation with our experts

Do you have any specific questions about these new changes? Do not hesitate to contact us. Our team of experts will be happy to help you.