New tax rules for expats in Belgium: What to expect
As of this month, Belgium's former expatriate tax regime - available to foreign executives and researchers recruited from abroad - no longer exists. The Brussels Times writes that the 27,000 or so expats affected will see significant changes to their financial and administrative situation.
Although Belgium has a reputation for high tax rates, the strict tax regime did not generally apply to expats in Brussels: they could, for example, benefit from certain write-offs on taxable income and tax deductions for work carried out outside Belgium.
"The expat regime in its current form was introduced in Belgium in 1983 to encourage international companies to draw talent to the country," Carolien Van Echelpoel, partner at KPMG in Belgium, told The Brussels Times. "It included several favourable tax measures, which lightened the country's heavy tax burden for expats coming to work here."
This made Belgium attractive to companies, allowing them to recruit suitable profiles and talent. "This is also what makes Brussels, in particular, an international hub for many companies," she said.
In 2021, Finance minister Vincent Van Peteghem announced that the old tax regime for expats would be phased out after 40 years. At the same time, new special tax rules have been introduced for expatriates and researchers.
Only those earning more than 75,000 euros gross per year can now benefit from certain tax concessions. Only inbound researchers, for whom there is no threshold, are exempt.
"The old, favourable regime has now been phased out and no longer exists"
"The conditions for the new favourable regime are slightly stricter: a salary limit has been built in, and there is now also a time limit," Van Echelpoel said, which narrows the group of people who can benefit from it.
While those subject to the previous system were granted a transition period until the end of 2023, the new regime took effect on 1 January 2022. Expats who arrived in Belgium after this date could no longer benefit from the old regime.
Belgian tax residents
"There was a large group of expats who did not meet the conditions for the new regime, and they could continue to enjoy the old one until 31 December 2023," Van Echelpoel said. "But the old, favourable regime has now been phased out and no longer exists. From 1 January 2024, tax concessions no longer apply to these expats." They are now considered Belgian tax residents, as opposed to non-residents living and working in Belgium.
"The main consequence of being a non-resident is that they were only taxable on their Belgian source income," she said. "Now, as Belgian tax residents, they will be taxable on foreign investment income and worldwide professional income, like all other residents."
"They will be taxable on foreign investment income and worldwide professional income"
According to figures from the tax authorities, 27,251 people benefited from the old regime in the assessment year 2023. Of those, 2,100 have switched to the new special regime – just under 10 per cent.
There could be several reasons why the remaining 25,000 have not done so, said Van Echelpoel. "This includes people who returned to their home country or found another job and the regime no longer applies to them, but also those who do not meet the conditions to transfer to the new regime."
The new regime also requires that those moving here must not have lived within 150 km of Belgium for five years before the move. "Whatever the reason, the group of people still able to enjoy favourable tax measures is now significantly smaller," Van Echelpoel said.
Most expats in Belgium are now subject to the country's income tax and have several other obligations regarding declarations they have to file and income they have to declare.
They will also have to report their foreign bank accounts to the National Bank. Expats who own property abroad will also have to report it to the administration, which will assign a foreign cadastral income to it.
© BELGA PHOTO BENOIT DOPPAGNE