Belgian Income Tax
Personal income tax varies by the persons whose domicile or whose seat of wealth is located in Belgium. The municipality where the taxpayer is domiciled on the 1st January of the tax year is the tax municipality, which determines the rate of the local surtax.
Taxable income includes:
- earned income
- miscellaneous income
- interest from self-employment income
- real-estate income
- income from movable property
- trade or business partnership
As well as in most countries there are specific rules for the calculation of the net income for each of these categories. Income taxes are levied on the worldwide income of Belgian residents and also the Belgian-source income of non-residents. There are special exemptions and deductions for foreign-source income. Please note that Belgian residents are taxed on their worldwide earned and passive income. On the other hand, non-residents are taxed only on their Belgian-sourced income.
Tax rates 2017
In Belgium the income tax is calculated by applying a progressive tax rate schedule to taxable income. The tax rates are:
|Tax||Tax Base (in EUR)|
|25 %||€0.01 – €10,860|
|30 %||€10,860 – €12,470|
|40 %||€12,470 – €20,780|
|45 %||€20,780 – €38,080|
Corporate Tax Rates
The corporate income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, usually during one business year. The corporate tax rate is 34 % in Belgium.
Personal allowance items
The personal tax allowances reduce income before calculating the tax due. Those personal allowances are:
- basic personal allowance €6,150
- personal allowance 1 child €1,310
- personal allowance 2 children €3,370
- personal allowance 3 children €7,540
- personal allowance 4 children €12,200
- extra allowance per child younger than 3 years €490
Higher social security reductions for new employers
A “new” more extensive reduction is being introduced for a first hiring during the 1 January 2016 ‐ 31 December 2020 period. In general, it means almost full exemption from employer’s social security contributions. This concession applies during the entire period of employment and also for an indefinite period of time.
Additionally, for the second to the sixth hire, an increase of the fixed and time limited reductions (during 13 quarters) in labour costs is planned.
However, in case of first hires, the entitlement to the reduction of the social security contributions do not necessarily need to be applied for the employee who once opened the right to the reduction. Pro‐Pay can transfer the advantage of the reduction to another employee in case this would be more advantageous from a financial point of view.
|1st employee||Complete exemption for indefinite period|
|2nd employee||€1 550,00||€ 1 050,00||€ 450,00||€ 13 750,00|
|3rd employee||€ 1 050,00||€ 450,00||€ 450,00||€ 8 850,00|
|4th employee||€ 1 050,00||€ 450,00||€ 0,00||€ 7 050,00|
|5th employee||€ 1 000,00||€ 400,00||€ 0,00||€ 6 600,00|
|6th employee||€ 1 000,00||€ 400,00||€ 0,00||€ 6 600,00|
Taxes for Expats
Kindly note there are special rulings for expats in Belgium. It includes foreign business travel exclusions, expatriate allowances and tax benefits on income and property. Generally speaking, the Belgian tax system distinguishes the difference between ‘resident’ and ‘non-resident’ taxpayers with regard to determining what income is subject to taxation. As a general rule, Belgian residents are taxed on their worldwide income. However, non-residents are only taxable on their Belgian source income.
Any person who has his family home (place of residence) or the place from where he manages his personal wealth is considered as Belgian resident. Nevertheless, people registered with the local community are presumed to be resident unless the contrary is proven. Therefore, each foreigner is considered as a Belgian resident (for tax purposes) as soon as he/she is entered into the local population register and, as a result, domiciled in a Belgian community.
Tax Benefits for Expats
Foreign nationals benefit from the special expatriate tax status as being treated as non-residents. Therefore, they are only taxable on their Belgian source income. These benefits, which can only be obtained by filing a motivated application with the Expatriate Tax Directorate in Brussels are two-fold:
- certain ‘expatriate allowances’ or reimbursements of expenses, and
- the so-called ‘foreign business travel exclusion’ will be excluded from the taxable basis. Applications should be filed within six months from the start of the month following the month of employment in Belgium.
Ad. Expatriate Allowances
Expatriate allowances include tax equalisation, cost-of-living differential, housing differential, home leave allowance and are treated as “costs proper to the employer”. These are therefore, within certain limits, not taxable to the individual employee.
Ad. Foreign Business Travel Exclusions
This is provided to the expatriate who travels abroad on business during his secondment to Belgium. This kind of an executive’s taxable remuneration will be further reduced to the extent that his compensation relates to business activities carried out abroad.
Both the ‘expatriate allowances’ and the ‘foreign business travel exclusion’ are supposed to be excluded from the taxable income from employment. After this particular deduction, the taxable income is then taxed in the same way as the taxable income of any other Belgian resident (i.e. applying the same tax rates, deductions and exemptions) and is likewise added to the other Belgian source income of the expatriate.
Please note that, the number of annual leave days is calculated based on the number of days worked during the previous year in Belgium. On one hand, the legal minimum amount of holiday entitlement in Belgium for people working full-time is 20 days. On the other hand, some companies offer extra holidays. If you are entitled to paid holiday leave, you will be paid your normal salary plus a compliment of 92% of your gross salary. Unpaid leave is possible if your employer agrees, however this has an impact on your social rights.
Calculate your net income:
Please note, that this calculation took into a consideration just a very basic pieces of information of yours and the result might vary significantly. Contact us for detailed and precise calculation or let us know by filling a form and will call you back. Contact us for an exact calculation.