Belgium tax shake-up hitting expats

Expats in Belgium are facing a change to their taxes as the Belgian government are planning to shake-up the regime in the 2022 Budget. The country’s Prime Minister Alexander De Croo announced these tax reforms as part of plans to “balance the budget.” Under the current system, expats living in Belgium while on a temporary work assignment are only taxed on the days that they actually work in Belgium. However, when the new regime is rolled out, expats will have to pay higher social security contributions. “We are tackling an outdated tax measure,” Finance Minister Vincent Van Peteghem said. It is estimated that this could bring in around 35 million euros for the government, which will help reduce the national budget deficit for 2022. The planned overhaul changes will decrease the amount from 5.4% to 3.1%. “We have come to a very broad package of measures, with a number of very drastic decisions,” PM Alexander De Croo noted.

Tax background

According to an article in The Daily Express, Belgium has an attractive special tax regime for expats temporarily employed in Belgium, as set out in the Tax statement of August 1983. “Under this special tax regime, expats who meet certain conditions could benefit from a reduction of Belgian income tax and social security contributions. On February 5 2021, the competent tax authorities announced some changes were to occur, concerning the procedure and the format for the application of the special tax regime for foreign expatriates,” says the report. “Currently, expats enjoy a generous expense deductible, which is part of the reason why the tax regime in Belgium is so favourable.” Expats who enjoyed the tax relief, although living in Belgium with their families, were classed to be a non-resident for income tax purposes. As such they were only taxed on their Belgian source income. Their tax-free allowances are exempt from income tax up to a threshold of either 11,250 euros or 29,750 euros per year.

Expats living in Belgium

According to the most recent data available, expats in Belgium totalled 1.4 million people – which is about 14% of the population. The main pull-factors of this country, home to main EU institutions are world-class and affordable healthcare, a high-quality education system, friendly people, a good life/work balance, low crime, and fantastic food and cultural scenes.

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