Income tax liability

Who is liable to pay income taxes in Belgium?

Your liability for income taxes (and any other sort of taxes, for that matter) depends on where you're domiciled, which is usually the country you regard as your permanent home and where you live and work most of the year.

Income tax liability

A foreigner working in Belgium who has taken up residence there is usually considered to be domiciled there. If you're entered in the local population register, you’re considered domiciled there for tax purposes unless you qualify for some form of special treatment.

The tax system in Belgium distinguishes between resident and non-resident taxpayers when it comes to determining what income is subject to taxation. As a rule, residents are taxed on their world-wide income, while non-residents are taxed only on income originating in the local country. There are, however, a number of situations where resident foreigners may be granted a special status, allowing them to be taxed as non-residents on certain categories of income.

There are double taxation treaties between Belgium and more or less 60 countries, designed to ensure that income that has already been taxed in one country isn't taxed again in another or at a reduced tax rate. (Most tax treaties also provide for the exchange of tax information between the two countries' tax authorities.)

If you're in doubt about your tax liability in your home country, contact your nearest embassy or consulate in your adopted country. Americans living in Belgium (or anywhere outside the USA) should be aware that, although US tax treaties allow for exemption of various sorts of earned income and credit you for income taxes paid abroad, you must file a US income tax return even if all your income is exempt from taxation. (Note that renouncing your citizenship is not only extremely difficult but can also result in your being barred from returning to the US even as a visitor.) US citizens can obtain information on tax filing requirements from an American embassy or consulate or via the Internet at the IRS website . British nationals should consult the Inland Revenue website  for further information.

You’re considered to be a resident of Belgium if you’re registered with the local commune. Temporary residents of Belgium are generally taxed as residents, but there’s a special regime for foreign executives, directors, high-level specialists and research experts appointed by a foreign employer to work 'temporarily' in Belgium, who are allowed to exclude part of their salary and other income from Belgian tax if the payments relate to professional or private interests outside Belgium. Such payments include salary received for work performed abroad, cost of living and housing allowances, school fees for children attending primary or secondary school, and home leave and tax equalisation payments.

Application for this special status must be made by your employer when you’re first hired to work in Belgium (before you arrive in Belgium) and he must be able to show that your 'primary economic interests' lie in your home country (or at least outside Belgium), even while you’re living and working in Belgium. Other factors that are taken into consideration when the application is processed include:

  • whether you were recruited for the job outside Belgium;
  • the length of your assignment (and whether it’s for a limited period);
  • the possibility of your being transferred elsewhere;
  • whether you maintain a home or own property abroad;
  • whether you have children enrolled in an international school, either in Belgium or abroad;
  • whether you’re maintaining your contributions or eligibility for social security, bonus or private insurance plans in your home country;
  • whether there’s a ‘diplomatic clause’ in your rental agreement in.

A foreigner working in Belgium who has taken up residence there is usually considered to be domiciled there. If you're entered in the local population register, you’re considered domiciled there for tax purposes unless you qualify for some form of special treatment.

The tax system in Belgium distinguishes between resident and non-resident taxpayers when it comes to determining what income is subject to taxation. As a rule, residents are taxed on their world-wide income, while non-residents are taxed only on income originating in the local country. There are, however, a number of situations where resident foreigners may be granted a special status, allowing them to be taxed as non-residents on certain categories of income.

There are double taxation treaties between Belgium and more or less 60 countries, designed to ensure that income that has already been taxed in one country isn't taxed again in another or at a reduced tax rate. (Most tax treaties also provide for the exchange of tax information between the two countries' tax authorities.)

If you're in doubt about your tax liability in your home country, contact your nearest embassy or consulate in your adopted country. Americans living in Belgium (or anywhere outside the USA) should be aware that, although US tax treaties allow for exemption of various sorts of earned income and credit you for income taxes paid abroad, you must file a US income tax return even if all your income is exempt from taxation. (Note that renouncing your citizenship is not only extremely difficult but can also result in your being barred from returning to the US even as a visitor.) US citizens can obtain information on tax filing requirements from an American embassy or consulate or via the Internet at the IRS website . British nationals should consult the Inland Revenue website  for further information.

You’re considered to be a resident of Belgium if you’re registered with the local commune. Temporary residents of Belgium are generally taxed as residents, but there’s a special regime for foreign executives, directors, high-level specialists and research experts appointed by a foreign employer to work 'temporarily' in Belgium, who are allowed to exclude part of their salary and other income from Belgian tax if the payments relate to professional or private interests outside Belgium. Such payments include salary received for work performed abroad, cost of living and housing allowances, school fees for children attending primary or secondary school, and home leave and tax equalisation payments.

Application for this special status must be made by your employer when you’re first hired to work in Belgium (before you arrive in Belgium) and he must be able to show that your 'primary economic interests' lie in your home country (or at least outside Belgium), even while you’re living and working in Belgium. Other factors that are taken into consideration when the application is processed include:

  • whether you were recruited for the job outside Belgium;
  • the length of your assignment (and whether it’s for a limited period);
  • the possibility of your being transferred elsewhere;
  • whether you maintain a home or own property abroad;
  • whether you have children enrolled in an international school, either in Belgium or abroad;
  • whether you’re maintaining your contributions or eligibility for social security, bonus or private insurance plans in your home country;
  • whether there’s a ‘diplomatic clause’ in your rental agreement in.

Do you want to pay less tax? Do the Free tax check from ING.

This article is an extract from Living and Working in Holland, Belgium & Luxembourg from Survival Books.

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