On Monday morning, the restricted council of ministers confirmed a comprehensive tax reform that the federal government plans to implement during this legislative term.
The reform package, valued at €4.4 billion with full implementation by 2029, was announced by the Finance Minister Jan Jambon at a press conference following the agreement reached early in the morning.
The tax-free allowance, the threshold below which no personal income tax is due, will increase from €10,910 to €15,300 by 2029, with an initial step in 2026.
The special social security contribution will be reduced for single individuals, providing an annual net benefit of up to €365 per person.
The employment bonus will see a significant increase for low-income earners, ensuring that by 2029, the gross salary will be equivalent to the net salary for minimum wage earners.
There will be an increase in the tax benefit for dependent children, with the allowance for the first child rising from €1,980 to €2,650 by 2029, eventually eliminating the progressive structure of this benefit.
Pensioners who continue working will be subjected to a maximum tax rate of 33%, replacing the current progressive rates that can reach up to 50%.
Self-employed individuals without a company will receive additional support, with the entrepreneur’s deduction increasing to €900 by 2029, up from €650.
The penalty for insufficient advance tax payments will be abolished.
The copyright system will be expanded to include the information technology sector.
An “exemption for Vinted” will be introduced, allowing occasional online sales, such as reselling children’s clothing, to be tax-free up to €2,000 annually, eliminating the risk of a 33% tax.
To deter incorporation, the minimum remuneration for company directors will rise from €45,000 to €50,000, and from 2026, if over 20% of compensation is in fixed benefits, a separate 10% tax will apply to the excess.
The spousal quotient will be gradually phased out.
Finally, the tax reduction on unemployment benefits will be removed eventually, and integration income will become taxable, accounting for all income received by the taxpayer.
