Expats in Belgium have until 31 July to change tax regime

Expats in Belgium have until 31 July to change tax regime
Credit: Benoit Doppagne / Belga

Expats living in Belgium will have to decide on whether to change to a new tax regime based on their income and frequency of travel.

From 1 January, an old tax decree for foreigners that has been in place since 1983 was replaced by new tax rules that are less advantageous compared to the previous one, which was considered too expensive for public finances, reported L'Echo.

The new rules apply to all new expats who arrive in Belgium. An estimated 24,000 expats already living in Belgium were included under this transitional tax regime for two years.

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If expats wish to benefit from the new regime, they have until 31 July to make the request to Belgian tax authorities. If they do not change their tax status, they will have the same status as Belgian taxpayers and risk suffering a financial impact, unless their employers decide to compensate them.

So how does the new regime differ from the old one?

The old tax regime considered expat workers non-residents, which gave them benefits such as only being taxed on days actually worked in Belgium.

Under the new tax rules, expats are instead entitled to be reimbursed for expenses at a maximum of 30% of their salary. The allowance, which covers costs resulting from employment in Belgium, is exempt from tax.

In addition, the employer may contribute to the cost of moving house to a residence in Belgium and school fees for children. However, that requires expats to have neither lived nor worked in Belgium for more than five years before taking on their role. The rule also applies to those who have not lived within a 150-kilometre zone around the Belgian border.

The rules mean that roughly 24,000 expats in Belgium may not be able to claim the benefits of the new tax measures, as the tax authorities may interpret the tax conditions in a restrictive manner.

Not for everyone

There is a requirement to receive a salary of at least €75,000 per year, except for researchers, which excludes a lot of young talent from benefitting from this regime.

Expats who benefit from the old tax rules, have high salaries and who travel a lot are less likely to be interested in switching to the new regime. However, people who earn between €75,000 and €300,000 could find it beneficial.

It is unclear whether the new tax rules will allow Belgium to attract more expats. However, some specific tax laws in place for expats look important to attract talent, especially as most of Belgium's neighbours have specific tax rules for foreigners, except Germany.

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