Two recent court rulings indicate that fiscal authorities are toughening up on taxes for expats in Belgium.
Expats in Belgium have enjoyed a relatively lax tax regime since 1983, when a "legal fiction of non-residence" was introduced to ensure that externally earned income could not be taxed by the Belgian State.
"The expat regime in its current form was introduced to encourage international companies to draw talent to the country," KPMG partner Carolien Van Echelpoel told The Brussels Times in January. "It included a number of favourable tax measures, which lightened the country's heavy tax burden for expats coming to work here."
However, reforms in January 2022 sought to correct several measures favourable to expats. It abolished the fiction of non-residence, introduced salary caps and created a time limit for expats benefiting from the regime (the status now only applies for five years – some beneficiaries enjoyed the scheme for more than 20 years beforehand).
Two significant court cases
Now, two court rulings imply that tax rules for expats will become even more stringent. In the first ruling that dates back to April 2023, tax authorities refused to allow a French expat, who has lived in Belgium since 1984, to benefit from the 1983 regime because they no longer met the conditions, particularly as their stay was no longer "temporary".
In January this year, a second ruling decreed that an English expat could no longer benefit from the regime following a change in employment contract. The individual was also fined for failing to declare a trust as a "legal structure".
Both cases illustrate fiscal powers' desires to go further than the 2022 amendment and to closely monitor any kind of tax breaks granted to expats, L'Echo reports.
Of the 68,000 expats living in Belgium, "some are subject to a tax audit, to check whether all the conditions of the [1983 regime] have been met, as well as the reality and professional nature of the days worked abroad, which are therefore not taxable in Belgium. Others may still be audited," partner at Bloom Denis-Emmanuel Philippe told L'Echo.
