Belgium has a complex taxation system that can be confusing for expats living and working in the country. In this article, we will explain how the taxation system works in Belgium, whether the country offers any double taxation agreements, the main taxes expats need to be aware of, any special tax breaks that could apply to expats, how and when to file a tax return as an expat, and the tax exit procedures for anyone leaving Belgium to move abroad.
The Taxation System in Belgium
Belgium operates a progressive taxation system, where the tax rate increases as income increases. Residents in Belgium are taxed on their worldwide income, while non-residents are only taxed on income earned within the country. The Belgian taxation system consists of federal, regional, and local taxes, which are administered by different levels of government.
Double Taxation Agreements
Belgium has signed double taxation agreements with several countries to avoid double taxation for individuals and companies. These agreements ensure that income is not taxed twice in both countries, which can result in a significant tax burden for taxpayers. Some of the countries that have signed double taxation agreements with Belgium include the United States, Canada, and the United Kingdom.
Main Taxes in Belgium
As an expat in Belgium, there are several taxes that you need to be aware of. The main taxes include income tax, social security contributions, and value-added tax (VAT).
Income tax
Income tax in Belgium is levied on all income earned by residents, including employment income, rental income, and capital gains. The tax rate ranges from 25% to 50%, depending on the income level. Non-residents are only taxed on income earned in Belgium, and the tax rate is generally higher for non-residents.
Social security contributions
Social security contributions in Belgium are compulsory for all residents who work in the country. The contributions are used to fund the country’s social security system, which provides benefits such as health care, pensions, and unemployment benefits. The contributions are based on the income level and are generally around 13% of the gross salary.
Value-added tax (VAT)
Value-added tax in Belgium is currently set at 21%. The VAT is applied to the sale of goods and services in the country, and it is paid by consumers. As an expat, you will need to pay VAT on any goods and services that you purchase in Belgium.
Special Tax Breaks for Expats
Belgium offers several tax breaks for expats who live and work in the country. These include the expatriate tax regime, which provides tax breaks for highly skilled workers who are employed by a Belgian employer or an international organization based in Belgium. The regime provides a tax-free allowance for housing costs, as well as a tax-free allowance for other expenses, such as school fees and home leave.
Filing a Tax Return in Belgium
As an expat in Belgium, you are required to file a tax return if you have income earned in the country. The tax year in Belgium runs from January 1st to December 31st. The tax return must be filed by June 30th of the following year. To file your tax return, you will need to obtain a tax identification number (TIN) from the government. You will also need to gather all the necessary documentation, including income statements and receipts for any deductions. The tax return can be filed online through the government’s tax portal or in person at the tax office.
Tax Exit Procedures for Leaving Belgium
If you are leaving Belgium to move abroad, you will need to follow certain tax exit procedures. The first step is to inform the government that you are leaving the country and that you are no longer a tax resident. You will need to complete a deregistration form, which should include your personal details, the date of departure, and your new country of residence. You will also need to settle any outstanding tax liabilities, including income tax and social security contributions.
If you have any assets in Belgium, such as property or investments, you may also need to pay any applicable taxes before you can transfer ownership. It is important to consult with a tax advisor before leaving Belgium to ensure that you have fulfilled all your tax obligations and to avoid any future tax issues.
Belgium has a complex taxation system that can be challenging for expats living and working in the country. The main taxes that expats need to be aware of include income tax, social security contributions, and value-added tax (VAT). However, Belgium offers several tax breaks for expats, including the expatriate tax regime, which provides tax-free allowances for housing costs and other expenses. If you have income earned in Belgium, you are required to file a tax return by June 30th of the following year. If you are leaving Belgium to move abroad, you will need to inform the government and settle any outstanding tax liabilities, including income tax and social security contributions.