Droit Fiscalité belge

Special rules have been issued by the Belgian tax authorities concerning the tax treatment of foreign executives, researchers and specialists working temporarily in Belgium.

A.      ELIGIBLE PERSONS

1.  The special tax regime applies to non-Belgian executives who exclusively perform activities which require a special knowledge and responsibility, thus executive functions, and who work in Belgium because:

-    they have been seconded to Belgium by a foreign enterprise to work temporarily in one or several branches of said enterprise, or in one or several companies controlled by the enterprise; or

-    they have been seconded to Belgium by a foreign enterprise which is part of an international group, to work temporarily in one or more Belgian companies which are part of said group, or in a controlling and coordinating office set up within the international group; or

-    they have been directly recruited abroad by a Belgian company affiliated with a foreign company, or by a Belgian enterprise that is part of an international group, to work temporarily for the Belgian company or enterprise itself or in a controlling and coordinating office established in Belgium by the international group.

2.  Provided that their activities in Belgium are temporary, the special tax system also applies to:

-    foreign company directors performing permanent functions in the branches or companies mentioned above;

-    foreign specialized personnel of the above-mentioned branches or companies who are so specialized that such recruitment in Belgium is extremely difficult, if not impossible;

-    foreign researchers sent from or directly recruited abroad to perform their activities in laboratories and scientific research centres.

3.  The person in question has to demonstrate that he/she has maintained ties abroad, such as:

the residence of the spouse or children abroad;

the availability of a home outside Belgium;

the fact that the executive’s children continue to be educated outside Belgium;

the ownership of real estate or personal property outside Belgium;

the existence of a life insurance policy outside Belgium;

the continued participation in a non-Belgian group insurance policy or any other non-Belgian pension or savings plan;

the insertion of a “diplomatic clause” in the Belgian lease agreement;
the continued participation in a non-Belgian social security system.

B.      TAX CONCESSIONS

The benefits consist in a number of exclusions from the taxable income, they come in two forms :

1.  Expatriate allowances and Reimbursements qualifying for exclusion

Some so-called expatriate allowances (tax equalization, housing allowance, cost of living allowance, home leave allowance), are treated as reimbursement of extra expenses which are to be borne by the employer, rather than the employee. They are therefore not taxable in the hands of the individual employee.

A distinction is made between non-repetitive expenses and repetitive expenses.

Most non-repetitive expenses are fully deductible from the taxable income. The excludable portion of repetitive expenses is however restricted to EUR 11.250  per annum for expatriate personnel employed by operating companies, and to EUR 29.750 per annum for expatriate personnel employed by controlling and coordinating offices or research centres.

The rules concerning excludable allowances and expense reimbursements are very detailed. A brief summary is provided below, but further investigation should be made before making conclusions in specific cases.

The following expenses are considered, among others, to be non-repetitive expenses:

-   moving costs on arriving in Belgium and on leaving Belgium;

-   the cost of setting up and decorating a home in Belgium and other costs of first installation in Belgium.

Education expenses for the expatriate’s children in primary or secondary schools while repetitive in nature, are not subject to the maximum amounts mentioned above and may therefore wholly be excluded from the taxable income. However, the Circular distinguishes between education expenses incurred in Belgium or abroad.

Repetitive expenses, other than qualifying education expenses are excluded up to the EUR 11.250 and EUR 29.750 limits referred to above. Repetitive expenses which qualify for exclusion include:

o        Allowances granted to cover the differences in cost-of-living and housing between Belgium and the expatriate’s country of origin.

o        Home leave allowances.

o        Educational leave allowances

o        Tax equalization.

However, the actual allowance paid does not in all cases qualify for exclusion. Instead, the allowance must be analysed to see whether it has been determined by the employer in the way provided under the Circular drafted by the tax administration.

Expatriates who are paid on a lump-sum basis, rather than receiving specific allowances, may benefit from a lump-sump computation of those allowances. They are based on a “Technical Note” issued by the tax authorities, which provides formulas for inputting various repetitive allowances.

2.  Exclusion for Foreign Work Days:

An additional benefit under the expatriate regime is then provided to individuals who travel on business.

The remainder of taxable remuneration, after exclusion of the allowances mentioned above may further be reduced in proportion to the business time spent by the expatriate outside Belgium. Precise rules are provided for determining what qualifies as work days performed outside of Belgium.

The taxpayer must prove the reality of the days present abroad and that these days were spent in the pursuit of his professional activity.

C.      FORMALITIES FOR OBTAINING AND RETAINING THE TAX CONCESSIONS

Entitlement to the tax concessions provided in the Circular is not automatic. All expatriates and their employers must file a special application with the Expatriate Tax Directorate in Brussels.

The application must be filed within six months from the first day of the month following the employment or secondment to Belgium.

If the application is approved, the expatriate will be regarded tax wise as a “non-resident” of Belgium for this purpose, thereby entitling him to the benefits of the Circular.