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
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.
that their activities in Belgium are temporary, the special tax system also
- 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
person in question has to demonstrate that he/she has maintained ties abroad,
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 :
allowances and Reimbursements qualifying for exclusion
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.
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.
expenses are considered, among others, to be non-repetitive expenses:
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.
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
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:
Allowances granted to cover the differences in
cost-of-living and housing between Belgium
and the expatriate’s country of origin.
Home leave allowances.
Educational leave allowances
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.
for Foreign Work Days:
benefit under the expatriate regime is then provided to individuals who travel
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
Precise rules are provided for determining what qualifies as work days
performed outside of Belgium.
taxpayer must prove the reality of the days present abroad and that these days
were spent in the pursuit of his professional activity.
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.
: The information in this note is for general interest only and should not be
relied upon for practical use without the assistance of a lawyer.