Announcement by the Belgian government to replace the current special tax status for expatriates by a new regime – update
Further to our article of 04/11/2021, we hereby provide you with an overview of changes that would take place on behalf of expats. Please note that this overview is prepared based on a draft law that has been filed last week in parliament and therefore is not final. The text will have to pass through several bodies before it will become official and therefore some elements might change before the final vote of the new legislation.
The plan is to implement the new legislation on 01/01/2022.
When applying for the special tax status, certain additional conditions will have to be met. The minimum gross salary should amount to EUR 75.000 per year. This amount would include the monthly salary, holiday pay and year-end bonus. On top of that it would include several types of benefit in kind (company car, computer, …) and bonuses. This condition will have to be met at the moment that the new status is claimed (at the start of the employment), but also in all following years for which the new status is applied.
This condition will not be required for researchers, but they will have to hold either a master’s degree in specific expertise areas (natural sciences, applied sciences, medical sciences, agricultural sciences and engineering) or have a least 10 years of relevant experience in these fields. It is indeed required that these persons are active withing the company within a research function ant this for at least 80% of their working time.
Additionally, the employee may not have been a Belgian tax resident, been subject to Belgian non-resident income tax or live within 150 km of the Belgian border in the period of 60 months prior to the employment in Belgium. In the past, a person with the Belgian nationality could not benefit of the expat status. The new regime will be applicable for Belgian nationals, as long as they meet these conditions for the past 5 years.
The new special tax status will only be applied for maximum 5 years on behalf of the employee, with the possibility of a 3-year extension.
If one of the conditions is not met anymore at a certain point in time, the status will definitely be lost (for example, if the employee does not meet the threshold of EUR 75.000 in a certain year due to lower bonuses).
Calculation of benefits
The EUR 11.250 or EUR 29.750 limit of non-taxable allowances will no longer exist and will be replaced by tax exempted costs proper to the employer of maximum 30% of the employee's gross salary (same element are taken into account as for the limit of EUR 75.000). Very important is that the amount of tax-free allowances is not included in the gross salary and will have to be paid on top of the agreed salary (min. EUR 75.000). It is considered as a reimbursement of costs linked to the employment in Belgium (cost of living, cost of housing, …). The reimbursement of these costs should be maximum 30% of the gross salary, with a general cap of EUR 90.000 on annual basis. The employer can of course decide to reimburse less than 30% of the gross salary. The general rules of costs proper to the employer (representation allowance, working from home allowance, …) can be paid on top of these specific allowances linked to the employment in Belgium.
The non-taxable travel exclusion that is currently in place, will no longer exist under the new regime.
For the moment, it is not yet clear whether the social security authorities will apply an exemption on the same basis of 30%. We are still awaiting input from their side in this respect.
The normal residency rules will apply on the employees. Persons that are considered as non-resident under Belgian domestic rules, will have to provide an attestation of residency in another country. Persons that will qualify as Belgian residents, will be taxable on their worldwide income in Belgium. This might have an important impact compared to the old expat regime where an expat only had to declare his Belgian professional income. They will however, as Belgian residents, be able to benefit from the protection foreseen in the double tax treaties in case they worked in a foreign country or receive foreign income.
The new regime will apply to employments or assignments starting in Belgium as from 01/01/2022 onwards.
For employees benefitting of the current special tax status for less than 5 years, the possibility is foreseen to opt for the new rules by requesting the application before 30/06/2022. The years under the current regime will be deducted from the 5 (or 8 years) period that the employee can benefit of the new regime. In case the employees benefitting of the current special tax status don’t opt for this possibility or the opt-in is refused, a transitional period of 2 years will in principle be available, after which the expats will become Belgian tax residents.
We emphasize that the above mentioned still has to be approved before becoming legislation. Changes are therefore possible.