New regime for expatriates as from 01/01/2022

Articles

The program law of December 27, 2021 mentions a new regime for expatriates coming to Belgium. Under this new legislation, there is a Special Tax Regime for Incoming Taxpayers and a Special Tax Regime for Incoming Researchers. The social security authorities confirmed on February 7, 2022 that they will also grant an exemption for this regime.

New regime as from 01/01/2022

When applying for the special tax regime, certain additional conditions have to be met. The minimum gross salary should amount to EUR 75.000 per year. This amount includes the monthly salary, holiday pay and year-end bonus. On top of that it includes several types of benefits 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 is not required for researchers, but they 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. Besides that, it is required that these persons are active within the company within a research function ant this for at least 80% of their working time.

The new special tax regime will only be applicable 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).

Additional (new) conditions

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 retime. The new regime will be applicable for Belgian nationals, as long as they meet these conditions for the past 5 years. 

The new expat regime now also applies to Belgian nationals, provided they have met all the conditions during the last 5 years.

Costs proper to the employer (free of tax and social security)

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 tax system was already confirmed through the Program Law of December 27, 2021. It was confirmed in this law that the abovementioned reimbursements are free of taxes.

Meanwhile, the social security authorities (NSSO) have confirmed that these benefits are free of social security, as is the case in the old expat regime. The non-taxable travel exclusion that is currently in place, will no longer exist under the new regime.

Tax residency

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.

 

Transitional period

The new regime will apply to employments or assignments starting in Belgium as from 01/01/2022 onwards.

For employees benefitting of the old special tax regime for less than 5 years, the possibility is foreseen to opt for the new rules by requesting the application before 30/07/2022. The years under the old 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 old special tax regime don’t opt for this possibility or the opt-in is refused, a transitional period of 2 years is available (until 31/12/2023), after which the expats will become Belgian tax residents. 

Summary

  • As of January 1, 2022, a new expat regime is applicable in Belgium for (foreign) employees. 
  • You must take into account new conditions; 
  • One of the conditions is a minimum gross salary of EUR 75.000 on annual basis;
  • The new expat regime also applies to Belgian nationals, provided they have met all the conditions for the past 5 years.
  • The non-taxable allowances can amount to max. 30% of the gross salary (capped to EUR 90.000). 

More information?

As a client of Baker Tilly, you can contact Audrey De Bevere, Individual Tax Partner, Yves Coppens, Individual Tax Partner or your file manager.
No client yet? Contact us for a no-obligation appointment.