Belgium has had a special tax regime to attract foreign talent since 1983. It was recently reformed in 2022 to offer more legal certainty for foreign taxpayers.
Since income taxes in Belgium are high, the expat regime offers significant tax benefits compared to the normal income tax rates in Belgium.
How does it work?
As part of your salary package, under the expat tax regime, your employer can grant you a tax free allowance equalling (at most) 30% of your gross salary. This allowance is also exempt from social security contributions.
On top of that, expenses related to your move to Belgium, the furnishing of your residence (max. 1.500 EUR) and the school costs of your children can also be refunded free of tax by your employer.
The maximum amount of the 30% allowance is 90.000 EUR.
What does this mean for you?
Assume your salary is 7.200 EUR/month (= ~100.000 EUR/year gross, most employees receive 13,92 months of salary per year):
- As a normal taxpayer, you would be left with ~53.000 EUR/year after tax. The average tax rate would be ~47%.
- As a taxpayer under the expat regime, and assuming your employer would be willing to maximise the 30% threshold, you would make ~44.000 EUR/year after tax. You would also get a tax free allowance of 23.000 EUR/year.
This totals 67.000 EUR/year, compared to the 53.000 EUR/year as a normal taxpayer. You would end up with an extra 14.000 EUR/year, because your average tax rate ends up being lower (33% vs 47% for a normal taxpayer).
Who can use it?
The expat regime can be used in two cases. One is for employees and corporate directors, the other is for researchers.
For employees and directors there is a gross minimum salary threshold of 75.000 EUR/year. Directors who take up a directorship in a local entity also cannot own more than 25% of the business.
In the case of researchers, the gross minimum salary threshold does not apply. However, they need to hold a master's degree in a specific scientific area (natural sciences, applied sciences, medical sciences, agricultural sciences and engineering) or have at least 10 years of relevant experience within these fields.
To make use of the special regime, you must also be recruited from abroad and not have had a link with Belgium in the 60 months prior to your employment.
That means for the last 5 years you may not have been a Belgian tax resident, been subject to Belgian non-resident tax, or have lived within 150 km of the Belgian border.
The tax regime runs for an initial period of 5 years, and can be extended once for an additional 3 years. Belgian nationals can also make use of it, provided they fall within the previously mentioned parameters.
Within 3 months after the start of your employment, your employer needs to make a special declaration to the Belgian tax authorities so you can make use of the expat tax regime.
You can also take a look at our Slideshare presentation on the topic.