Personal income tax

Personal income tax is due by all “inhabitants of the Kingdom”. According to section 3(1) of the Belgian Income Tax Code of 1992 (“BITC”), inhabitants (“residents”) of Belgium are those persons who have established their residence or the seat of their wealth in Belgium.

More information on who is liable Belgian personal income tax

Income liable to personal income tax comprises the following four categories:

• real estate income
• income from movable property (investments)
• miscellaneous income
• earned income

For each of these categories, there are specific rules for calculating net taxable income.

More information on overview of personal income tax

Each piece of property (land, buildings and possibly machinery and equipment) located within Belgian territory is in principle subject to real estate tax.

More information on real estate income

A distinction needs to be made among three types of income of movable property. Income from movable property can be taxed separately, in which case the following rates apply:

More information on income from movable property

This third category of taxable income includes all income that is not earned by performing occupational work. Miscellaneous income is generally taxed separately. We summarise the most common payments that qualify.

More information on miscellaneous income

Earned income comprises wages, salaries and other remuneration received in respect of an occupational activity. There are six categories of occupational earnings:

• employee salaries and wages
• company directors’ emoluments
• profits from agricultural, industrial and commercial activities
• earnings from a liberal profession (certain knowledge and not trade-based service professions, e.g. medical, legal, etc.)
• profits and proceeds from former occupational activities
• replacement income: pensions, early retirement payments, unemployment benefit, health insurance benefits, etc.

More information on earned income

Certain expenses qualify for tax relief. The eligibility conditions are detailed below. The deductions fall into one of two categories:

• Long-term savings and investments in property: deduction for sole own dwelling, life assurance premiums, mortgage capital repayments, mortgage interest, pension savings schemes, group insurance and pension funds, purchase of employer shares
• Other expenses: child care expenses, maintenance allowances, gifts, domestic servants' wages, LEA cheques and service cheques, expenses for the purposes of saving energy, cleaner cars

More information on expenses qualifying for tax relief

Earned income comprises wages, salaries and other remuneration received in respect to an occupational activity. There are six categories of occupational earnings:

• Expatriate tax status
  As a general rule, assignees who move to Belgium are considered tax-residents in Belgium. Consequently, they are liable to Belgian income tax on their worldwide income. However, most employees assigned to Belgium pay "non-resident income tax" because they apply for the special expatriate tax status, which was introduced to make it easier for multinational companies to transfer executives and specialists to Belgium
• Planning for top executives
  In order to avoid costly employer social security contributions (35% of uncapped gross pay), top executives' salaries can often be optimised in Belgium by the use of self-employment or a personal management company (PMC)
• Tax-friendly compensation techniques
  Belgian law defines pay very broadly, from both a tax and a social security viewpoint. This means that, failing any specific exceptions or exemptions, all pay components qualify as taxable income and are subject to standard income tax and social security. Many companies employing staff in Belgium take advantage of the existing rules to include tax-friendly components in their compensation packages. Here we review some of the most interesting ones
• Share-based incentives
  Share-based incentives are an important feature in optimising the remuneration of executives in Belgium
• Investment income for individuals
  Investment income and capital gains are taxed favourably in Belgium, making it an attractive investment location for individual taxpayers. Belgian real estate taxation also opens the way to tax-efficient investments
• Split taxation
  Split taxation is a possibility in which an individual performs work for companies established in various countries with which Belgium has double taxation treaties. Depending on the circumstances, the taxation of salary or directorship emoluments may be split over the various countries involved. The split will generally result in a lower overall tax burden than if personal income tax had been levied only in Belgium

More information on Personal tax planning