Paying 2017-2018 income tax in Belgium? Read this.

TransferWise content team
18.12.17
10 minute read

Keeping on top of your tax liabilities is essential. Getting it wrong can prove a costly hassle. If you discover your responsibilities too late, you could be saddled with extra costs, and even criminal charges. And paying your tax bill as an expat can be especially tricky. If you’re a cross border commuter, a non-resident foreigner living in a different country for a short while, or a freelance or remote worker, it can be hard to know where your tax liabilities lie.

Even within the EU, there is no single law which dictates how a citizen who lives or works abroad should be taxed. It’s important to understand your own personal situation, and especially which country you’re considered tax-resident in. Usually, this country can tax your total worldwide income - even if you’re not a citizen.

Tax is a complex legal area. This helpful overview of the income tax system in Belgium is a great starting point. However, if you think you might be liable to pay tax on some or all of your income in Belgium, take some professional advice to work out exactly what you owe.

(Source 4 December 2017)

What income is taxable in Belgium?

If you’re considered a tax resident in Belgium you’ll have to pay tax on your worldwide income to the Belgian authorities. If you’re not a tax resident in Belgium, you still have to pay some tax there, but usually this will only be due on money you’ve earned in Belgium.

Generally there’s no tax to pay on capital gains, but there is on real estate profits and any money you earn from investments. There are a number of allowances which might reduce the overall amount you have to pay tax on. For example, some professional costs could be deducted from your earnings before tax, as well as any relevant tax-free allowances.

You might also be liable for a local income tax, which is set by the municipal government. These communal taxes vary from 0-9%, depending on where exactly you live. Non-residents might still need to pay these taxes, at an average of 7%, depending on the situation. Consult a tax lawyer to make sure you know exactly what you have to pay.

(Source 1, Source 2, Source 3 4 December 2017)

Who has to pay income tax in Belgium?

How your tax liabilities are worked out depends a lot on your personal circumstances. There are different ways of calculating taxes depending on your status. You might be deemed:

  • A resident taxpayer
  • A non-resident taxpayer

Resident taxpayers spend the majority of their time living in Belgium and have to pay tax on their worldwide income to Belgian authorities. If you spend less than half the tax year in Belgium, you might qualify for non-resident status. That means you’re liable in Belgium only for taxes due on money you’ve earned in Belgium. However, the rules on this classification are very strict, so it’s a good idea to get advice if you’re unsure of your status.

(Source 4 December 2017)

Resident income tax

You’re considered a resident taxpayer if you’ve lived in Belgium for at least half of the tax year in question. In this case, you have to pay tax on any income you make anywhere in the world, to Belgian authorities. In Belgium, the tax year runs the same as the calendar year, so 1 January through to 31 December.

(Source 4 December 2017)

Non-resident income tax

If you live in Belgium for less than 6 months of the tax year, you’re likely to be considered a non-resident. This means you pay tax in Belgium only on income you’ve earned in Belgium, either through employment or through things like rental income. You might be liable for taxes in addition to this elsewhere in the world.

This might be the case if you’re a foreigner working just part of the year in Belgium, or if you’ve moved there as an expat, but only arrived part of the way through the tax year, which is the same as the calendar year. The rules around non-resident tax status are pretty strict though to discourage people from trying to lower their tax burden by simply claiming not to be a tax resident in Belgium. If you think you’re a non-resident, then you can expect to have to prove it on your tax return.

(Source 4 December 2017)

In what instances do Belgian residents working abroad need to pay income tax?

If you’re a Belgian resident, but work abroad for some of the tax year, it’s important to check what your tax liabilities are.

If you work abroad for less than half of the tax year - so you’re away for under 6 months of that specific year - and live and work in Belgium for the rest of the tax year, then you probably need to declare all your earnings in Belgium. You’ll then have to pay tax on all of your worldwide income there.

However, if you’re abroad for more than half of the year - 183 days or more - you might be considered a non-resident taxpayer and need to pay tax in Belgium only on income you’ve earned there.

What are the income tax rates in Belgium in 2017-2018?

Belgium has a progressive tax system. That means that a progressively higher tax rate is applied based on how much you earn.

If you’re employed in Belgium, your employer might deduct some money from your wages every month to cover the expected tax bill at the end of the year. This is known as a précompte professionnel or bedrijfsvoorheffing. However, you probably still need to complete a tax declaration to ensure everything is paid and cover any other earnings. This tax declaration is also where you can claim any exemptions or allowances.

If you’re paying taxes for the 2017-2018 tax year in Belgium these are the rates that will apply:

Annual income range Belgium income tax rate (%) 2017
up to €11,070 25%
€11,070 – €12,720 30%
€12,720 – €21,190 40%
€21,190 – €38,830 45%
over €38,830 50%

(Source 4 December 2017)

What are the tax exemptions in Belgium?

Tax is applied on taxable income only. Basically, you start with your entire income from work and, in some cases, earnings from things like investments and real estate. Then, to work out your taxable income, you deduct social security contributions you’ve paid as well as professional expenses.

Depending on your circumstances, you might also be able to deduct an allowance for your spouse, known as a dependant spouse allowance, or you might be able to attribute some of your income from self employment to your spouse if they helped you with your work. You might also be eligible for other tax breaks depending on your personal situation and residency status. To be eligible for any of these allowances you have to include them on your tax declaration.

Social contributions

Your taxable income doesn’t include social contributions paid to your mutual society. These social contributions are paid to either a private or mutual insurance society, sometimes connected to a trade union. Paying into these societies is compulsory for many people in Belgium, as they provide a form of health and disability insurance should it be needed.

Professional expenses

You can deduct professional expenses, including things like travel expenses, and in some circumstances the cost of accommodation or uniforms for work. You can either declare your actual expenses, or claim a standard legal amount which is based on your profession and earning level.

Dependant spouse allowance

You can allocate some of your earnings to your spouse if their income doesn’t exceed 30% of the total amount you earn as a couple. This can reduce the overall amount of tax you have to pay.

Assistant spouse deduction

If you’re self employed, but your spouse helps with your work, you might be able to assign some of your income to them. This could bring down the overall tax liability you have to pay between you, because of the progressive nature of the tax system.

(Source 4 December 2017)

What are the tax penalties in Belgium?

If you don’t pay the tax you owe, or file your tax return late, you might be liable to pay a fine, or find that the amount of tax you must pay increases. That’s because the tax authorities will make assumptions about what tax you might owe if you don’t file a return. That won’t include any details of exemptions or allowances you might be entitled to, so your tax bill will finish up higher than it should be.

If you then want to change the amount of tax you’re charged, the burden of proof is on you to show that you should be entitled to any exemptions or allowances. Getting it right first time is far easier.

(Source 4 December 2017)

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What sort of double taxation agreements are there with Belgium?

There can be situations in which you’re liable to pay tax in 2 countries. This could theoretically be the case if you’re a cross-border commuter or if you travel to different countries very often for work, for example. To make sure that people don’t actually need to pay double the amount of tax that should be due, many countries enter into double taxation agreements. These help to ensure that you only pay tax once on your earnings.

Belgium has double taxation agreements with the following countries:

Belgium double taxation agreements

Albania Lithuania
Algeria Luxembourg
Argentina Macedonia
Armenia Malaysia
Australia Malta
Austria Morocco
Azerbaijan Mauritius
Bahrain Mexico
Bangladesh Mongolia
Belarus The Netherlands
Bosnia Herzegovina New Zealand
Brazil Nigeria
Bulgaria Norway
Canada Pakistan
Chile Philippines
China Poland
Croatia Portugal
Cyprus Republic of the Congo
Czech Republic Romania
Denmark Russia
Ecuador Rwanda
Egypt San Marino
Estonia Senegal
Finland Serbia and Montenegro
France Singapore
Gabon Slovenia
Germany Slovakia
Georgia South Africa
Ghana Spain
Greece Sri Lanka
Hungary Sweden
Hong Kong Switzerland
Ireland Taiwan
Iceland Thailand
India Tunisia
Indonesia Turkey
Israel Ukraine
Italy UAE
Ivory Coast UK
Japan USA
Kazakhstan Uruguay
Kuwait Uzbekistan
Korea (South) Venezuela
Latvia Vietnam

(Source 4 December 2017)

Should I file a tax return?

You must file a tax return every year if you’re liable for tax in Belgium. The tax year is the same as the calendar year - from 1st of January 2017 to 31st of December 2017. However, you’ll get a notification that you have to file your return a few months later, usually around May. The exact date it has to be submitted will be shown on your return, that date is usually by the end of June. Most people complete their tax returns online in Belgium, although you can opt to send it in the post instead if you prefer.

(Source 4 December 2017)

How do I pay income tax in Belgium?

The majority of taxpayers in Belgium submit their tax declaration online. This is usually far faster and easier than completing a paper declaration, although this is still possible if you’d rather send your forms in by post. The Belgian tax authorities recommend the online tax submissions because the programme is designed to help identify and eliminate common mistakes. You are also usually given a slightly longer time to submit your tax return online compared to sending in a paper declaration.

Paying income taxes online

If you want to pay your taxes online, you’ll need to use one of the following ways to access the system:

  • Your ID card, a card reader and your PIN number
  • A token - which includes access codes, and must be applied for in advance
  • A wireless card reader, ID card and PIN
  • A unique access code generated through your smart phone

Which documents you need to submit will depend a lot on your personal situation. However, you’re advised to upload some scanned documents. For example, if you’re claiming deductions or allowances, these documents will support your application and can save you time and hassle later.

If you’re paying your taxes in Belgium, but you have a bank account held in a different country or currency, it’s important to take into consideration any charges that will be added to the transfer you make to pay your taxes. If you need to convert your money from a different currency to pay your Belgian taxes in euros, it could cost you more than you think. That’s because regular banks and money exchange services often use unfair exchange rates. Instead of offering the real mid-market rate, which you’d find on Google, they can mark up the rate by 4-5%, and keep the difference as their profit.

If you’re an expat and need to pay your taxes in Belgium, a great alternative is to use TransferWise. Because TransferWise works differently to banks, you can get your money transferred quickly and safely, using the real exchange rate, and a small upfront fee. This isn’t magic. It works because TransferWise don’t use the pricey SWIFT system for making bank transfers. The costs are reduced, and the savings are passed on to the customer. Depending on the circumstances, you might be able to pay your taxes directly using a TransferWise transfer, or if you don’t already have a bank account in Belgium, you could transfer the payment to a friend or family member who does, to bring down the costs.

If you often have to move your money between different currencies, a new TransferWise borderless multi-currency account could make life even simpler - and save you some money too. You can hold your money in any one of dozens of different currencies - including euros - and then switch between currencies whenever you need to. You get the real exchange rate, and there’s only a small transparent fee for changing currencies.

(Source 4 December 2017)

Taxes are a difficult topic for everyone. And it can be even more complicated if you’re an expatriate working abroad, a cross-border commuter, or if you juggle life between different countries. It’s important to know what your options and duties are when it comes to tax, as getting it wrong can be an expensive mistake. Whatever taxes you need to pay, you don’t want to lose out because of unfair fees levied on converting the currency. TransferWise might be able to help you save money on cross-border transactions. See if you can get a better deal from TransferWise if you find yourself needing to pay your taxes abroad.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content is the publication is accurate, complete or up to date.

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