2021-10-19-KPMG_Global-Belgium_–_Government_Announces_Revamp_of_Expatriate_Tax_Concessions_3页_359kb

Belgium - Government Announces Revamp of Expatriate Tax Concessions

Core Content

The Belgian federal government has announced the framework for the 2022 budget, which includes significant changes to the expatriate tax concessions. These concessions, previously outlined in a Circular letter rather than the Income Tax Code, are set to be replaced by a new regime. While the full details of the new rules are not yet available, the government has outlined several guiding principles that are expected to shape the upcoming legislation.

Main Points and Key Information

• Revamp of Expatriate Tax Concessions:
  The existing expatriate tax concessions, which provided benefits to expatriates working in Belgium or recruited from abroad by a Belgian employer, are to be withdrawn and replaced by a new system. This change is part of the broader 2022 budget reforms.

• Integration into Income Tax Code:
  The new tax concessions will be incorporated into the Income Tax Code, making them more transparent and enforceable. This is a significant shift from the current system, which relies on a Circular letter.

• Residence-Based Tax Treatment:
  Under the new regime, expatriates will be classified as either resident or non-resident taxpayers based on normal residence rules. This is a change from the current "deemed non-resident" status, which allowed expatriates to avoid reporting certain types of income.

• Taxation of Non-Belgian Source Income:
  Resident expatriates will be required to report and pay tax on non-Belgian source investment and real estate income, which was previously exempt under the current system.

• Time-Limited Concessions:
  The new tax concessions will be limited in time, although the exact duration has not been specified.

• Minimum Salary Requirement:
  To qualify for the new concessions, expatriates must meet a minimum annual gross salary threshold. This threshold is expected to be higher than the minimum salary required for obtaining a single permit for immigration purposes.

• Exemption Structure:
  The current system, which allows for an exemption of part of the remuneration and an exemption of income relating to work-days abroad, is likely to be replaced by a system similar to the Dutch 30% concessions. In this new system, a portion of the gross remuneration will be exempt, with a possible annual cap on the total exemption.

Implications

The changes to the expatriate tax concessions could have a major impact on:

• Tax Treatment: Expatriates may now be subject to more comprehensive tax reporting and liability.
• International Assignment Policies: Employers may need to revise their policies and cost structures for sending employees to Belgium.
• Assignment Planning: The new rules may affect how assignments are planned, particularly in terms of salary thresholds and tax planning strategies.

KPMG Note

KPMG highlights that the new rules must go through the standard law-making process, including formal proposals and parliamentary discussions. Therefore, it is crucial to monitor the development of these rules to understand the exact details, including the effective date and any transitional measures that may be introduced.

Contact Information

For further information or assistance, contact:

• Ferdy Foubert
  Tel: +32 2708 3817
  Email: ferdyfoubert@kpmg.com

• Olivier Vanneste
  Tel: +32 2708 45 51
  Email: ovanneste@kpmg.com

Additional Resources

• Belgian Prime Minister's Budget Agreement
• KPMG's Taxation of International Executives: Belgium

Conclusion

The proposed changes to Belgium's expatriate tax concessions represent a major shift in how expatriates are taxed. The integration into the Income Tax Code, residence-based classification, and potential new exemption structures are expected to bring more clarity and consistency, but also increase the tax burden on some expatriates. Employers and expatriates should closely follow the development of these rules to ensure compliance and effective tax planning.