Managing Taxes In Belgium As An Expat

Migrating to a different country usually comes with some initial challenges. Millions of qualified foreign workers live and work in Belgium. For many, the priority is to send remittance transfers to their families. They depend on trusted services like the Ria Money Transfer App. Familiarizing oneself of the new taxation landscape is one of the things that take priority soon after relocating.

Here is a look at ways to mitigate the tax burden as an overseas worker in Belgium

Special status

The tax rate in Belgium is among the highest in the EU. According to the prevailing tax brackets, individuals earning more than EUR 41,000 annually may have to pay income tax as high as 50%. There are also mandatory social security contributions. The social security contribution (employees’ part) in Belgium is 13.07% of salary. Self employed persons pay higher rates of the social contribution. There are also local and municipal taxes in Belgium, which vary by location for locals. Expats usually pay these on a flat rate.

Expats can reduce the tax burden with special tax brackets and concessions. Concessions can help reduce the annual social security contributions and taxes. The precise amount of tax a foreigner pays in Belgium depends on whether they are registered as a resident or a nonresident. In most cases taxpayers are automatically classified into the applicable category. However some expats get the option to register themselves voluntarily as nonresidents. This option is available to defined categories of specialists, researchers, directors, and foreign executives working temporarily in Belgium.

Tax exemptions

The primary benefit of having a special tax status is the ability to claim tax exemptions on one-time and recurring expenses. One-time costs include the amount spent on finding a home in Belgium. It also includes expenses incurred in moving from one’s home country to Belgium.

Recurring expenses can include house rent, school fees (depending on the school – public/private), and so on. These can be paid by employers as ‘allowances’. For the purpose of tax allowances are treated differently from income.

One-time and recurring expenses can both be exempt from income tax. The upper limits for exemptions are different for each. The prerequisite is that these costs must be paid by the expat’s Belgian employer. They may be paid periodically, as lump sums, or against claims.

The qualification for these exemptions is not direct and automatic. Expats must apply jointly with their employers for the tax exemptions within 6 months of arrival in Belgium. Applicants must qualify in terms of nationality (foreign), employment status (employed by a Belgian firm), and so on. Applicants must also be registered for Belgian social security and pension before applying for the exemption.

Double taxation

Belgium has treaties with more than 90 countries to prevent double taxation for foreign nationals working in Belgium. Those residing in Belgium for more than 6 months (183 days) of the year can be categorized as residents. Residents also pay tax in Belgium on their income from other countries. Exploring double taxation relief can be useful for those who fall into this category.

Note that residents in Belgium are eligible for certain personal allowances. Allowances can represent significant euro amounts for families with children. Registering as a nonresident can make you ineligible for these benefits. Carefully compare the tax rates in Belgium with your home country for your specific income (from both countries) to choose the optimum tax route. Remember to take into account your family situation. The presence of a large and vibrant migrant community in Belgium means that expats can always seek professional, personalized tax advice.