Changes to Belgian special tax status expected in 2022

The Belgian government has approved a draft bill in which changes for the new Belgian special tax status for foreign executives and specialists are embedded. The limited duration of the tax benefits, the minimal remuneration threshold, and the ‘30%-rule’ are the most profound changes. The changes will be effective from January 1, 2022.

As a reminder, the aim of this special tax regime was to attract highly skilled and qualified foreign individuals to Belgium in return for a reduction in Belgian income tax and social security contributions, due to the high labour cost in Belgium. To obtain this special tax status, both the employer and employee needed to demonstrate, amongst other things, the temporary nature of the assignment or employment in Belgium or that the employee was hired abroad.

Changes to expat tax concessions

Firstly there will be, a limitation on the duration of the special tax regime whereby the expat can benefit from the expatriate status for a period of 5 years (which can be extended by up to 3 years). Each year, prior to January 31, the employer will need to demonstrate that all requirements are still fulfilled to continue to benefit from the “new” expat status.

Next, the Belgian government has tackled so-called ‘statelessness’. Expats who plan to move to Belgium will, as a general rule, become Belgian residents for income tax purposes. Consequently, they will be taxed on their worldwide income (with the ability to claim treaty protection to avoid double taxation). 

An important change is that a minimum gross salary of EUR 75.000,00 is required to be eligible for the new Belgian special tax status regime.

Also, ‘tax-free allowances’ for costs of expatriation are replaced by a tax exemption of a maximum of 30%of salary (with the tax-free amount capped at EUR 90.000,00).  In addition, certain specific costs (such as relocation costs and school fees) will not be limited and can still be reimbursed tax-free by the employer.

Lastly, the regime will be open to individuals who have Belgian nationality.  Any applicant will need to meet certain conditions.  These are that, during a period of 60 months prior to the first working day in Belgium, the expat may not have lived in a city that was located less than 150 km from the Belgian border, nor may the expat have been subject to any tax in Belgium, nor was (s)he considered a Belgian tax resident in that period.

We want to stress that the above points are based on draft legislation and assume that no further changes will be made. Once the final bill has been approved and published, we will provide you with more and final details.

In conclusion, it is important to be aware that for assignments to Belgium from 1 January 2022, these new rules will be applicable to determine whether an individual can qualify for the special tax regime in Belgium.