New law on the expatriate tax regime.
Since 1983, Belgium has a favourable tax regime for expatriates which is based on a circular letter. The Belgian government announced that the current expatriate tax regime will be replaced by a new regime. The new law on the revised expatriate tax regime is expected to be published in the Belgian Official Gazette before year end and will normally be applicable as from 1 January 2022.
To qualify for the new regime, the individual must either be directly recruited abroad or seconded by a foreign company (part of a multinational group) to carry out a remunerated activity in Belgium.
The individual must comply with several cumulative conditions:
- for the 60 months prior to the start of employment in Belgium:
- he has not been a Belgian resident,
- he has not been living within a distance of 150 km from the Belgian border,
- he has not been subject to tax as a non-resident for professional income in Belgium, and
- he must receive a remuneration of more than EUR 75,000 (gross remuneration before deductions for social security contributions, but excluding severance pay, compensation for temporary loss of remuneration, social benefits, and cost proper to the employer (see below on 30 percent)) for services rendered in Belgium per calendar year.
The individual will be subject to the normal residence rules.
No conditions exist regarding nationality (Belgian nationals, foreign nationals, or dual nationals are eligible) or regarding the level of education (except for certain inbound researchers).
Benefits of the New Expatriate Tax Regime
The reimbursement of recurring expenses arising directly from secondment or employment in Belgium up to a maximum lump sum of 30 percent of the gross remuneration with a cap of EUR 90,000 per year is considered tax-free. These costs proper to the employer are paid in addition to the individual’s gross remuneration.
Subject to conditions, certain additional costs proper to the employer (relocation, furnishing, school fees) can also be reimbursed tax-free.
Duration of Expatriate Tax Regime and Transitional Period
The new expatriate tax regime will be applicable for a period of five years, with a possible extension of three years.
As a transitional measure, the existing expatriate tax regime can remain applicable for two years (2022 and 2023), but only for expatriates who started working in Belgium before 31 December 2021.
Expatriates who are currently benefitting from the expatriate tax regime and whose employment in Belgium started after 1 January 2017 can opt to switch to the new regime if conditions are fulfilled. They have until 31 July 2022 to make this choice.
Procedure to Obtain the Expatriate Tax Regime
An electronic application for the expatriate tax regime will have to be filed by the employer within three months following the start of the individual’s employment in Belgium and, if applicable, within three months after the expiration of the first five years of employment.
The new expatriate tax regime is also applicable for qualifying inbound researchers (employees only, i.e. not company directors).
The main difference with the expatriate tax regime for inbound employees/directors who are not researchers, as stated above, is that there is no condition for the remuneration threshold (i.e., the minimum salary of EUR 75,000 is not applicable for researchers).
KPMG can assist with screening your current expatriate population on the eligibility for the new expatriate regime and advise on the application of the new expatriate regime for future hires.