Turning point
The Court of Justice of the European Union (CJEU) has recently delivered an important decision on the Belgian system of supplementary taxation for non-residents. In its ruling of 12 March 2026 (Nr. C-119/24, CHEFQUET), the Court concluded that the current regime is incompatible with the ‘principle of free movement’ within the EU.
This ruling is significant. It directly affects non-resident taxpayers with Belgian-source income and opens the door to potential refund claims for prior years.
Current Framework
Belgian resident individuals are always subject to a municipal surcharge on top of their personal income tax. This surcharge is set independently by each municipality, which means rates vary across the country. In practice, they range between 0% and 9%, with an average of around 7%.
Non-residents are treated differently. Because they are (usually) not linked to a specific Belgian municipality, they are not subject to this local surcharge. Instead, they pay a federal supplementary tax at a flat rate of 7% (since income year 2004). This federal tax was introduced as a substitute for the municipal surcharge, with the aim of ensuring that both residents and non-residents contribute equally to the financing of public services in Belgium.
What triggered the decision
The recent case involved a French resident couple who earned a salary in Belgium and owned Belgian real estate. As non-residents, they were subject to Belgian taxation on that income, including the 7% supplementary tax. They challenged this additional levy, arguing that it resulted in a heavier tax burden compared to certain Belgian residents. Their case eventually reached the CJEU.
Comparable situations, different outcomes
A central question for the Court was whether residents and non-residents are in a comparable situation. Their answer was ‘yes’.
Both groups earn income taxable in Belgium and benefit from the infrastructure and services that make such income possible. The fact that the surcharge is levied at municipal level for residents and at federal level for non-residents does not alter that conclusion. Despite this comparability, the outcome differs. Residents are subject to a variable surcharge depending on their municipality, while non-residents are always taxed at a fixed rate of 7%.
Indirect discrimination
The Court found that this difference in treatment amounts to indirect discrimination.
While the rules do not explicitly distinguish based on nationality, non-residents are in practice more likely to be foreign taxpayers. As a result, the system disproportionately affects individuals from other EU Member States.
Importantly, the Court clarified that the regime is incompatible with EU law insofar as it may lead, in certain cases, to a higher tax burden for non-residents than for residents. This conditional test is key: the system does not need to disadvantage all non-residents to be unlawful, its mere potential to do so is sufficient.
Disproportionate by design
Belgium argued that the system ensures a fair contribution from non-residents to public finances. The Court accepted that this is indeed a legitimate objective.
However, the mechanism used to achieve it was found to be excessive. A fixed rate that may exceed what certain residents pay is not appropriately calculated. In other words, the system goes further than necessary and therefore fails the proportionality test.
Problematic consequence
It was previously argued that a uniform rate corresponding to the average of all Belgian municipal surcharges would not, in itself, be discriminatory. The Court, however, does not follow that reasoning.
The reasoning of the Court leads to a striking implication. If non-residents must never be taxed more heavily than any resident, the benchmark effectively becomes the lowest municipal rate in Belgium. Since at least one municipality (i.e. Knokke-Heist) applies a 0% surcharge, this raises fundamental questions about whether any positive federal rate can still be justified.
Possible alternatives
In his opinion, the Advocate General of the CJEU suggested less restrictive approaches. These include applying a uniform surcharge to both residents and non-residents, or linking the non-resident surcharge to the municipality where the income is generated. While legally more robust, such solutions would be complex to implement in practice, given the large number of municipalities in Belgium.
Refund opportunity?
The recent judgment creates immediate opportunities for affected taxpayers.
Non-residents who have paid the 7% supplementary tax may be entitled to reclaim it. In practice, this amount can always be clearly identified as a separate line item on the Belgian tax assessment, making verification relatively straightforward.
Recovery can be pursued through a standard appeal procedure or, in some cases, through a retroactive correction mechanism. Importantly, decisions from the CJEU are generally treated as ‘new’ developments, which means older tax years (beyond the standard 12-month appeal deadline) may also be revisited, subject to certain procedural conditions (i.e. via an ‘ex officio’ tax relief request that is valid for 5 years).
Given that the surcharge amounts to (only) 7%, it is obviously important to assess whether the cost of pursuing an objection procedure outweighs the potential financial benefit of a refund.
Legislative outlook
The Belgian Minister of Finance has already indicated in Parliament that the current regime will need to be amended following the judgment. At this stage, however, no concrete timeline has been communicated, nor is it clear whether the supplementary tax will be abolished entirely or replaced by a revised mechanism intended to comply with EU law.
This legal uncertainty is likely to persist in the short term.
Broader impact
Although the case was examined in the context of cross-border employment and the related Belgian salary, its implications go further.
The same reasoning is expected to apply to self-employed individuals operating across borders and to investors holding Belgian assets, such as real estate. In certain cases, even taxpayers residing outside the EU may rely on similar protections, as the ‘free movement of capital’ extends to nationals of third countries (not only EU nationals).
Key Takeaway
This judgment fundamentally challenges a long-standing feature of Belgian non-resident taxation. The current system, built on a fixed federal surcharge, is now clearly at odds with EU principles. Legislative reform appears unavoidable, although designing a workable alternative will not be an easy task.
For taxpayers, the key takeaway is practical: there is a real opportunity to recover overpaid taxes, and timely action will be essential.