The formal request for the expat tax status needs to be submitted to the tax office normally within 6 months as from the 1st day of the month following the start date of employment or secondment in Belgium (Administrative instruction nr. Ci.RH.624/499.006, 18 June 1999). If the special status is granted, it will retroactively apply as from the initial starting date.
In case the application is late due to exceptional circumstances (e.g. illness, death of a close relative or extended business trip), the special status will only be allowed as from the initial starting date on the condition that the employee has not been subject to any resident taxation in Belgium since their arrival. If the taxpayer cannot demonstrate any ‘force majeure’, the expat status can only be granted as from the following income year.
Due to the COVID-19 pandemic, many countries have imposed travel restrictions or prevented people from travelling since early last year. In general, many were also less willing to travel, which resulted in a decline of business travel and many cross-border workers having to adjust their working schedule. Although employment contracts were still being signed and assignments were being set up, many foreigners were not able to make the move and start working in Belgium. Instead, employees continued working remotely, awaiting the opportunity to relocate with their family to Belgium.
While physically working abroad for a Belgian employer can have undesired tax consequences (which is topic for a different article), companies often also simply overlooked the deadline to submit the expat status request as their newly recruited employees remained working abroad.
It has been generally accepted that the COVID-19 pandemic qualifies as a situation of ‘force majeure’, which justifies a flexible interpretation of the relevant tax rules. In this context, the Belgian tax authorities currently allow that in some cases the starting date of the 6-month deadline can be extended, but only if certain conditions are simultaneously met.
The tax office distinguishes between (a) the situation where the employee remains a tax resident in their home country until the actual move to Belgium, and (b) the situation they are no longer a tax resident and not considered taxable on the Belgian salary in their home country.
If (i) the employee is unable to move to Belgium because of imposed travel restrictions; and (ii) the employer already bears the costs/the employee has been on a Belgian payroll since the initial starting date of employment; and (iii) the employee is not considered a resident for tax purposes in their home country and is as such not taxed during the period between the initial starting date and the actual relocation to Belgium, the tax office is of the opinion that nothing changes in that case. The starting date of the 6-month deadline is the date as stipulated in the initial employment contract, irrespective of the actual moving date to Belgium.
If the company missed the 6-month deadline, the latter will thus not be extended and the expat tax status will only be granted for the following income year, unless they would be able demonstrate different exceptional circumstances, as explained before.
However, when the employee is still considered a tax resident in their home country and continues to be taxed over there during the period between the initial starting date as mentioned in the contract and the actual relocation to Belgium, the tax office will only consider the latter to be the starting date for the 6-month deadline (as well as the moment as from when the employee will be considered taxable in Belgium).
Any applicant claiming ‘force majeure’ in respect to the 6-month filing deadline, should evidently be able to demonstrate this to the Belgian tax authorities on the basis of supporting documents. The tax authorities generally consider a tax residency certificate issued by the employee’s home country, to be sufficient for this.