An Offer You Cannot Refuse
On a daily basis Belgians move abroad, primarily for economic reasons and career opportunities outside the country. While some of these moves are permanent, many are only temporary. We have recently seen an increasing number of Belgians considering temporary employment in the UAE, mainly in Dubai and Abu Dhabi.
If you are contemplating a temporary move to the UAE, you should know that such a decision requires careful planning. Here, we outline the key legal aspects to consider.
Working Abroad, Still Taxed in Belgium?
Personal income tax is levied on the worldwide income of individuals who are considered Belgian tax residents. In case you remain a Belgian tax resident while taking up a job offer in the Middle East, you will need to report your UAE salary in your next Belgian tax return. If you will try to have your UAE-sourced salary exempted from taxation in Belgium, it might not work as you hope.
Belgium has a Double Tax Agreement (DTA) with the UAE, but since they currently do not levy personal income tax, the Belgian authorities do not apply the treaty and you will consequently be fully taxed on your earnings in Belgium. The fact that you will spend most of your working time in the UAE and visit Belgium only a few times makes no difference.
Therefore, if you want to avoid paying around 50% personal income tax on your UAE salary, you need to consider moving your tax residency away from Belgium, at least for the duration of the project. Alternatively, you could still attempt to invoke a tax exemption under the DTA. Belgium taxes salary but not necessarily business income earned in the UAE.
Subject-To-Tax Requirement and the UAE Corporate Tax Regime
The concept of ‘taxed’, as referenced in the DTA, means that income remains subject to a tax regime even if the tax laws of a contracting state explicitly exempt it, classify it as non-taxable, or if the competent authority chooses not to collect a legally due tax. According to the Belgian tax authorities, an income is considered ‘taxed abroad’ if it has undergone the tax treatment normally applicable in its country of origin.
While the UAE currently does not levy any personal income tax, it does tax business income, both for companies and individuals.
Historically, the UAE had no uniform Federal Tax System, with each emirate imposing its own tax rules, including a corporate income tax of up to 55% on foreign company branches. However, in practice, only foreign banks and oil companies were taxed. With Federal Decree-Law No. 47 of 2022, the UAE introduced a 9% corporate tax on income above AED 375,000, applying nationwide while allowing certain exemptions, particularly for Qualifying Free Zone Entities.
If you take on a temporary job in the UAE as a sole proprietor or self-employed contractor rather than as an employee, you could successfully claim a tax exemption on your UAE earnings in your Belgian tax return. The mere existence of a UAE corporate tax—even if not effectively applied to your income—should establish sufficient taxation to secure this exemption.
Avoid Belgian Tax Residency
Whether you qualify as a tax resident is a factual matter. Individuals who maintain permanent residence in Belgium are deemed Belgian tax residents (which is usually triggered by registering in our National Register).
Belgian tax law generally includes two presumptions of tax residency:
- Individuals registered in the Belgian population register are presumed to be tax residents, which can be demonstrated otherwise.
- For married individuals, tax residency is assumed to be where the family resides, which is normally a presumption that cannot be challenged.
A person’s residence is considered to be where their family, professional and economic interests are primarily located.
Additionally, individuals whose ‘seat of wealth’ is in Belgium are also classified as tax residents. The seat of wealth refers to the location from which an individual manages their private assets or where their economic interests are centered. However, in practice, this criterion is rarely ever used by the Belgian authorities.
In theory, if either of these two criteria (residence or seat of wealth) is met, the Belgian tax authorities will consider you a Belgian tax resident.
No 183-Day Rule in Belgium
There is no minimum duration of stay in Belgium that automatically changes your tax residency status. Each case is assessed based on a set of factual circumstances, but whether you stay more or less than 6 months in Belgium, does not matter.
However, the tax administration typically requires a minimum stay of 24 months in a fixed location abroad to establish foreign residency, as tax residency requires a degree of permanence. If you return before this period, you may still be considered a tax resident for the duration of your absence.
The additional challenge with the UAE tax treaty is that a tax resident is defined as someone who is subject to income taxation. Since the UAE currently has no personal income tax, the Belgian tax authorities normally do not recognize UAE tax residency for individuals.
Navigating the Consequences of Deregistration
In general, a (temporary) deregistration from the Belgian National Register is still recommended, especially if you plan to live and work abroad for an extended period.
Deregistering will have significant consequences. From a tax perspective, you will no longer be taxed on worldwide income, which is likely the primary reason for doing so. In any case, if you officially depart from Belgium, you are required to file a special (exit) tax return within 3 months after deregistration. If you continue to earn Belgian income (e.g. rent, investments, etc.), you may be taxed as a Non-Resident after you have left. In any case, your UAE salary will not be considered taxable in that case.
On the other hand, deregistering from the Belgian population register will have far-reaching consequences beyond what you might initially expect. It affects your eID validity, car registration, civic obligations, banking and probably a few other things we may have overlooked. Furthermore, you could lose access to Belgian social security and healthcare, requiring alternative coverage abroad.
If you are a non-EU national with a right of temporary stay in Belgium, deregistering will obviously complicate things even further.
What about Social Security & Medical Expenses?
Working abroad also affects your coverage under the Belgian social security system, especially if you deregister. If you work abroad, you will typically fall under the social security system of your host country instead of Belgium.
Belgium does not have a social security agreement with the UAE, meaning that time spent working in the UAE does not count towards your Belgian social security benefits. In the UAE, the national social security system primarily applies to UAE nationals and expats are excluded from it.
Your employer is required to provide private health insurance, and it is crucial to review your policy to ensure coverage for accompanying family members. If necessary, additional private insurance should be arranged.
During your employment abroad, you generally cannot return to Belgium for medical treatments under the Belgian system. Upon returning, re-enrollment in the Belgian healthcare system is possible but may involve a waiting period.
If you want to avoid gaps in your social security contributions, it is advisable to contact the Overseas Social Security (OSS) department, which is part of the National Social Security Office (NSSO) in Belgium. While costly, the OSS allows Belgian expatriates to continue contributing to pension, healthcare, and disability insurance while working abroad, ensuring uninterrupted coverage.
Do You Have the Right to Stay?
Unlike relocating within the EU as a Belgian national, moving to the UAE requires proper residency authorization, typically in the form of a visa. If you plan to work in Dubai or Abu Dhabi, a thorough understanding of immigration regulations is essential.
In most cases, your local employer will act as your sponsor and facilitate the visa and work permit application process. Your family members must also obtain the appropriate documents to accompany you.
Visa procedures can be time-consuming, often taking several months to complete. It is crucial to start the process well in advance to avoid delays.
Final Thoughts
Relocating to the UAE for work offers exciting opportunities but also comes with legal and administrative challenges. Proactively managing taxation, social security, and residency requirements will ensure a smooth transition and help safeguard your rights, particularly if you plan to return to Belgium in the nearby future.