What is an Assignment and How Does It Work?
A secondment involves an employee being temporarily assigned to another entity within the same international group of companies. In some cases, the employee may even be seconded to a different employer altogether, like a client or a business partner.
Tax Residency Rules for Employees on Secondment to Belgium
The idea is that the former employer ‘lends’ the secondee to the host but remains their employer for the duration of the assignment. If the host employer is a Belgian company, the parties involved need to make sure that the secondment complies with the relevant Belgian employment, tax, and social security requirements.
If the employee arrives in Belgium and registers here, he will automatically be considered a tax resident who is liable here for taxes on their worldwide income. However, if the stay in Belgium is only of a temporary nature and the employee retains closer social and economic ties with their home country, they could apply for a non-resident tax status in Belgium instead. If this application is successful, the employee will only pay tax here on their Belgian source income.
When Is Salary Taxable in Belgium During an Assignment?
In this context, the salary will only be considered taxable in Belgium if it is paid or the salary cost is borne by the Belgian host. If the salary is paid by the former employer abroad, the salary will not be taxable in Belgium if the employee stays (not only working) in Belgium as the country of employment for less than 183 days in any period of 12 months. As soon as the Belgian secondment lasts for more than 183 days, the salary will be taxable here and a Belgian tax return will need to be filed.
How to Benefit from Belgium’s Expat Tax Regime for Seconded Employees
It is important to mention that a special tax regime is also available to certain foreign executives, specialists, and researchers who are temporarily assigned to Belgium. Under this special regime, the seconded employee can benefit from a tax exemption up to 30% of their gross salary. The new Belgian expat tax regime has been introduced in January 2022.
Social Security Exemption for Seconded Employees in Belgium
The employee may also be exempt from Belgian social security for the duration of their secondment, within an EU context or if a bilateral social security treaty is in place with the home country. If certain conditions are met, the employee can continue to pay social security abroad while working in Belgium. This is typically demonstrated with a portable ‘A1’ document or with a certificate of coverage from a foreign social security authority. This ‘PD A1’ is normally valid for a period of up to 24 months.
The LIMOSA Declaration: A Key Requirement for Foreign Workers in Belgium
Any foreigner working in Belgium, paying social security abroad, also must complete a mandatory LIMOSA declaration. This declaration enables the Belgian authorities to monitor any foreign employees that are active here but are not paying into the Belgian system.
TAXPATRIA® regularly advises on cross-border assignments and make sure you are fully compliant when temporarily seconding employees to Belgium.