New exit rules for Belgian tax benefits: better to leave on the 15th instead of the 14th?
Last week the Belgian tax authorities published an administrative guideline on the prorating and limitation of certain tax benefits, deductions and allowances in case the taxpayer arrives in Belgium after 1 January or leaves the country before 31 December (nr. 2018/C/17.
Up till now resident taxpayers could benefit from the entire amount of the allowance or deduction, even when they arrived in Belgium, for example, in December or left the country already in January of a given calendar year. For non-resident taxpayers the same rule applied, taken into account the limitations of the so-called ‘75%-rule’.
The prorating of certain benefits is now introduced when the taxable period of the taxpayer does not correspond to a full calendar year, for a reason other than death. It will be applicable to private individuals (residents or non-residents) who transfer their tax residence during the calendar year from Belgium to another country or vice versa.
The prorating will be applied by multiplying the amount of the benefit or allowance by a fraction of which: (i) the numerator is equal to the number of months of the taxable period; and (ii) the denominator is equal to 12.
To determine the number of months of the taxable period that the taxpayer was in Belgium and therefore entitled to the benefits; each calendar month is calculated for a full month if the taxpayer is still in Belgium on the 15th or arrives before the 15th. The result is rounded up to the higher or lower multiple of 10.00 EUR, depending on whether or not the amount calculated reaches 5 EUR.
For the purpose of your income tax calculation, the following – most common – benefits will be prorated in the upcoming tax filing (tax year 2018 / income year 2017):
- the basic personal tax allowance (EUR 7,270.00) and the increased allowance in case of low earnings;
- the increased allowance for individuals with a disability, with dependent children and/or other dependents;
- the maximum amount of EUR 440.00 of the tax credit for ‘children’;
- the basic amount of EUR 1,880.00 and the maximum amount of EUR 2,260.00 EUR for the federal reduction for ‘long-term savings’ and ‘home-building savings’;
- the maximum amount of EUR 940.00 for the reduction for pension saving;
- the maximum amount of EUR 100,000.00 for the reduction due the acquisition of new shares from start-up companies;
- the maximum amount of EUR 376,350.00 EUR of charitable donations that qualify for a tax reduction;
- the minimum amount of EUR 3,840.00 EUR for the remuneration paid for employing house staff, as well as the maximum allowed deductible amount of EUR 7,530.00;
- the tax exempted amount of EUR 1,880.00 for (interest) income from regulated savings accounts;
- the (new) exempted amount of EUR 416.50 of dividend income received after 1 January 2018;
- the maximum amount of EUR 58,720.00 of income taxable as royalty income from the transfer or licensing of copyrights;
- the maximum lump-sum expense deduction of EUR 15,660.00 and EUR 31,320.00 EUR that can be claimed on royalty income;
- the maximum amount of EUR 390.00 for the tax-free reimbursement by the employer for expenses due to home-work travel;
- the different income bands and the maximum allowed amount for the lump-sum business expense deduction for employees, self-employed and company directors;
- the maximum amount of EUR 10,490.00 for the dependent spouse allowance (‘marital quotient’) for a partner with no or little earnings;
- the maximum amount of EUR 14,490.00 in respect to officials working for an international organization to consider them eligible for the standard tax allowances or not;
These are only the most common tax benefits, allowances and deductions. For a full overview we can refer to the administrative guideline nr. 2018/C/17 that can be consulted on the website of the Belgian tax authorities (www.fisconetplus.be).
These new measures apply as from tax year 2018 (income year 2017), except for the prorating of the (new) tax exempted amount of dividends of EUR 416.50 that only applies to dividends received as from 1 January 2018 (tax year 2019).