Belgium has introduced a new special tax regime for foreign executives and researchers. The old regime was based on an administrative tolerance that dates back to 1983, and was in urgent need of an update. The new regime is now available to expats arriving in Belgium on or after 1 January 2022.
The Belgian tax authorities have recently issued an administrative circular (Nr. 2022/C/9, dd. 21 January 2022) in which they provide a two-year transition period during which the old regime can still be continued or, under certain conditions, a possibility to already opt-in for the new regime.
- Employment started in Belgium on or after 1 January 2022
Applications for obtaining the old special tax status can no longer be submitted for expats who started working in Belgium in 2022. Those employees can potentially only benefit from the new regime, if the conditions are met and this is confirmed by a positive decision issued by the Belgian tax authorities.
- Employment started in Belgium before 1 January 2022, but the application for the expat tax status has not yet been submitted
If an expat started working in Belgium before 1 January 2022, the standard application period of 6 months (under the old regime) continues to apply. Those executives that remain eligible for the old tax status (e.g. if you started working in Belgium in December 2021 or before), need to submit their application by 30 June 2022 the latest. No further extension (beyond the 6-month deadline) is possible and the conditions as stipulated in the Administrative Circular of 8 August 1983 continue to apply.
If the special status is granted, the old tax regime remains applicable until 31 December 2023. Foreign executives who cannot make full use of this two-year transitional period (e.g. because the employment in Belgium is terminated in the course of 2022 or 2023), are not able to reapply afterwards for the old regime under a new employment contract. After 2023, the old regime will no longer exist.
- Employment started in Belgium before 1 January 2022, and the expat status under the old regime has been approved
Under certain conditions, those who benefit from the old expat regime can opt for the new one if they want (opt-in). A request for this needs to be filed before 31 July 2022. It should be noted that this option is only available to those expats who have been under the old regime for 5 years or less. If the authorities approve the application, the new tax status will apply retroactively as of 1 January 2022.
If the decision is negative or the executive prefers not to opt-in, the new regime will not apply and the employee will stay under the old expat status until 31 December 2023. In that case, the two-year transition period will remain in place, after which the expats will lose their status and become Belgian tax resident. In any case, if it is clear that you(r employees) do not meet the conditions of the new regime, there is obviously no point in applying for it.
In view of this, those Belgian companies that currently employ expats, need to check if their employees should opt-in or better stay under the old regime for the time being. The below comparison illustrates the impact on the employee’s earnings after deductions are taken out under the old vs. new regime.
| Gross-to-net salary calculation (tax year 2023) | |||
| old vs. new expat status | |||
| Old regime | Old regime | New regime | |
| (0% travel) | (20% travel) | 2022 | |
| Total cost employer | 122.187,50 | 121.484,38 | 118.750,00 |
| Gross salary | 100.000,00 | 100.000,00 | 100.000,00 |
| Social security contribution | 11.599,63 | 11.232,03 | 9.802,50 |
| Gross taxable salary | 88.400,38 | 88.767,97 | 90.197,50 |
| Cost proper to the employer | 11.250,00 | 14.062,50 | 25.000,00 |
| Correction expat allowance | 0,00 | 2.812,50 | 0,00 |
| Foreign travel exclusion | 0,00 | 15.503,59 | 0,00 |
| Business expense deduction | 5.040,00 | 5.040,00 | 5.040,00 |
| Personal tax-free allowance | 9.270,00 | 9.270,00 | 9.270,00 |
| Taxable income | 62.840,38 | 47.704,38 | 50.887,50 |
| Total income tax | 25.997,19 | 18.429,19 | 20.020,75 |
| 0 € up to 13,870.00 € (25%) | 3.467,50 | 3.467,50 | 3.467,50 |
| 13,870.00 € up to 24,480.00€ (40%) | 4.244,00 | 4.244,00 | 4.244,00 |
| 24,480.00 € up to 42,370.00 € (45%) | 8.050,50 | 8.050,50 | 8.050,50 |
| over 42,370.00 € (50%) | 10.235,19 | 2.667,19 | 4.258,75 |
| Municipal surcharge (7% average) | 1.819,80 | 1.290,04 | 1.401,45 |
| Special social security contribution | 731,28 | 691,00 | 731,28 |
| Annual net salary | 59.852,10 | 68.357,74 | 68.044,02 |