Belgium country tax guide

1. Languages used by the local tax authorities

There are three official languages in Belgium: French, Dutch and German.

Belgium is composed of four language areas: the Dutch language area (Flanders), the French language area (major part of Wallonia), the German language area (small part of Wallonia) and the bilingual (French/Dutch) Brussels-Capital area. In principle, contacts with public authorities (such as the tax authorities) are made in the language of the area where they are located. 

As an exception, there are some municipalities with linguistic facilities that benefit from a special regime. When such municipalities are located in Flanders or Wallonia, both French and Dutch can be used for contacts with public authorities. In the German-speaking part of Belgium, both German and French can be used.

Foreign documents should be translated into the applicable national language(s) when provided to the Belgian tax authorities.

2. Main corporation tax characteristics

Corporate tax rate/additional taxes / global aggregate rate

The taxation of Belgian companies relies on a territorial basis. Subject to specific anti-abuse provisions, Belgian companies carrying on a trade or business abroad are generally not taxed in Belgium on these profits and cannot offset the related losses. 

Corporate income tax is levied at a rate of 25%. However, SMEs companies can benefit from a reduced tax rate of 20 % on the first bracket of EUR 100,000 profit provided that certain conditions are met.

SMEs companies are companies which, on the balance sheet date of the last closed financial year, do not exceed more than one of the following criteria: 

• number of employees, as an annual average: 50;
• annual turnover, excluding value added tax: EUR 11 250 000;
• balance sheet total: EUR 6 000 000

Exceeding or ceasing to exceed more than one of the criteria only has an impact if this situation occurs during two consecutive financial years. Specific rules apply for companies belonging to a group.

Corporate wealth tax

Belgian legislation provides for an annual tax on securities accounts (“TSA”) which can be described as a type of wealth tax for individuals or companies.

The TSA rate is set at 0.15% and applies on securities accounts with an average value exceeding EUR 1,000,000. 

However, the amount of the TSA may not exceed 10% of the difference between the tax base and the threshold of EUR 1,000,000.

The average value of assets is calculated on four specific dates: 31 December, 31 March, 30 June and 30 September.

Financial instruments (shares, bonds, etc.) as well as cash invested in securities accounts are both included in the tax base.

With regard to securities accounts held by Belgian residents or that are part of the assets of a Belgian permanent establishment, this tax applies to both Belgian and foreign securities accounts. For non-residents, the tax applies on securities accounts held in Belgium, unless a double tax treaty prohibiting such kind of wealth tax is in place.

Specific tax regime for dividends /interest/ capital gains

Dividends, interests and capital gains are subject to Belgian corporate income tax at normal rate (in principle, 25%) except in the following cases:

• Under the participation exemption regime, dividends received by a parent company established in Belgium are, in principle, fully exempt from any tax provided that the following main conditions are cumulatively met:
• the participation in the distributing company has been held in full ownership for an uninterrupted period of at least 12 months (or commitment to hold the shares for at least 12 months) (detention condition); 
• the participation amounts to at least 10% of the share capital or has an acquisition value of at least EUR 2,500,000 (participation condition); the distributing company is subject to an ordinary CIT regime (taxation condition). 
• Following the same conditions as the participation exemption regime, companies can be fully exempt from taxation on capital gains realized upon disposal of the participation they own in other companies.
• The Interest-Royalties Directive as implemented in Belgian tax law provides for an interest withholding tax exemption for interest paid or accrued between qualifying related companies, inter alia requiring for the companies: (i) to have an indirect or direct minimum share participation of 25% or having a common direct or indirect parent company holding such 25% direct or indirect minimum participation in both companies during a minimum holding period 
  of 1 year; (ii) to be a tax resident of a EU Member State; and (iii) to be subject to the domestic corporate income tax regime.

Existence of exempt companies or companies subject to a reduced tax rate

Belgian tax law does not provide for any general regime of exemption.

As mentioned above, SMEs companies can benefit from a reduced tax rate of 20% on the first bracket of EUR 100,000 profit provided that certain conditions are met. The main condition is that it has to pay a minimum fee of EUR 45,000 per year to at least one individual company director, or possibly lower depending on the taxable income of the company.

3. Main personal income tax characteristics

Personal income tax rate / additional taxes / global aggregate rate

Personal income tax relies on the concept of residence. 

According to the Belgian tax law, residents of Belgium are those persons who have established their domicile or the seat of their wealth in Belgium. This implies that if the place where an individual has his permanent home (where his spouse and children live) or the place where an individual has the center of his economic interests, is located in Belgium, the individual qualifies as a Belgian resident.

Belgian tax law provides two legal presumptions with respect to Belgian tax residency:

• Individuals who are entered in the population register are presumed to be Belgian tax-resident unless they demonstrate that their actual tax residence is situated outside Belgium.
• The tax residence of married individuals is located at the place of the family’s de facto residence, i.e. where the spouse (and any children) reside.

For Belgian tax authorities, facts prevail over the taxpayers’ intentions. If it is found that a person has his/her residence elsewhere than at his/her registered address, the tax authorities are entitled to ignore the residence as indicated in the population register. Tax residence therefore essentially depends on factual criteria. Above all, tax residence is the place where a taxpayer effectively and continuously resides. In other words, the place from where he lives his life, where he works and from where he manages his estate.

Subject to tax treaties, Belgian tax residents are liable to Belgian income tax on their worldwide income whereas non-residents are liable only on their Belgian source income.

The applicable personal income tax rates (tax year 2024):

Any mechanism considering the family position?

Married couples and individuals living under legal cohabitation (official civil union) are subject to a joint taxation regime. However, the income of each individual is taxed separately at the progressive income tax rates.

For married couples or legal cohabitants, the “marital quotient” mechanism applies, meaning that part of the taxable income of the partner who earns the most is allocated to the other partner for tax calculation purposes only. 

Furthermore, tax exemptions apply for some categories of dependent persons (mainly the taxpayer’s children).

Where the persons at charge are children, the following amounts are deductible:

A disabled child is considered as two children. Additional exempted amounts are provided for children under 3 years old.

Specific taxation of dividends /interest/ capital gains?

Interest and dividends are, in principle, taxed at a distinct rate of 30%. An option for the standard progressive income tax is available if the progressive rates are more favourable. 

Reduced 20% or 15% rates are applicable for dividends distributed by SME’s if a certain number of conditions are met.

Generally, capital gains realized by individuals outside their business activities are not taxable provided that the transaction is part of the normal management of private assets.

However, the Belgian tax on savings income provides for a 30 % taxation on the interest-bearing part of capital gains (Belgian TIS) realized by Belgian resident individuals on certain investment funds provided that more than 10% of the underlying assets are invested in debt-related products (bonds, cash deposits, etc.).

Furthermore, capital gain deriving from the sale of a building that is sold within 5 years following its acquisition is taxed at a 16,5 % rate, except if the building sold was the private residence of the seller (tax exemption). Stricter provisions apply for the sale of an unbuilt land.

Beneficial regimes

Since 2022, Belgium has set up a new special tax regime for qualifying expats. This new regime replaces the former special regime for foreign executives.

The purpose of the new regime is to attract high added value employees, directors participating to the daily management of the company and specialized researchers in Belgian companies, Belgian establishments of foreign companies or non-profit associations.

To be eligible to the preferential regime, the qualifying expatriate must be recruited outside of Belgium or be assigned in an intra-group context. During a period of 60 months prior the beginning of employment in Belgium, the expatriate may not have been a Belgian tax resident or subject to Belgian non-resident tax on professional income in Belgium or have lived closer than 150km from the Belgian borders. 

The main benefits of this preferential regime are the following:

• Payment by the employer of recurring expenses due to employment in Belgium (i.e. additional expenses compared to the country of origin concerning accommodation, cost of living, travel expenses to the country of origin, etc.) is considered as a tax-exempt reimbursement of costs proper to the employer up to an amount not exceeding 30% of the gross annual remuneration, with an annual ceiling of EUR 90,000.
• Specific reimbursements of non-repetitive expenses incurred by the employer are considered as tax-exempt expenses proper to the employer (e.g. moving costs, first installation costs during first six months and school fees).

The regime is applicable for a period of 5 years with a possible 3-year extension.

Personal wealth tax

As mentioned above for corporate wealth tax, Belgian legislation provides for an annual tax on securities accounts (“TSA”) which can be described as a type of wealth tax for individuals or companies.

The TSA rate is set at 0.15% and applies on securities accounts with an average value exceeding EUR 1,000,000. 

However, the amount of the TSA may not exceed 10% of the difference between the tax base and the threshold of EUR 1,000,000.

The average value of assets is calculated on four specific dates: 31 December, 31 March, 30 June and 30 September.

Financial instruments (shares, bonds, etc.) as well as cash invested in securities accounts are both included in the tax base.

With regard to securities accounts held by Belgian residents, this tax applies to both Belgian and foreign securities accounts. For non-residents, the tax applies on securities accounts held in Belgium, unless a double tax treaty prohibiting such kind of wealth tax is in place.

Gift and inheritance tax rates

Subject to applicable tax treaties, gifts and inheritance transmissions are subject to Belgian taxes in the following cases:

Gift tax and inheritance tax vary depending on the Region in which the donor / deceased is domiciled or, if not domiciled in Belgium, on the Region in which the real estate asset is located. The applicable tax rate also depends on the family ties between the donor/deceased and the beneficiary.

For gift of movable assets, the following flat taxes apply:

Regarding movable property, manual gifts and indirect gifts are exempt from gift tax if they are not registered. Registration is not mandatory in those cases but if the donor dies within 3 years (in Flanders and Brussels) or 5 years (in Wallonia) or even 7 years (for certain types of gifts in Flanders) years as of the date of the non registered gift, the beneficiary will need to pay inheritance tax on the value of the gift.

Gift of immovable property must be registered, and the following progressive rates apply in the three Regions:

The taxable basis for registration duties for a gift is the value of the full ownership of the gift, even when the donor only gives the bare ownership of an asset and retains the usufruct.

When the property of an asset is split between a usufruct holder and a bare owner, the full ownership is carried over to the bare owner at the end of the usufruct duration (which could be the lifetime of the usufruct holder) without any liability for tax purposes.

The following inheritance tax rates apply in direct line and between partners

Inheritance of the family home can benefit from a favorable regime (reduced rate or exemption).

In order to encourage the activity of family-owned businesses, reduced tax rate (or even, tax exemption) apply on the gift or inheritance of family enterprises and companies.

Belgium does not have such a regime.

HNWI may obtain a visa and a residence permit by proving they have sufficient means of subsistence. There are no legal criteria, and the application will be subject to the government’s discretionary decision.

Belgian citizen and individuals having a Belgian visa or residence permit are allowed to travel within the Schengen Space with a passport and, if required, a visa. These rules can be currently modified due to the specific provisions taken to face the Covid-19 pandemic.

Trusts and similar foreign structures are not known under Belgian civil law but Belgium recognize structures set up under applicable foreign laws.

Public and private foundations can be set under Belgian law. Private foundations are regularly used for estate planning purposes.

These vehicles, when located abroad, generally qualify as “legal constructions” under Belgian tax law and are subject, since 2015, to a look-through taxation regime (also known as “Cayman tax”). 

Therefore, natural persons considered as the founders of a foreign legal construction shall be taxed as if the income obtained by the legal construction has been directly received by the Belgian resident founder, even if the income is not actually distributed to the founder. 

Furthermore, distributions from legal constructions to the Belgian resident founder are taxed as dividends at a flat rate of 30 % except if the founder can demonstrate that the distribution is derived from income that has already been subject to Belgian income tax regime or represents the initial contribution (which is deemed the latest to be distributed).