Last Updated on 6th March 2025
Belgian authorities announced last year that the ‘special tax regime’, which previously benefited around 27,000 taxpaying expatriates, was ending and being replaced with a significant update effective from 1st January 2024.
The basics of this news meant that expatriates who could previously opt to be treated as non-residents for personal tax purposes would now be automatically categorised as tax residents, with all of their worldwide income and assets reportable and taxable in Belgium, double tax treaties notwithstanding.
Following the news, we’ve spoken with countless residents and families either currently living in Belgium and who had previously been enrolled in the scheme or who had incorporated the tax efficiencies available into their plans.
We have put together this brief guide to clarify what the changes mean and how they may have an immediate or longer-term impact on your finances.
Recapping the Reforms Made to the Special Tax Regime in Belgium
For those who have a forthcoming relocation to Belgium planned, we’ll summarise the key information you may need to know. Let’s start with the primary benefits of the old tax regime, which included:
- Exemptions on Belgian taxation against personal income arising from outside the country.
- Exclusions from reporting obligations imposed on tax residents.
- Tax exemptions or allowances and exclusions from Belgian social security contributions for some outgoings linked to employment assignments or contracts in Belgium.
The Belgian tax authorities elected to act following the identification of legal loopholes, which enabled longer-term residents to apply and claim eligibility – even though the initiative was created to encourage expatriates to move to Belgium for employment.
A ruling in the European courts compounded the issue, finding that tax exemptions granted to Belgian companies or multinational employers were non-compliant with EU legislation. This ruling further instigated the reforms.
Through the revised regime, only expatriates who meet a newly enforceable minimum income cap can comply with tighter eligibility criteria, and, importantly, the tax reductions are only available for between five and eight years.
New Criteria to Enrol in the Belgium Special Tax Status Regime
From 1st January 2024, those wishing to enrol in the scheme must be able to provide evidence that their gross salary is over €75,000. However, this excludes verified research professionals who do not need to meet any earnings threshold.
The direct impact is that the proportion of expatriates living in Belgium who will be able to benefit from lower tax burdens is significantly reduced, with estimates that only around 10% of previous claimants are likely to remain eligible.
Those working in Belgium who can prove they have a valid tax residency status outside of Belgium can continue to claim tax exemptions and allowances. In contrast, all others are expected to transition from non-resident to resident status for tax purposes.
However, the criteria are now much stricter and seek to ensure that the majority of expatriates and employers pay the full amount of domestic taxation on their worldwide income and assets in a country with a tax system that is considered the fourth highest in the world, according to the latest OECD figures.
The Impacts of Ineligibility for Special Tax Status in Belgium for Expatriates
Expats already living in Belgium may find that the outcome is a reduction in salary, given that the previously allowable write-offs have been replaced by a flat-rate 30% deduction at a maximum of €90,000 for work-related professional expenses. This means that ‘in-kind’ remuneration is now no longer tax-exempt.
Belgian employers have also been instructed to classify assistance with tax returns as a form of private expense reimbursement, not a business expense. This means the taxable benefits employees receive will cover a broader scope and lead to higher employment income and personal income tax liabilities.
How Ineligibility for the Special Tax Regime in Belgium Could Affect Your Tax Obligations
Otherwise, all expats earning under the €75,000 threshold will be reclassified as Belgian tax residents based on having their main home, employment and interests within Belgium, with several consequential outcomes:
- All foreign income will be reportable in Belgium, including earnings originating from other countries, with an expected higher tax burden.
- Resident’s reporting requirements apply, including declarations about foreign real estate held outside of Belgium, ownership of foreign bank accounts, reports of stock exchange transactions, and the disclosure of foreign security accounts valued at €1 million or more.
- Tax residents with life insurance products purchased from an overseas provider must disclose this within their annual tax return.
- Sales and acquisitions of overseas properties must be reported to the Belgian authorities within four months, although the deadline is reduced to 30 days for non-resident taxpayers who become tax residents after the first day of each tax year.
In addition, reporting deadlines for tax returns are earlier for tax residents, who are expected to submit returns by 15th July each year if filing online or by 30th June if submitting a paper tax return.
Therefore, expatriates living in Belgium may need to take decisive and swift action to ensure compliance, not only with meeting their tax liabilities but also with adhering to the shorter declaration and tax filing deadlines.
Advice on Tax Management for Expatriates in Belgium Impacted by the Reforms to the Special Tax Regime
Our guidance is always to reach out to our accomplished local team based in Brussels to ensure you fully understand how the reforms affect your finances and tax planning and to check that any decisions you make are supported by professional, independent advice.
Much might depend on your personal circumstances. Some expatriates may not recognise that they have a valid claim to non-tax residency, especially where they split their time equally, work in Belgium on a time-limited contract or secondment, own a permanent residence, or have economic interests elsewhere.
For others, the primary considerations might be around the investment rules in Belgium, including the Belgian taxation arising on savings income, stock exchange transactions and securities accounts, ensuring you have an accurate forecast of your tax obligations and can strategise accordingly.
Given the reclassification of tax return support offered by employers, we at Chase Buchanan have seen a significant uptick in demand for professional, tailored guidance. We remain on hand to offer input and assistance, starting with a review of your current situation and tax position and moving forward with accurate guidance to ensure your status in Belgium and onward decision-making are clear.
*Information correct as at March 2025