Income tax in Belgium

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If you are employed in Belgium, your salary will be taxed as part of your personal income tax liability. In principle, all natural persons resident in Belgium are subject to income tax, but there is also a limited tax liability for non-residents who earn income there. Exceptions to this are regulated by the double taxation agreement (DTA) between Belgium and the country in question.

Double taxation agreements

The taxation of employees‘ income is based on the principle that income is only taxed in the country in which the work generating that income is carried out. However, there are several exceptions to this principle, which means that the country of residence can tax the income. A notable exception to this is the 183-day rule. The number of days spent in the country is the determining factor for calculating the 183 days. Belgium has a special rule for normal work interruptions, which are included in the calculation of days. This means that, for example, Saturdays, Sundays, sick days and vacation days must be included in the calculation, even if they are not spent in the country of employment, provided that they fall within the period of work abroad. However, it should be noted that setting up a permanent establishment of the employer in Belgium may also give rise to an income tax liability for employees working in Belgium (see also Permanent Establishment in Belgium).

In the event of receiving earned income from another country and Belgium, the first step is to ascertain tax residency. The criteria for tax residency in Belgium for natural persons are generally met if the centre of vital interests (e.g. family residence) is located in Belgium. If tax residency is in Belgium, natural persons are generally subject to Belgian income tax on their worldwide income.

Salary Split

However, there may be situations in which an employee is liable to pay tax in different countries. For instance, an employee may be liable for income tax in Belgium for days worked in that country. In such cases, an income tax exemption may be granted in the employee’s country of origin for the days worked in Belgium. However, it is essential that the income attributable to Belgium is declared in the foreign tax return as part of the so-called progression proviso. However, it should be noted that the exemption is granted on the condition that proof of taxation in Belgium is submitted, for example in the form of a Belgian tax assessment notice. This arrangement is commonly referred to as a ’salary split‘.