The new Belgian expat regime entered into force and applies to all employments/assignments in Belgium starting from January 1, 2022.
This concerns a new favorable tax regime for employees, directors and researchers who are coming to Belgium to work here. For expatriates benefiting from the old special tax status, transitional measures apply.
Old special tax status – Circular of 8 August 1983
Since many years, Belgium had a special tax regime (the old expat regime) to attract employees and directors to work temporarily in Belgium for a Belgian entity which is part of an international group of companies.
These special tax concessions mainly provided the following benefits:
- The beneficiaries were automatically considered as a non-resident taxpayer. As a consequence, they were only taxable on their Belgian source income and their worldwide professional income.
- They were not taxed on allowances or on reimbursements of expenses caused by the Belgian assignment (within certain limits).
- The beneficiaries were not taxable on the part of their remuneration related to their professional activity outside of Belgium.
The new expat regime
The Program Law of December 27, 2021 introduced a new expat regime applicable to employees, directors and researchers whose assignment to / employment in starts as of 01/01/2022 and who meet the conditions set in the Law.
I. Qualifying conditions
Absence of connection with Belgium
During a period of 60 months prior to the employment in Belgium, the qualifying employee or director should not have been:
- taxed as a resident taxpayer in Belgium;
- living at a distance of less than 150 km from the Belgian borders;
- taxed as a non-resident on Belgian professional income.
Qualifying employees or directors must either be recruited directly from outside Belgium or seconded by a company that is part of a multinational group or non-profit organization.
There is no longer a foreign nationality requirement. Belgian nationals satisfying the above mentioned conditions are now also eligible for the tax concessions of the new expat regime.
Minimum gross compensation threshold: € 75.000
The new expat regime requires a minimum annual gross salary threshold of € 75.000. This threshold includes gross salary, variable compensation as well as benefits in kind, but not the 30% tax free allowance itself (see infra).
Should the employment or director mandate not cover a full calendar year, this threshold should be calculated on a pro rata basis.
Exception for researchers
This annual minimum salary threshold of the new expat regime does not apply for researchers as far as they meet the following conditions:
- They hold a master degree in the following expertise area: agricultural sciences, exact or applied sciences, industrial sciences, medical sciences, pharmaceutical sciences, veterinary sciences and engineering; or
- They have at least 10 years of relevant experience in these areas.
This exception for researchers only applies to employees (and not to directors) and only if the researcher spends at least 80% of his/her professional time on research activities.
II. Benefits of the new expat regime
The employer may reimburse or compensate the expatriate on a tax-free basis for the recurring additional costs resulting from the expatriation in Belgium. This reimbursement is limited to 30% of the gross remuneration and capped at a maximum tax free amount of € 90.000. No proof should be provided for the reimbursement of these costs proper to the employer.
Big uncertainty at this moment in time is whether the Belgian social security authorities will align their qualification to the fiscal qualification ‘cost proper to the employer’ and exempt the ”30%” form Belgian social security.
The reimbursement of school fees and relocation costs can (under certain conditions) still be reimbursed as costs proper to the employer on top of the above mentioned 30% compensation. For these expenses, proof and supporting documents will need to be provided.
III. Maximum duration
The new expat regime is applicable for an initial 5-year period with a possible 3-year extension (by submitting a new application and showing that the qualification requirements are still met).
Unlike the old expat regime, where a change of employer meant losing the expat status, the new expat regime is no longer linked exclusively to the employer. It can therefore continue to apply when there is a change of employer.
IV. Belgian residency
The new expat regime provides that standard residency rules included in the Belgian income tax legislation apply.
This residency status implies that qualifying expatriates will be taxable in Belgium on their worldwide income, but are entitled to invoke the double tax treaties concluded by Belgium.
The employer and the employee jointly need to apply within 3 months after the start of the Belgian employment/assignment.
In addition to the application, the employer must annually provide the Belgian tax authorities with a list of all eligible employees/directors for the preceding year by January 31.
I. Employed/assigned after January 1, 2022
Employees, directors or researchers whose employment/assignment in Belgium started after January 1, 2022 and who meet the qualification requirements, are subject to the new expat regime.
II. Employed/assigned before January 1, 2022
The Circular of January 21, 2022 provides some opt-in/opt-out mechanisms for existing situations (to be analyzed on a case-by-case basis):
Opt-in for the new expat regime
Expatriates benefitting from the old expat regime for less than 5 years (and meeting all other qualifying conditions of the new expat regime) may opt for the new expat tax regime. This opt-in demand needs to be filed by July 31, 2022 at the latest.
Opt-out – continue old expat regime
Expats benefitting from the old expat regime for less than 5 years and meeting the qualifying conditions of the new expat regime may also opt out and remain subject to the old expat regime until 31 December 2023.
This might be relevant for expatriates with a high travel exclusion under the old expat regime. An specific analysis is recommendable here.
Expatriates not qualifying for the new special tax status
Expats present in Belgium for more than 5 years or not meeting the qualifying conditions of the new expat regime may continue to benefit from the old expat regime concessions until 31 December 2023.
As from January 1, 2024 they will subsequently be considered as ordinary Belgian tax resident.
How can Mint Consult help?
Mint Consult will be glad to assist employers to evaluate the impact of this new expat regime on their current and future population by providing the following services:
- Cost simulations for employers as well as for expatriates;
- Assistance for the possible opt-in/opt out decision on a case-by-case basis;
- Information session to current expatriates;
- Review of existing employment contacts or drafting of addenda if required;
- Amendment of remuneration packages;
Additional questions? Feel free to contact us.