The Belgian tax system includes direct taxes, (individual income taxes and corporate income taxes), and indirect taxes (value-added tax, inheritance and gift taxes, registration fees and excise duties).
Regions and local authorities levy local taxes.
The Federal tax office (Ministry of Finance), which is divided in different departments in accordance with the various taxes, administers the Belgian tax laws.
The assessment and collection of income taxes and VAT are controlled by the “administration of business and income taxes” (A.O.I.F.). In addition, there is a specialized department (BBl) with an overall competence in all tax matters, which deals with the more substantive and difficult cases. Within the administration of direct taxes there are specific units which control, for instance, non-resident taxpayers, the financial and insurance industry and the real estate sector.
Taxation of individuals
An individual whose “place of living” or “seat of wealth” is located in Belgium is regarded as a Belgian resident. A Belgian resident is subject to Belgian income tax on their worldwide income. Exemptions with “progression – reserve” for certain types of income do exist, based on the Belgian double tax treaties.
The standard Belgian income tax rates are:
|Rate||Tax Year 2016 (AJ) Income 2015||Tax Year 2017 (AJ) Income 2016|
|25%||Up to 8710 EUR||Up to 10.860 EUR|
|30%||from 8.710 EUR up to 12.400 EUR||from 10.860 EUR up to 12.470 EUR|
|40%||from 12.400 EUR up to 20.660 EUR||from 12.470 EUR up to 20.780 EUR|
|45%||from 20.660 EUR up to 37.870 EUR||from 20.780 EUR up to 38.080 EUR|
|50%||from 37.870 EUR||from 38.080 EUR|
Each taxpayer is entitled to some personal deductions and allowances, for instance:
The taxable basis consists mainly of immovable income, professional income, movable income, and miscellaneous income.
Belgian non-residents are only taxed on their Belgian-sourced income. The tax rates are the same as those applicable for Belgian residents.
The taxable basis is determined in the same manner as for Belgian residents. Though, not all non-residents are entitled to all personal deductions. Only nonresidents whose worldwide professional income is at least 75% taxed in Belgium, are entitled to almost all of them.
A resident company (one with its centre of activities or management in Belgium) is liable to corporation tax on its worldwide profits, including capital gains, and subject to exemptions in double tax treaties.
The 33% tax rate applies whether profits are retained or distributed, and is increased by a 3% crisis contribution (33,99%). Small companies meeting certain conditions are entitled to reduced rates.
|24,98%||< 25.000 EURO|
|31,93%||25.000 – 90.000 EURO|
|33,54%||90.000 – 322.500 EURO|
|33,99%||> 322.500 EURO|
Taxable income is based on the results as reported in the companies’ annual financial statements, including all profits and losses, capital gains and losses, dividends, interests, and royalties. Taxable profits are profits disclosed in the financial statements, but adjusted for disallowable expenditures, exempt profits, special deductions and losses carried forward. The most important adjustments are:
1) A deduction from gross income of 95% of inter-corporate dividends paid by resident and non-resident subsidiary companies to a qualifying Belgian company or branch may be applied, provided that:
participation of at least 10% of the subsidiary’s capital or a participation whose acquisition value is at least EUR 2.500.000;
2) Capital gains on shares are exempted if:
Losses can be carried forward indefinitely. Losses cannot be carried back.
Every company is entitled to decrease its taxable profits with a percentage of its equity capital. This percentage amounts are:
Belgian ‘equity capital’ includes capital, share premiums, reserves and carryforward of profits. To discourage any abuse, the company’s equity will be adjusted by eliminating, among others, the following items:
As of income year 2012, any notional interest deduction built up in 2012 can be used until tax year 2019.
Since the tax year 2008, there has been a tax deduction for new patent income. The tax deduction amounts to 80% resulting in an effective taxation of the income at the rate of 6,798%.
For certain investments in patents, environmentally friendly investments in research and development, energy-saving investments, and security equipment, a deduction from the taxable profits is allowed.
Certain tax exemptions can be applied for under certain conditions for engaging additional personnel, for example for the “head of the export”, head of the department “Quality Care”, trainees and low wage employees for small and medium enterprises.
For individual’s capital gains not related to self-employment activities are only taxed if they are derived from sales of land and buildings (other than one’s primary home) and from sales of a Belgian corporation’s shares to non-EER companies, if the taxpayer owns more than a 25% participation in the corporation (“miscellaneous income”). However, there are many exceptions.
Capital gains realized from fixed assets invested in an individual’s occupation or business are taxed at the normal progressive income tax rates (“professional income”). If these assets are held for more than 5 years before disposal, the capital gains are separately taxed at the favourable rate of 16,5%, and tax may be waived when re-invested, subject to certain conditions.
For companies, capital gains are normally regarded as ordinary business income, which is taxable at the normal corporation tax rates (33,99% or the reduced corporation tax rate where applicable). Nevertheless, there are exceptions:
Value-added tax (VAT) is a sales tax, charged on the supply of goods and services provided in the course of business. A person who makes taxable supplies or delivers goods is liable to register for VAT if their yearly taxable turnover exceeds EUR 25.000 (as from April 1, 2016). Taxable persons must file a monthly or quarterly tax return reporting all taxable transactions made.
VAT is also charged on the importation of goods from non-EU countries into Belgium, the acquisition of goods from other EU member states, and the receipt of some international services in Belgium.
In general, the rate is 21%. For certain supplies, the rate is 6% (goods classified as necessities such as food) or 12% (services of a social nature).
The inheritance tax system in Belgium differs for individuals resident in Brussels, Flanders and Wallonia. For deceased Belgian residents, worldwide assets are brought into account. The rates will depend on the region and the relation to the deceased.
A gift tax is imposed on gifts of:
Registration fees are due in, amongst others, the following circumstances: