2.2 Belgian taxation of residents Residents of Belgium are taxed on their worldwide income. Taxable income comprises real estate income, income from movable property, miscellaneous income and earned income. For each of these categories, there are specific rules for the calculation of the net income. These rules are described below. A Earned income Earned income is divided into six subcategories: • employee salaries and wages; • directors’ emoluments; • profits from agricultural, industrial and commercial activities; • proceeds from a liberal profession; • profits and proceeds from former work activities; • replacement income: pensions, early retirement payments, unemployment benefit, health insurance benefits, etc. As a general rule, earned income comprises wages, salaries and other pay (including benefits in kind) received on account of paid work. Repayments of expenditure incurred on behalf of an employer are not considered earned income. Benefits in kind are in principle taxed at the actual value to the beneficiary. Otherwise, the benefit in kind is taxed on a (beneficial) lump-sum basis fixed by statute (car or housing provided by the company, etc.). Stock options granted by the employer are considered earned income and are taxable upon grant (i.e. on the 60th day following the day of the offer) if the options are accepted in writing within this 60-day period. If the options are taxable upon grant, the benefit in kind resulting from the grant of the option is determined on a lump-sum basis. The options are taxed at marginal income tax rates. Net income is determined in six stages • deduction of compulsory social security contributions; • deduction of actual or lump-sum business expenses; • economic exemptions, notably tax measures to promote investment and/or employment; • clearance of losses; • award of the ‘assistant spouse’ quota and marital quotient; • set-off of losses between spouses. 28 Guide for foreign employees working in Belgium
Belgian Income Tax Rates Earned income (together with real estate income, ‘current’ alimony payments (see below) and – in very exceptional cases – investment income) is taxed at the following progressive tax rates: Taxable income 0 7.900,00 Tax bracket 7.900,00 7.900,00 11.240,00 3.340,00 11.240,00 18.730,00 7.490,00 18.730,00 34.330,00 15.600,00 › 34.330,00 Belgian tax brackets in EUR % 25% 30% 40% 45% 50% - 1.975,00 2.977,00 5.973,00 12.993,00 Tax due Tax on the bracket 1.975,00 1.002,00 2.996,00 1.975,00 2.977,00 5.973,00 7.020,00 12.993,00 Total In addition to the above, municipal taxes are due varying from zero to 10% on the principal amount of income taxes charged, calculated on the basis of the above tax brackets. Each taxpayer is also entitled to one or more standard allowances (depending on his personal situation) as shown below. Additional tax relief may also be available in some cases. Standard tax deductions EUR (basis amounts) Standard tax deduction if taxable income not over 23.900,00 if taxable income between 23.900,00 and 24.160,00 if taxable income above 24.160,00 Marital quotient Income limit Limit 30% 30.933,33 9.280,00 1 child 2 children 3 children 4 children 5 children + each child ‹ 3 years old Immigration - Tax - Social Security - Law - Social Formalities 6.690,00 6.690,00 less difference between taxable income and 23.900,00 6.430,00 1.370,00 3.520,00 7.880,00 12.750,00 17.620,00 4.870,00 510,00 29