Will personal taxation in Belgium make you forget the French bureaucracy and the tax obligations that weigh on you? So why not move to Belgium? Our neighbour has just the thing to win you over.
How is personal income tax calculated in Belgium? Is it fundamentally different from the French system?
The Belgian tax system differs significantly from the French system. Anyone who earns income in Belgium must pay tax there. There is no family allowance, and tax is deducted at source, as is now the case in France.
Residents of the kingdom
Personal income tax (IPP) is payable by all residents of the Kingdom.
These are people who have established their domicile in Belgium or the seat of their assets if they are not domiciled there. Whatever their nationality.
- In the absence of proof to the contrary, natural persons are considered as such if they are entered in the Belgian National Register (a database of all persons legally resident in Belgium).
- Domicile for tax purposes is defined as the actual place of residence; the seat of assets is defined as the place where the assets making up the assets are administered.
- For spouses and legal cohabitants, taxation is separate, but joint taxation (single declaration) applies.
People who do not meet the definition of Belgian resident but who receive income in Belgium may be subject to non-resident tax. This tax is calculated according to the same rules as resident tax. However, only the following will be taxed in Belgium:
- remuneration received for the exercise of a professional activity in Belgium,
- income from property situated in Belgium.
CatégorieTaxable income categories
As in France, personal taxation in Belgium is based on taxable income. These are divided into categories, each with its own specific rules. Revenues
- professional income (salaries, benefits of all kinds, etc.), remuneration of self-employed workers; replacement income (unemployment, pensions, alimony, etc.)
- real estate,
- furniture,
- and miscellaneous income.
Tax is charged at a progressive rate, in brackets
As in France, personal taxation in Belgium is based on a bracket system, which takes into account:
Professional income,
+ replacement income
+ property income
+ Income from movable property (only where this is more favourable to the taxpayer),
= Overall taxable income subject to tax.
The income tax rates for 2021 in Belgium are as follows:
| Net taxable income | Tax rates |
| up to €13,540 | 25 % |
| from €13,540 to €23,900; | 40 % |
| from €23,900 to €41,360 | 45 % |
| from €41,360 | 50 % |
The exempt portions for each band are then subtracted from these calculations, multiplied by the tax rate for the band.
The evidence is clear: incomes are heavily taxed. While in France the tax rate is 45% on income over €158,123 (+ 3% on income over €250,000), in Belgium it is 50% on income from €41,360!
What’s more, to these amounts must be added the municipal tax, which represents a percentage of this “State” tax. Its percentage depends on the municipality of residence and varies between 4.9% and 8.8% (with three municipalities at 0% on the Belgian coast and a rate of 7.5% for non-residents).
Taxationat separate rates
Income from securities, the main ones being:
Dividends
- Ordinary dividends are taxed at 30%
- VVPR Bis dividends, taxed at 20% or 15%
- And dividends from the liquidation reserve, taxed at 20% or 5%
Interest
- Income from ordinary savings deposits, taxed at 5%
- Other interest, taxed at 30%
Royalties, life annuities and temporary annuities, taxed at 30%+.
Copyright, taxed at 15%
Income from movable property that has actually been subject to withholding tax does not have to be mentioned in the tax return (except for certain types of income: copyright, property leasing rent, etc.)
Sundry income (a catch-all category for income received outside the workplace)
- Occasional profits taxed at 33%
- Research allowances taxed at 33%
- Income from subletting and transfer of building lease, taxed at 30%
- Proceeds from leasing fishing, hunting and tending rights, taxed at 30%
- Prizes and subsidies awarded to scholars, artists and others, taxed at 16.5
- Quick” capital gains on built-up property, taxed at 16.5
- Quick” capital gains on land, taxed at 16.5 or 33%
- And capital gains on the sale of major holdings, taxed at 16.5%
Tax-exempt portions
There is no family allowance in Belgium, but there are allowances for family expenses, which are deducted from taxable income. All taxpayers are entitled to a first tax-free income bracket.
This amounts to €9,050.00 for 2021 income. This tax-free bracket can then be increased depending on the taxpayer’s personal situation:
- Children and other dependants,
- 1 650for a child,
- 4 240for two children,
- 9 500for three children,
- 15 360for four children.
- Fromfifthth child,it is appé an additional allowance of5 860per child.
- Single taxpayer with dependants: €1,060
- Taxpayer with a severe disability: €1,650.
Allowances for professional expenses.
For an employee, the allowance is 30%, capped at €4,880; for an executive, it is 3%, capped at €2,540.
Tax reductions
Under certain conditions, certain expenses are eligible for a tax reduction, up to a certain ceiling. Among the many possibilities for tax reductions:
- Individual life insurance premiums (< €2,350 at federal level)
- Buying your own home (main residence): housing bonus that varies according to region,
- ALE (local employment agency) vouchers and service vouchers (personal assistance), which depend on the region of residence:
- in Brussels, 15% of a maximum of €1,467 per person per year,
- in Flanders, 20% of a maximum of €1,530 per person per year,
- in Wallonia, 10% of a maximum of €1,350 per person per year.
- Reduction for remuneration paid to a domestic employee: 15% of total expenditure, capped at €15,920,
- Donations and gifts to approved organisations (min. €40), for 45% of the amount paid,
- Expenditure to save energy, (varies by region and type of expenditure)
- Purchase of electric cars: 15% up to a maximum of €5,150,
- Childcare costs for children under 14: 45% of the costs, up to a maximum of €13 per day per child
- Pension savings, 30% of a maximum of €990 per person per year,
- Cash contribution to a start-up company (less than 4 years old),
- 30% of the contribution in the case of SMEs
- 45% of the contribution if it is a micro-company (conditions and limits to be respected)
The Federal Public Service Finance (SPF Finances) offers the following information on its websiteTax-Calc, a tax calculation simulator.
Social security contributions
Only professional income is subject to social security contributions
Main self-employed activity in 2021:
- 20.5% of net taxable income up to €60,638.46 with a minimum of €14,042.57
- 14.16% on the part exceeding €60,638.46 but not exceeding €89,361.89. Above this ceiling, there are no social security contributions. These are therefore a maximum of €16,498.12 for 2021
Salaried activity (subordination):
- 13.07% personal contributions on full salary (with no ceiling)
- 34.21% employer’s contributions (with the possibility of reductions)
There is a special social security contribution, calculated by the tax authorities, the maximum of which is €731.20 for 2021.
Capital gains
In principle, it is taxable unless the transaction is part of the “normal management” of private assets.
- The concept is vague… The tax authorities generally accept that capital gains made by private individuals investing in the stock market and by entrepreneurs selling their historic shareholding in their company are exempt.
- Points to bear in mind: the taxpayer’s wealth, recourse to borrowing, the frequency and links between transactions, the risky or complex nature of transactions, etc.
- The tax rate is 33% if the income is reclassified as “miscellaneous income”.
- Taxation is at the progressive rate if the income is reclassified as “professional income”.
Capital gains.
If it’s a “quick sale”
- Buildings
- Resale of the property within five years of acquisition, 16.5
- Resale of donated property within three years of the donation, 16.5%
- Resale of your main home 0%
- Resale of inherited property 0%
- Sale of property belonging to a minor 0%
- Undeveloped land
- Resale within five years of acquisition, 33%
- Resale between the fifth and eighth years, 16.5%;
If the sale is “speculative”, i.e. involves “risky” management outside the normal management of private assets (frequent buy-and-sell transactions, borrowing, etc.), then the tax rate is 33%
Source: https://valoxy.org/blog/la-fiscalite-des-personnes-physiques-en-belgique/