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Generic Tax Name Personal income tax
Tax name in the national language Impôts sur le revenu des personnes physiques ou des ménages / Belastingen op het inkomen van individuen of huishoudens
Tax name in English Taxes on individual or household income
Member State BE-Belgium
Tax in force since 1962/11/20
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Income Tax Code 1992, articles 3 to 178/1.

Law of 10.08.2001 (BOJ 20.09.2001) with reform of personal income tax.

For PIT after the Sixth State Reform : see Special Act of 6 January 2014 reforming the financing of Communities and Regions, increasing tax autonomy for the Regions and financing the new competences. Law of 08.05.2014 modifying the Income Tax Code 1992 as a consequence of the introduction of the regional additional tax on PIT (BOJ 28.05.2014)

 

The ways of implementation applicable to the withholding tax on earned income allocated or made payable as from 1 January 2014 are published in the BOJ of 18 December 2013.

 

For further details on Personal income tax, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:

http://finance.belgium.be/en/figures_and_analysis/analysis/tax_survey/

Application of indexation provisions provided for by law.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments

Regional authority : determination of the regional surcharges (tax rate) and matters under their material competences (tax credits/ reliefs).

The federal authority remains exclusively competent for determining the taxable base, and as a consequence, exclusively competent for the deductions applied to gross income.

 
Beneficiary





Comments
Under the Sixth State Reform, the Regions have been given increased tax autonomy and they can now levy a regional PIT by means of a regional additional tax on PIT. The tax component of the Sixth State Reform came into force on 1 July 2014 and has applied as from tax year 2015. As a result, as from 1 July 2014, the Regions can fix their own rules for the regional additional tax. 

 

 

Since 2009 : part of the withholding tax on earned income has been attributed to the alternative financing of social security.

 
Geographical Scope

Belgian territory and, for the regional additional tax, the Region in which the taxpayer's tax residence is located on 1 January of the tax year (Flemish Region, Walloon Region or Brussels-Capital Region).

 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments

Employment incomes of married couples are Taxed jointly
Taxed separately
Comments


Comments
  • Personal income tax is due by the inhabitants of the Kingdom, i.e. the persons whose domicile or seat of wealth (when they are not domiciled in Belgium) is located in Belgium. Unless evidence to the contrary can be provided, all individuals listed in the National Register of Individuals are considered inhabitants of the Kingdom.
  • The taxpayer is liable to the regional additional tax of the Region in which his tax residence is located on 1 January of the tax year (1 january 2015 for 2014 income). If the taxpayer changes his tax residence during the year from one to another Region, the situation on 1 January of the tax year applies. As a result, there is only one possible tax residence per tax year.
  • The municipality where the taxpayer is domiciled on January 1st of the tax year is the "municipality of taxation", which determines the rate of the muncipal surcharges.

(*) Under the new Special Finance Act, the concept 'seat of wealth' has become a subsidiary criterion which is only used secondly.

 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments
Benefits in kind : company cars

In case a company car is provided, the taxable benefit is assessed on the basis of the catalogue value, multiplied by a percentage related to the age of the car, and multiplied by a coefficient based on the carbon dioxide emission of the car. The formula in order to calculate the benefit in kind per year is the following :

6/7 * catalogue value * Age percentage * CO2 coefficient

 
Owner-occupied immovable property

Since 1 January 2005, the cadastral income of the own dwelling house is no more taxable.

 
Interests from deposits

The first 1,880 euro (for 2014 income) bracket of a yearly income from ordinary savings deposits is exempted from withholding tax on movable property if the beneficiary is a natural person.

Each spouse or legal cohabitant is entitled to the exemption. The double exemption also applies when only one savings account has been opened in the name of both spouses or legal cohabitants.

 

Capital gains on immovable property

Short-term capital gains on immovable property are taxable.

 

Capital gains on movable property

In principle not taxable but :

for capitalisation SICAVs/BEVEKS having invested at least 25% in interest-bearing debt securities (notably bonds, Treasury certificates), capital gains obtained through the repurchase of own shares or through a partial or total distribution of the social assets of the SICAV/BEVEK, are liable to a 25% withholding tax in respect of the part corresponding to, on the one hand, the interest received by the SICAV/BEVEK and, on the other hand, capital gains generated by the debt securities portfolio, after deduction of losses.

 

 

Annuities from life insurance

Contracts concluded in the context of life insurances combine a tax advantage granted where premiums or contributions are paid, with a taxation upon withdrawal, i.e. where the capital or the annuity resulting from premiums capitalisation are paid out. Where life insurance is used for the reinstatement of a mortgage loan, withdrawals are taxed when the capital is fully rebuilt.

 

Occasional profits and proceeds

The profits and proceeds not connected with a professional activity are considered here. Are not concerned:

  • profits and proceeds obtained through the normal management of one’s private fortune,
  • gains from gambling and lotteries.

The total amount of occasional profits and proceeds is taxable after deduction of actual expenses.

 

Prizes and subsidies are only taxable in as far as they exceed 3,810 euro.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments

They include loans made to the taxpayer bearing no or less interest than the basic interest rate determined by royal decree; use of company car; free occupation of a dwelling; free supply of heating and electricity.

Are not taxable some minor benefits like small gifts received on certain festive occasions and some commuting expenses paid by the employer (partial or total exemption).

The employer's financial intervention in meal, sport and culture vouchers is an exempted social advantage for the beneficiary, provided some conditions are met.

Eco-vouchers can also be tax exempted. These vouchers must be registered and granted in the framework of a collective agreement either sectoral or concluded within the company. If there is no collective agreement, a written individual agreement is required. The exemption is limited to 250 euro per year.



Comments

Tax unit: In Belgium, the tax unit is the adult, single or married, with children or other dependent persons. The legal cohabitants are assimilated to spouses.

 

Taxable income includes real-estate income, income from movable property, miscellaneous income and earned income. There are specific rules for the calculation of the net income for each of these categories.

 

1. Real estate income - General rules

The taxable amount of the real property is established separately for each spouse and the jointly owned property is apportioned on a fifty-fifty basis between the spouses. The fifty-fifty apportionment also applies to own real estate income if the spouses are married under the legal regime.

The taxable amount of real estate income is determined, according to the case, either on the basis of the cadastral income or on the basis of the rent. The net amount is then obtained by deducting interests on loans (other real estate than the own dwelling house).

 

2. Income from movable property

The amount of the chargeable movable income is established for each spouse separately. Income from jointly owned movable property is apportioned according to the property law.

Under the new Special Finance Act, the tax on income from movable property is not reduced by the autonomy factor of 25.99% and it is not part of the basis for the calculation of the regional surcharges. The “movable property income box”  includes dividends, interest, income from renting, lease-farming or concessions of movable property, income from prizes attached to debenture bonds, capital gains on securities taxed as miscellaneous income.

The following income is however subject to regional surcharges: income included in life annuities or temporary annuities, income from copyright, income from a sublease or the transfer of a lease, income from the permission to place advertising boards on buildings and income from sporting rights (hunting, fishing, trapping). 

 

3. Miscellaneous income

This category of income includes all income with the common characteristic of not being earned by performing a professional activity. Among categories of miscellaneous income, only current maintenance payments are included in the aggregated taxable income. Every other miscellaneous income is taxed separately.

The amount of the taxable miscellaneous income is determined separately for each spouse. Any shared income is apportioned according to the property law.

 

4. Earned income

There are seven categories of professional earnings: employee salaries and wages; company manager remunerations; assisting spouse remunerations; profits from agricultural, industrial and commercial activities; proceeds from a liberal profession; profits and proceeds from former professional activities; replacement income.

The net income is determined in six stages:

  • deduction of social security contributions;
  • deduction of actual or lump sum expenses;
  • economic exemptions, notably tax measures in favour of investment and/or employment;
  • clearance of losses;
  • awarding of the “assistant spouse” quota and the marital quotient;
  • compensation of losses between spouses.
 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments
Actual expenses

The deductibility of professional expenses is a general principle which applies to all categories of income, including replacement income.

May be deducted, expenses the taxpayer has incurred or borne during the assessment period with a view to acquiring or preserving taxable income, provided he can establish the reality of such expenditures and the amount thereof.

 
Lump sum expenses

For certain categories of earned income, the law provides lump sum expenses which substitute actual expenses, unless the latter are higher.

The basis for calculation of the lump sum expenses is the gross taxable amount, less social security contributions and contributions assimilated thereto

For company managers, the lump sum deduction is set at 3% of the basis of calculation, with a maximum of 2,370 euro.

For remunerations paid to the assisting spouse, the lump sum deduction is set at 5% of the basis of calculation, with a maximum of 3,950 euro.

The same 3,950 euro limit applies to the lump sum expenses which may be awarded to employees and members of a liberal profession; these are calculated according to the scale below.

 

Basis of calculation

Professional expenses

in euro

lower limit

above the limit

0

-

5,710

0

28.7%

5,710

-

11,340

1,638.77

10%

11,340

-

18,880

2,201.77

5%

18,880

-

and more

2,578.77

3%

 

An additional deduction for lump sum expenses can be granted to employees when the distance between their home and their work is at least 75 km.

Distance between home and work

Additional fixed amount

       

75 km

-

100 km

75

101 km

-

125 km

125

126 km

 

and more

175


Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments

Under the new Special Finance Act, only alimony payments remain deductible from the total net income. The Regions may grant no advantages in the form of a deduction from the taxable base. 


Allowances
The basic yearly allowance for an individual amounts to: 7,070.00  EUR/National currency
The basic yearly allowance for a couple amounts to: 7,070.00  EUR/National currency
Additional allowance for 1st child 1,500.00  EUR/National currency
Additional allowance for 2nd child 2,370.00  EUR/National currency
Additional allowance for 3rd child 4,800.00  EUR/National currency
Additional allowance for additional child 5,350.00  EUR/National currency
Additional allowance for old age dependents 3,000.00  EUR/National currency
Comments

The basic zero-rate band is 7,070 euro (both for a single person and for a spouse).

An additional amount of 280 euro is granted where the taxable income does not exceed 26,280 euro (for low- or middle-income taxpayers).

When the taxable income amounts to between 26,280 euro and 26,560 euro, a phasing out rule applies: the additional amount granted is progressively reduced proportionately to the difference between the taxable income and the 26,280 euro limit.

The basic exemption is increased by 1,500 euro where the taxpayer is disabled (and where the taxpayer’s spouse is disabled).

 

Exemptions for dependent children are allocated by priority to the spouse with the higher tax base.

An additional exemption of 560 euro is awarded for each dependent child who is less than three years old and for whom the tax credit for child care expenses has not been requested.

A disabled child counts for two (the child will be awarded the deduction according to his/her own rank plus the deduction granted to the child next in rank).

A child legally considered as stillborn is also considered as dependent for the year in which the death occurred. The additional exemption for each dependent child who is less than three years old, is automatically awarded for a stillborn child.

When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit.

 

Exemptions for other dependent persons

  • ascendants and collaterals up to the second degree included, aged more than 65 : 3,000 euro
  • other dependent persons : 1,500 euro
  • disabled dependent persons, with the exception of children : 1,500 euro
  • single person with dependent children : 1,500 euro
  • spouse whose income does not exceed 3,110 euro:the year of marriage or the year of declaration of legal cohabitation, provided the assessment is made per taxpayer : 1,500 euro

In case of joint custody, each single parent has right to the total exemption for single persons with dependent children.

 

Please note that these allowances for dependents are credited against the lower part of the personal income tax scale, contrary to other allowances which are credited against the upper part of the scale.


Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments

Deductions, allowances and credits differentiated by region (Flemish / Walloon / Region of Brussels-Capital).

From assessment year 2015, the federal tax credit for mortgage loans on owner-occupied dwellings and the credit for energy-saving expenditures is abolished (except transitional measures) and replaced by similar regional tax credit facilities.

 

For further details on those tax credits, please refer to the Tax survey publication on the website of Federal Public Service Finance - Belgium available at:

http://finance.belgium.be/en/figures_and_analysis/analysis/tax_survey/

 

Tax credits remaining a federal competence

Tax credits transferred to the Regions

Long-term savings

Pension savings scheme

 

 

Personal premiums for group insurance contracts and pension funds

Acquisition of employers’ shares

Individual life insurance premiums not related to real estate

Real estate 

Expenses for another dwelling than the own dwelling house:

federal tax credit for long-term savings (individual life insurance premiums + capital repayments)

Expenses for acquiring or maintaining the own dwelling house: regional tax credit for own dwelling house (housing bonus) or regional tax credit for long-term savings (loans and agreements which are not meeting the conditions giving entitlement to the housing bonus)

 

Expenses for making dwellings secure against burglary and fire

 

Expenses for renovating low-rent dwelling houses

 

 Classified monuments and sites

 

 Zones of positive metropolitan policy (*)

Transitional provisions: federal tax credits at the marginal rate (for another dwelling than the own dwelling house) – loans contracted until 31 December 2013.

Regional tax credit for standard interest, regional tax credit for additional interest, regional tax credit for “housing-savings”, regional tax credit for interest
relating to the conversion of the old creditable withholding tax on real estate.

Environment

Tax credit carried over for some energy-saving expenses made in 2011 and 2012

 Roof insulation (dwelling house of at least five years)

Tax credit for passive, low-energy and zero-energy houses

 

“Green” loans

 

Electric vehicles

 

 

 

 

Other expenses

Gifts

 LEA vouchers and service vouchers

Child care expenses

 

Remunerations domestic workers

 

Shares of recognised development funds

 

 (*) As the royal decree determining the zones of 'positive metropolitan policy' has not been renewed, the tax credit may no longer apply in practice.

 


Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments

Losses incurred by a taxpayer in the course of previous taxable periods can be set off by him against profits from subsequent taxable periods with no time limit.

Compensation of losses between spouses :

Where the income of one of the spouses is negative, the loss can be deducted from the income of the other spouse, after taking into account all the deductions to which the latter is entitled.

The amount of the transferable losses cannot exceed the income of the spouse to whose income the deduction applies.


Exemptions
The following income is exempted from income tax























Comments

As a general rule, taxable income includes real-estate income, income from movable property, miscellaneous income and earned income.

Hereafter are developed however cases of exempted income.

A temporary exemption of personal income tax is given for premiums for innovation paid or granted from 1 January 2006 and is valid for the year 2014.

Commuting expenses have to be borne by the employee; they are deductible as professional expenses. Where these expenses are refunded by the employer, they are in principle a taxable income. The latter can partly be exempted however.

The mileage allowance for bicycling commuting is also exempted from tax up to 0.22 euro a kilometre.

A new exemption has been introduced for severance payments. Those are paid by the Belgian National Employment Office to compensate for the damage suffered by redundant workers (employed before 1 January 2014) resulting from the fact that a part of the notice period has been calculated according to the old less favourable rules.

Workers who received severance payments are no longer entitled to the redundancy allowance paid by the Belgian National Employment Office (see hereafter).

The redundancy allowance which is payable by the Belgian National Employment Office and which dismissed workers (employed before 1 January 2014) can benefit, is tax exempted and exempted from social security contributions (*). The exemption applies to allowances received as from 1 January 2012, provided the dismissal is notified by the employer on 1 January 2012 at the earliest. As soon as the worker is entitled to severance payments, he loses entitlement to the redundancy allowance.

(*) The redundancy allowance is granted to workers bound by an employment contract for workers, service vouchers or domestic workers whose contract is terminated provided the dismissal is notified as from 1 January 2012.
 

As regards remunerations relating to activities performed in the framework of local employment agencies, 4.10 euro are exempted from tax for each hour worked.

 

The employer's financial intervention in meal (up to 5.91 euro per voucher) and in sport and culture vouchers (up to 100 euro per year) is an exempted social advantage for the beneficiary, provided some conditions are met.

 

Eco-vouchers can also be tax exempted. The exemption is limited to 250 euro per year.

 

The system of non-recurrent advantages linked to results or "wage bonus" is tax exempted. The bonus is an additional allowance granted to each worker or group of workers in the company and linked to the results of the company (more specifically to previously defined goals, financial or not, which can objectively be ascertained). The tax exemption is granted for a maximum amount of 2,722 euro per worker. The portion of the bonus exceeding the upper limit is considered as wage.

 

Allocation granted to artists and considered at social level as lump sum settlement of expenses for performing “small-scale” artistic activities, are exempted to 2,444.21 euro per calendar year.

Although, as a general rule, replacement incomes are taxable, some social transfers are exempted. Are concerned:

  • income support;
  • legal family allowances;
  • maternity allowances and legal adoption premiums;
  • disability allowances chargeable to the Treasury under current legislation;
  • war pensions;
  • allowances paid in respect of an incapacity for work or an occupational disease to a person losing no professional income. The allowances are automatically exempted where the degree of disablement does not exceed 20% or where the allowances are paid on top of a retirement pension. Where the degree of disablement exceeds 20%, the tax exemption is in principle limited to that percentage.


Comments

EXPENSES ENTITLING TO A TAX RELIEF

Certain expenses entitle to a tax relief. The Regions are now exclusively competent for granting some tax incentives.

 

REFUNDABLE TAX CREDITS

For further detail, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:

http://finance.belgium.be/en/figures_and_analysis/analysis/tax_survey/

 

TYPE OF REFUNDABLE TAX CREDIT

BENEFICIARY

Refundable tax credit for increase of “own assets”

Taxpayers declaring profits or proceeds are entitled to a tax credit if they have increased the company's « own assets ».

Refundable tax credit on low income from professionnal activities

The tax credit is computed on the net amount of the activity income, i.e. the amount of the earned income not being a replacement income or a separately taxed income, after deduction of the actual or lump sum professional expenses. Income from an occasional independent activity is not taken into account either.

Wage income is not taken into account except for statutory civil servants. Wage income not taken into account is entitled to a reduction in personal social security contributions and to the refundable tax credit for low-income workers.

Refundable tax credit for low-income workers

This refundable tax credit is intended for low-income workers (and company managers subject to the employees' social security system) entitled to the employment bonus.

!t amounts to 14.40% (as of April 2014; before: 8.95%) of the reduction in personal security contributions which is actually granted on remunerations earned during the taxable period.

Service vouchers The portion of the regional tax credit for service vouchers which could not be offset, is refundable.
Dependent children

When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit. The double exemption for disabled children and the additional exemption for children under three are to be taken into account. The refundable tax credit is computed at the marginal rate for the spouse with the highest income and is limited to 430 euro per dependent child.

Energy-saving expenses

 The refundable tax credit for energy saving expenses only remains applicable where it concerns some carried-over tax credits relating to energy-saving expenses .

 

 

 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Bracket 1 From  0.00  EUR/Natcur
To  8,680.00  EUR/Natcur
Rate: 25.00 %
Bracket 2 From  8,680.00  EUR/Natcur
To  12,360.00  EUR/Natcur
Rate: 30.00 %
Bracket 3 From  12,360.00  EUR/Natcur
To  20,600.00  EUR/Natcur
Rate: 40.00 %
Bracket 4 From  20,600.00  EUR/Natcur
To  37,750.00  EUR/Natcur
Rate: 45.00 %
Bracket 5 From  37,750.00  EUR/Natcur
To   EUR/Natcur
Rate: 50.00 %
Comments

A global zero-rate band, varying according to the composition of the household, is tax exempted. This global band consists in the first place of the basic zero-rate band granted to each of the spouses. This band is then increased by the exempted income for dependents and for certain specific family situations.

Where the global zero-rate band of one of the spouses exceeds the income it is credited against, the balance can be transferred onto the other spouse’s income in order to be credited against his/her income.

These exemptions are calculated "from the bottom up".


Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge: 7.0 %
Comments

Rate in capital city : 6.00% to the municipalities and 1.00% to the 'special administrative district' of Brussels (i.e. the Brussels Agglomeration which includes 19 municipalities of the Brussels-Capital Region).

The rate of municipal surcharges is specific to each municipality. Municipal surcharges do not apply to the tax on interest and dividends, provided those interest and dividends have no professional nature.

The calculation of municipal surcharges is based on the total tax, i.e. after offsetting of federal and regional tax credits.

 

In tax year 2013 the local surtax varied between 0% and 9% of the federal PIT amount (7,42% on average).


Special surcharges
There are special surcharges in the form of:
Surcharge 1 : Name: Special social security contribution
A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

The special social security contribution is levied on the salaries of employees (or their counterparts) whose net taxable household income exceeds 18,592.01 euro a year. Unlike other social security contributions, it is not deductible.

See the separate tax file relating to it.


Separate taxation
Separate taxation applies to the following items: Employment income
Income from business or self-employed activities
Income from sport and entertainment activities 16.5 %
Benefits in kind (company car, meal cheques, etc)
Pension income
Owner-occupied immovable property
Dividends 25.0 %
Interests from government bonds 25.0 %
Interests from corporate bonds 25.0 %
Interests from special saving accounts 25.0 %
Interests from deposits 15.0 %
Royalties
Income from renting immovable property
Income from renting movable property
Capital gains on immovable property 16.5 %
Capital gains on movable property
Inheritance
Annuities from life insurance
Prizes and awards 16.5 %
Scholarships
Income from occasional activities 33.0 %
Revenues from donations and gifts
Revenues from lotteries and games activities
Comments

The law has provided for separate taxation in respect of three categories of income:

  • income from movable property,
  • most miscellaneous income,
  • certain types of non-periodical income: capital gains, arrears, dismissal compensation, amounts paid on due date in respect of group-insurance contracts, life insurance contracts or pension schemes, regional employment premiums.

 

These incomes escape aggregation and are taxed at special rates. Total aggregation (inclusion of this income in the aggregated taxable income - and application of the progressive rate) is nonetheless applied where doing so is to the taxpayer’s advantage.

The choice is made for separately taxable income as a whole.

 
Income from movable property

The assessment rates vary between 10% and 25% according to the case.

 

Assessment rates of the main income from capital and movable property (2014 income)

DIVIDENDS

Dividends from the distribution of taxed reserves injected in the capital

10%

Dividends from 'residential' real estate investment companies

15%

Other dividends

25%

INTEREST

Income from ordinary savings deposits

15%

Interest from government bonds 24 Nov 2011 - 2 Dec 2011 (so-called "Leterme bonds")

15%

 Interest relating to thematic citizens lending

 15%

Other interest

25%

ROYALTIES, LIFE ANNUITIES AND TEMPORARY ANNUITIES

 25%

COPYRIGHT

15%

 

 

Miscellaneous income

The tax rates applying to these incomes are the following:

 

Rates of separately taxed miscellaneous income (2014 income)

Type of income

Tax rates

Occasional profits and proceeds

33%

Allowances “research workers”

33%

Prizes and subsidies

16.5%

Prizes attached to debenture bonds

25%

Income from sublease or from transfer of a lease

 

25%

Income from permission to place advertising boards

25%

Income from sporting rights (fowling, fishing, shooting)

25%

Capital gains from built property

16.5%

Capital gains from unbuilt property

 

33% if the capital gains are realised less than 5 years after the acquisition, 16.5% in the other cases

Capital gains on the transfer of an important parcel of shares

16.5%

 

 

Earned income

In many cases earned income which can enjoy the separate taxation is taxed at an average rate. The average rate is based on the tax amount to be paid after application of the tax credits for the zero-rate band, the tax credits for replacement income, the federal and regional tax credits (as from 2016 income, only the fereral tax credits will be taken into account), but without considering the tax credit for foreign income.

 

Separate taxation of earned income (2014 income)

Type of income

Tax rate

Salary arrears, replacement income arrears

the previous year’s average rate

Gross termination compensation

the previous year’s average rate

Redeployment allowances

the previous year’s average rate

Prepaid holiday pay

the current year’s average rate

Arrears of maintenance payments

the current year’s average rate

Fee arrears

the current year’s average rate

Capital gains from professional activities

16.5%

Gross regional employment premiums < 180 euro per month

10.38%

Young sportsmen’s remunerations, first 18,720 euro gross bracket

16.5%

Volunteer sporting activity as a self-employed secondary activity, first 18,720 euro gross bracket

33%

Setting-up allowance for general practitioners (*)

16.5%

 Remunerations of casual workers in the Horeca sector (**)

 33%

(*) A setting-up allowance amounting to 20,000 euro is granted to general practitioners who decide to set up in a 'priority area" with a lack of general practitioners.

(**) In force as from 1 October 2013 and provided certain conditions are met (remunerations for services provided during maximum 50 days a year, etc.)

 

Capital and annuities from a group insurance contract

In case a capital is paid out, a separate taxation is made for the paid-out capital where a group insurance is liquidated. There are different taxation methods depending on whether the capital is liquidated on the “usual date” or earlier.

“Usual date” means:

  • the retirement of the beneficiary;
  • from the age of 60;
  • the death of the insured.

 


Taxation upon the liquidation of the capital of a group insurance

 

Liquidation of capital or surrender values upon usual termination or assimilated date

 

Contributions made until 31 December 1992

Contributions made from 1 January 1993

employer’s contributions

 

separate taxation (rates applicable to capital paid as from 1 July 2013)

 

payment at the age of 60 years: 20% (*)

payment at the age of 61 years: 18%

payment between 62 and 64 years: 16.5%

payment at the age of 65 years: 10% (**)

otherwise: 16.5%

employee’s contributions

separate taxation at a 16.5%rate

separate taxation at a 10%rate

Liquidation of capital or surrender values before legal date

employer’s contributions

taxation at marginal rate 

employee’s contributions

taxation at marginal rate

taxation at a 33% rate

 (*) The taxation increase from 18% to 20% is the continuation of the increase to 62 years in the minimum retirement age and, as a result, only applies where capital and surrender values are paid or allocated before this minimum age.

 (**) Taxation at a 10% rate where the beneficiary actually remained professionally active at least until the legal retirement age. In case of liquidation resulting from the death after the legal retirement age, the 10% rate remains acquired where the deceased actually kept on working until this age.


Withholding taxes
The tax is withheld when paid to residents on: Dividends: 25.00 %
Final Creditable
Interests from governments bonds: 25.00 %
Final Creditable
Interests from corporate bonds: 25.00 %
Final Creditable
Interests from special saving accounts: 25.00 %
Final Creditable
Interests from deposits: 25.00 %
Final Creditable
Comments

 

Movable income has been subject to a first reform applicable to income allocated as from 1 January 2012. The key elements of this reform were the giving up of the principle of the withholding tax on income from movable property as a final tax, the increase to 21% of the rate of the withholding tax on some interest and dividends, and the introduction of an additional levy of 4% on high movable income. The report of movable income became compulsory in principle.

Given the numerous problems related to the concrete application of this reform, the latest has been changed for income allocated in 2012 and given up for income allocated as from 1 January 2013 : the principle of the withholding tax as a final tax has been restored, the additional levy of 4% has been abolished and the standard rate of the withholding tax has been increased to 25%.

The rate of the withholding tax on income from movable property amounts henceforth as a standard to 25%, with the exception of six income categories (it concerns liquidation surpluses (transitional system applicable until 1 October 2014), dividends from residential real estate investment companies, income from ordinary savings deposits, interest from the so-called “Leterme government bonds”, interest from thematic citizens lending and a portion of income from copyright).

For further details, see the corresponding file (withholding tax on income from movable property).



Comments
 
Tax due date

The withholding tax on movable property must be paid within two weeks after the attribution or payment of the taxable income.

The withholding tax on earned income must be paid within two weeks after the end of the month in which the income has been paid or attributed.

As regards direct taxes and the advance tax payment on property which have been assessed, the tax liability arises at the time the assessment roll became enforceable. They shall be paid within two months after the date of dispatch of the tax notice. The tax due date, as regards the amounts registered in the assessment roll after submission of the tax return, is the date which can be found on the notice of assessment in respect of PIT.

Taxpayers declaring income from a self-employed activity must make advance payments (1). Moreover, any taxpayer can make advance payments to discharge the tax which is not covered by a withholding tax: these payments entitle the taxpayer to a tax bonus.

Advance payments must be made:

  • for the first quarter, no later than April 10th;
  • for the second quarter, no later than July 10th;
  • for the third quarter, no later than October 10th;
  • for the fourth quarter, no later than December 20th.

 

Remarks:

(1) A tax increase is applied when these payments are not made or when they are insufficient.

 
Tax collector

Federal Public Service Finance.

 
Special features

From assessment year 2015, the regions may levy surcharges on 25.99% of the federal taxable income. For assessment year 2015, the rates of the surcharge ("centimes additionnels régionaux") have been fixed at 0.35117% for the three regions.                              

 

Calculation of the federal and regional part of the tax due

From assessment year 2015, the regional tax competences are extended. The total PIT due is now composed of a federal part and a regional part.

The regional part of the tax consists of additional (proportional) surcharges, reductions and credits determined by the Regions. The regional surcharges are levied on a fraction (25.990%) of the reduced total of tax due ("impôt Etat réduit"). The “reduced total” is the total of tax due on aggregated income and separately taxed items of income, reduced by the personal allowances and the taxes due on dividends, interest and royalty income. The regional tax reductions and credits are linked to the material competences attributed to the Regions.

 

 

The following relates to withholding tax on income earned in 2014. The data hereafter are not the most recent available but are used to determine the personal income tax on income earned in 2014.

The withholding tax on earned income is in principle withheld by the employer and paid to the tax administration.

In some cases, the employer is entitled to an exemption of payment which has no impact on the amount withheld. The employer retains the exempt amount; as a result, the exemption works as a wage subsidy to the employer.

 

1. Employees’ remunerations

The tax deducted at source is withheld by the employer and computed in seven main steps:

  • deduction of the social security contributions,
  • deduction of the professional expenses,
  • application of a tariff aligned with the PIT tariff,
  • taking into consideration of the basic zero-rate band,
  • taking into consideration of the family situation,
  • application of the tax credits,
  • computation of the monthly amount.

 

A. Deduction of social security contributions

From the gross income are subtracted the employee’s social security fees and other levies made in pursuance of the social legislation or assimilated legal or administrative regulations. The special social security contribution is not deductible though.

 

B. Deduction of lump sum professional expenses

The annual income is then transformed into a net annual income by subtracting the lump sum professional expenses.

 

Professional expenses and computation of the withholding tax on earned income

Gross annual income

Professional expenses

 

on lower limit

% above lower limit

0 - 5,710.00

0

28.7%

5,710.00 - 11,340.00

1,638.77

10%

11,340.00 - 18,880.00

2,201.77

5%

18,880.00 - 64,587.67

2,578.77

3%

64,587.67 and more

3,950.00

0%

 

C. Scale

The common scale applies as it is,

  • where the beneficiary of the income is single;
  • where the beneficiary’s spouse has also own earned income consisting exclusively of pensions, annuities or assimilated benefits exceeding a monthly net amount of € 129. «Net» amount means the amount after deduction of social security contributions and after deduction of 20% of the remainder.

From 1 January 2004, legal cohabitants have been assimilated with married people. So the term “spouse” also covers a “legal cohabitant”.

 

Computation of withholding tax on earned income – Common scale

Net taxable annual income

Basic tax

 

on lower limit

% above lower limit

0 - 8,690

0.00

26.75%

8,690 - 11,800

2,324.58

32.10%

11,800 - 17,100

3,322.89

42.80%

17,100 - 37,760

5,591.29

48.15%

37,760 and more

15,539.08

53.50%

A particular provision applies:

  • where the beneficiary’s spouse has no earned income of his/her own;
  • where, on 1 January 2014, the beneficiary’s spouse has an own earned income consisting exclusively of pensions, annuities or assimilated benefits not exceeding a monthly net amount of € 129. «Net» amount means the amount after deduction of social security contributions and after deduction of 20% of the remainder.

 

The withholding tax on earned income is then computed as follows:

  • 30% of the beneficiary’s net taxable annual income is attributed to his/her spouse, with a maximum of € 10,200. The amount attributed is « Income B », the remainder being «Income A»;
  • the common scale is then applied to both Income A and Income B;
  • finally, the addition of both results gives the "base tax".

 

D. Taking into consideration of the zero-rate band

When the common scale applies as it is, the base tax computed according to that scale shall be reduced by € 1,607.68, but this reduction shall on no account result in a negative base tax.

When the particular provision applies, which divides the taxable income in two parts (one-earner families or equivalent), the basis tax obtained by adding the results of the application of the scale to “Income A” and “Income B”, shall be reduced by € 3,215.36, but this reduction shall on no account result in a negative base tax.

 

E. The family situation

Step five takes account of the family situation by granting the following tax credits:

 

Reductions of the withholding tax for dependent children and specific family situations

Number of dependent children
and peculiar family situations

Annual credit

1

408

2

1,104

3

2,952

4

5,400

5

7,980

6

10,548

7

13,128

8

15,900

for each child beyond the eighth

2,856

single person (except where the taxable income consists of pensions or prepensions)

288

widow(er) not married again, with dependent children

408

single parent family

408

disabled taxpayer

408

for ascendants and collaterals up to the second degree and aged 65 at least: for each dependent person

828

for all other dependent persons

408

Disabled children and other disabled dependent persons count for two.

A tax credit of 1,284 euro is yearly granted where the income beneficiary’s spouse has own professional income not consisting of pensions, annuities or assimilated benefits and not exceeding 214 euro per month.

A tax credit of 2,568 euro is yearly granted where the income beneficiary’s spouse has own professional income exclusively consisting of pensions, annuities or assimilated benefits and not exceeding 428 euro per month.

The ceilings of 214 euro and 428 euro per month are assessed on the basis of 80% of the gross income after deduction of the social security contributions.

 

F. Other tax credits

  • Where appropriate, 30% of the mandatory deductions implementing a group insurance contract or a precautionary provision for old age and premature death are deducted from the "base tax".
  • A tax credit is granted for the first annual 130 hours (*) of overtime by workers. The credit is computed on the basis of the “gross amount NOSS - National Office For Social Security” (i.e. before deduction of the personal social contributions) of the remunerations on which overtime pay has been calculated. The credit amounts to 57.75% where overtime pay is equal to 50% or 100%, and to 66.81% where overtime pay is equal to 20%.
  • A tax credit of 74.88 euro is granted to employees whose taxable monthly remuneration does not exceed 2,257.74 euro.
  • A tax credit is granted to low-income workers entitled to the employment bonus (**). It is equal to 8.95% (***) of the amount of the employment bonus actually granted.

    (*)The upper limit of 130 hours of overtime has been increased to 180 hours for workers employed by employers in the Horeca sector, provided the use of a cash register system in each operating place. The upper limit of 130 hours of overtime has also been increased to 180 hours for workers employed by employers carrying out construction works. (**)The employment bonus is a reduction of the persona! social security contributions targeted on low-income workers. It is also granted to some workers affected by restructuring. It is a lump sum reduction that decreases progressively where the reference wage increases. (***) 14.4% as of 1 April 2014.

 

G. Computation of monthly amount

The amount of tax thus obtained is then divided by twelve so as to determine the amount of withholding tax to deduct from monthly earned income.

 

2. Holiday pay and other exceptional allowances

For holiday pay and other exceptional allowances paid by usual employer, the withholding tax on earned income to be deducted is calculated according to a special scale, whereby the rate varies according to the normal gross annual income and not to the income actually paid out.

 

3. Salary arrears and redeployment allowances

The withholding tax on salary arrears and on redeployment allowances is calculated according to a "reference salary".

This corresponds in principle to the annual amount of the normal gross salary the beneficiary of the income enjoyed immediately before the revision which led to the payment of the arrears.

 

4. Termination compensation

The withholding tax on earned income levied on termination compensation, is calculated according to the rules set forth above in respect of arrears.

The reference salary to be taken into account is the one upon which the calculation of the compensation was based, or, failing that, the salary which was paid to the recipient during the last period of normal activity in the service of the employer who pays the compensation.

 

5. Company managers

Remunerations paid or allocated to company managers are liable to withholding tax on earned income. A distinction is made between periodical and non-periodical remunerations.

 

6. Students

No withholding tax is due on remunerations paid or allocated to students with a written employment contract not exceeding fifty working days per calender year.

This tax exemption is granted only where, apart from the solidarity contribution, no social security contributions are due on the payments.

 

7. Young workers

No withholding tax is due on remunerations paid or granted to young workers who meet the conditions of eligibility for school-leavers’ unemployment benefits, provided the work is carried out under the terms of an employment contract starting in October, November or December of the preceding year and provided the gross amount of the remunerations does not exceed € 2,700 a month.

 

8. Horeca sector - casual labour

The rate of the withholding tax on earned income has been uniformly (without reduction) fixed at 33.31% for remunerations entitled to separate taxation. The conditions are the following:

-   the remunerations must relate to services supplied during maximum 50 days per calendar year;

-   the employer and the worker must conclude a fixed-term employment contract or a contract for a clearly determined job not exceeding 2 consecutive days;

-   the employer must come under the joint committee for the hotel industry or under the joint committee for temporary work if the user comes under the joint committee for the hotel industry;

-   the calculation of the social security contributions must be based on a hourly or daily lump sum amount.

 

WITHHOLDING TAX ON EARNED INCOME – SOME SPECIAL FEATURES

Exemptions of payment

The withholding tax on earned income is in principle withheld by the employer and paid to the tax administration. In some cases, the employer is entitled to an exemption of payment which has no impact on the amount withheld. The employer retains the exempted amount; as a result, the exemption works as a wage subsidy to the employer.

These exemptions of payment refer to the structural reduction ; remunerations paid to research workers ; team bonuses and night shift differentials ; overtime pay ; sportsmen. For further information please refer to the Tax survey publication mentioned above.

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51a+d59fa

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 49,025.40 EUR 12.65
2011 47,310.90 EUR 12.48
2010 44,623.40 EUR 12.22
2009 42,307.30 EUR 12.13
2008 43,854.50 EUR 12.39
2007 41,206.90 EUR 11.95
2006 39,559.00 EUR 12.11
2005 39,205.70 EUR 12.59
2004 37,663.80 EUR 12.61
2003 36,041.80 EUR 12.75
2002 36,072.80 EUR 13.11
2001 35,171.00 EUR 13.23
2000 33,405.50 EUR 12.94

Comments

The ESA95 code d51a includes subcodes which are also the subject of other files, such as "Withholding tax on movable property" and "Tax on the worker's participation in the benefit or the capital of the company".

This results in double-accounting of some tax revenue amounts, once in the PIT file and once in the file describing the associated tax.