Taxes in Europe Database v2
Income Tax Code 1992, articles 3 to 178.
Law of 10.08.2001 (B.O.J.20.09.2001) with reform of personal income tax.
The ways of implementation applicable to the withholding tax on earned income allocated or made payable as from 1 January 2013 are published in the BOJ of 14 December 2012.
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:
Application of indexation provisions provided for by law.
A substantial part of the revenue is earmarked and transmitted to the regional authorities (Regions and Communities).
Part of the revenues is transferred to special purpose vehicles (SPV) owing to securitisations of fiscal claims in 2005 and 2006.
Since 2009 : part of the withholding tax on earned income has been attributed to the alternative financing of social security.
In case a company car is provided, the taxable benefit is assessed on the basis of the list 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 (as of January 2012) :
6/7 * List value * Age percentage * CO2 coefficient
Since 1 January 2005, the cadastral income of the dwelling house is no more taxable, except if interest on a loan contracted before 1 January 2005, are still deducted.
The first 1,880 euro (for 2013 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.
The profits and proceeds not connected with a professional activity are considered here. Are not concerned:
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 3,760 euro.
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.
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.
Certain income was sometimes classified in different categories, such as copyright. A new tax regime applies now to copyright in order to specify the income category it belongs to.
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 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. The taxpayer's dwelling-house represents a special case: the taxable income thereof is granted a lump-sum relief and the advance tax payment on property pertaining to it, is partly creditable against the taxpayer's income tax liability.
2. Income from movable property
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 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.
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. All 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 director remunerations; profits from agricultural, industrial and commercial activities; proceeds from a liberal profession; profits and proceeds from former professional activities; replacement income; copyright.
The net income is determined in six stages:
COMPUTATION OF THE TAX - General principles
Tax calculated according to the rate schedule
- allowance for dependents
- tax credits for expenses entitling to a tax incentive
- tax credit for replacement income
- tax credit for overtime pay
= reduced "base" tax
- tax credit for foreign income
= "principal" on ATI (aggregated taxable income)
+ tax on separately taxed income
- withholding taxes, tax credits, advance payments and other items to be set off
+ increases for no or insufficient advance payments
- bonus for advance payments
= « State » tax
+/- regional and municipal surtaxes
+ tax increases
= amount payable by or to the taxpayer (*)
(*) The amount eventually paid by or refunded to the taxpayer such as stated on the notice of assessment in respect of personal income tax, includes the tax, the balance of the special social security contribution and the balance obtained after applying the social exemption for the patient's contribution towards medical costs.
Since 2004 the tax has been fully computed per spouse.
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.
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 2,340 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 3,900 euro.
The same 3,900 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
above the limit
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
Deduction for sole own dwelling (new system since 2005)
This deduction applies to loans raised on or after 1 January 2005 in order to acquire or maintain the taxpayer’s dwelling house. It must be the taxpayer’s sole dwelling house, which means that he cannot own other real estate by 31 December of the year in which the loan contract was entered into. The dwelling must be located in a Member State of the European Economic Area.
The deduction applies to interest on loans, capital repayments or life insurance premiums assigned to the amortisation of the mortgage loans and outstanding balance insurance premiums. The mortgage loan and the life insurance must have been taken out with a company having its seat in the European Economic Area.
Unlike loans raised before 1 January 2005, the deduction is not limited according to the total earned income. The maximum amount of the deduction, per taxpayer and per taxable period, is made up of the basic deduction and of increases:
The basic amount is also increased where at least three children are dependent on the taxpayer on 1 January of the year following the year in which the loan contract was entered into. This increase amounts to 70 euro for 2012 income.
These increases no longer apply as from the taxable period during which the taxpayer becomes owner, occupier, emphyteutic lessee, superficiary owner or usufructuary of a second dwelling. The increases are then definitively lost.
The deduction applies to the total net income.
Interest on loans is eligible for relief when they relate to debts incurred for the sole purpose of acquiring or maintaining real property. In the case of an acquisition of property by inheritance, the interest accruing from a loan taken out with a view to paying inheritance tax is deductible to the extent that it relates to that property.
The deductible amount may not exceed the amount of the taxable income from real property. Where a taxpayer has incurred a loan before 1 January 2005 in order to buy a dwelling house, for example, and has no other income from immovable property, the deductible interest may not exceed the indexed cadastral income of that dwelling house.
Where newly built houses or important renovation works are involved, an additional deduction of mortgage interest may be granted (see below). This deduction remains applicable to loans contracted before 1 January 2005.
Where the loan entitles to the deduction for sole own dwelling, the deductible interest of loan are therein included and are not deducted from the real estate income.
The following rules only apply to interest on loan not taken into account for the deduction for sole own dwelling.
Interest on loans specifically raised for acquiring or maintaining real estate can be deducted from taxable real estate income up to the amount of the latter. The remainder is eligible for an additional deduction when the loan has been entered into in order to finance a new construction or important renovation works. This deduction applies to the total net income.
The life insurance premiums in question concern other contracts than those taken into account for the deduction for sole own dwelling. Consequently, this applies to contracts entered into before 1 January 2005 and after this day but not taken into account for the deduction for sole own dwelling.
These premiums entitle to a tax credit, provided some conditions are met.
The deductible amount for each spouse is limited:
This limit applies to the combined life insurance premiums and mortgage capital repayments, minus the premiums and the repayments benefiting the deduction for sole own dwelling limited to the basic amount.
In principle, life insurance premiums entitle to the tax credit for long-term savings, which is granted at the 30% rate.
They can entitle to the increased tax credit for savings for house purchase, which is granted at the marginal rate, if some conditions are met.
Consequently, the increased tax credit for savings for house purchase only applies to mortgage loans raised before 1 January 2005. As far as mortgage loans raised after this date are concerned, the deduction for sole own dwelling applies.
The basic zero-rate band is 6,800 euro (both for a single person and for a spouse).
An additional amount of 270 euro is granted where the taxable income does not exceed 25,270 euro (for low- or middle-income taxpayers).
When the taxable income amounts to between 25,270 euro and 25,540 euro, a phasing out rule applies: the additional amount granted is progressively reduced proportionately to the difference between the taxable income and the 25,270 euro limit.
The basic exemption is increased by 1,440 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 540 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
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.
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:
Expenses entitling to a tax incentive
Rate and ceiling of tax credit
Long-term savings and investment in real property
Individual life insurance premiums and mortgage capital repayments, when not considered as “housing-saving”
Pension savings scheme
Personal premiums for group insurance contracts and pension funds
Sums paid for the acquisition of employers’ shares
Expenses for renovation in ‘zones of positive metropolitan policy’
15% of the expenses
Maximum 730 euro
Expenses for making dwellings secure against burglary and fire
30% of the expenses
Expenses for renovating low-rent dwelling houses
5% of the expenses for 9 years
Maximum 1,100 euro
Roof insulation (agreement signed as from 28 November 2011)
30% of the expenses
Maximum 2,930 euro
Roof insulation (agreement signed before 28 November 2011)
40% of the expenses
Other work aimed at energy-saving - transitional system
(agreement signed before 28 November 2011) (*)
40% of the expenses
Maximum 2,930 euro or 3,810 euro, as appropriate
30% of the interest, after deduction of the interest rate subsidy
30% of the expenses, max. 9,510 euro
15% of the expenses, max. 4,800/2,930 euro
40% of the expenses, max. 260 euro
Other expenses (tax credits granted at federal level)
Local Employment Agencies vouchers
and service vouchers
Recognised Development Funds
5% of the expenses
Maximum 310 euro
(*) For expenses incurred in 2012 for work carried out under an agreement signed before 28 November 2011, a transitional system applies: the tax credit for work aimed at energy saving remains at the 40% rate, the possible carry-over (to the next three taxable periods) and the possible conversion into a refundable tax credit remain applicable.
As regards the expenses actually incurred and paid in 2012 for work carried out under an agreement signed before 28 November 2011 (transitional system), the measure relating to energy saving, as it existed previously, remains applicable, including the possible conversion into a refundable tax credit.
As regards the expenses relating to roof insulation paid in 2012 under an agreement signed as from 28 November 2011, the possible conversion into a refundable tax credit remains applicable.
Natural persons signing a loan contract during the period from 1 January 2009 to 31 December 2011 incl. in order to pay expenses entitling to the tax credit for investments in energy-saving (the “green loans”), are granted an interest rebate of 1.5%. There is no automatic mechanism anymore linking the system of green loans and the above-mentioned tax credit. A green loan can indeed be raised for work which does not entitle or no longer entitles to the tax credit for energy saving because this tax credit has been limited in the meantime, notably as far as recently built dwellings (of less than five years) are concerned.
Tax credit “green loans”
“Green loans” also give right to a tax credit on the remaining interest not entitling to the interest rebate. This tax credit amounts to 30% of the interest which were actually paid during the taxable period, after deduction of the State intervention (i.e. after deduction of the ‘interest rebate').
This tax credit applies to interest paid as from 1 January 2009.
(**) The tax credit for “service vouchers” can be changed into a refundable tax credit for taxpayers with income not exceeding 25,270 EUR.
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.
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 2012.
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 cycling commuters is also exempted from tax up to 0.21 euro a kilometre.
The redundancy allowance which is payable by the National Employment Office and which dismissed workers can benefit, is tax exempted and exempted from social 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 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, sport and culture vouchers is a social advantage exempted up to 100 euro a year 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 maximum 2,430 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 2,361.52 euro per calendar year. This tax exemption follows the exemption system applied to social security contributions, and applies where those allocations are considered as well as professional income as miscellaneous income.
Although, as a general rule, replacement incomes are taxable, some social transfers are exempted. Are concerned:
EXPENSES ENTITLING TO A TAX RELIEF
Certain expenses entitle to a tax relief. The deductions are grouped in four categories: those related to long-term savings and to real estate investments, the deductions relating to the environment, the other expenses entitling to a tax relief at federal level, regional tax incentives.
The tax advantage can take four forms:
TAX CREDITS TO BE OFFSET AGAINST THE "PRINCIPAL"
For further details on tax credits, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:
TYPE OF TAX CREDIT
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 ».
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.
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 5.7% of the reduction in personal security contributions which is actually granted on remunerations earned during the taxable period.
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 for the spouse with the highest income and is limited to 420 euro per dependent child.
The part of the tax credit relating to some energy-saving expenses paid in 2012, which cannot effectively be granted to the taxpayer because of insufficient taxable income, is converted into a refundable tax credit.
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".
The tax credit in the Flemish Region has been abolished as from tax year 2012 and no other Region has introduced regional surtaxes.
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).
Municipal surcharges are calculated at the appropriate rate which is specific to each municipality and which is based on the “principal”.
In tax year 2013 the local surtax varied between 0% and 9% of the federal PIT amount (7,42% on average).
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.
The law has provided for separate taxation in respect of three categories of income:
These incomes escape aggregation and are taxed at special rates. Total aggregation (inclusion of this income in the ATI - 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.
The assessment rates vary between 10% and 25% according to the case.
Assessment rates of the main income from capital and movable property (2012 income)
DIVIDENDS EXCEPT SURPLUSES
From shares issued as from January 1st, 1994 by a public call for funds
From shares issued as from January 1st, 1994, provided that the newly issued shares are attributed in consideration of cash contribution, that they are in registered form as from the date of their issue, that they are the object of an open deposit or that they are registered on a securities account with a clearing house
From shares distributed by investment companies, except in the case of total or partial repayment of a company's capital or in the case of an acquisition of own shares
From so-called AFV-shares (fiscal advantages shares), but only where such shares are quoted on a stock exchange and where the company paying the income has irrevocably waived the transfer of the benefit resulting from the exemption of corporate tax, or distributed by companies of which a part of the capital has been injected by a PRICAF (*)
From dividends distributed by a cooperative participation company in the context of a participation scheme (Act of 22 May 2001 concerning employee equity participation and employee participation in the capital and the profits of their enterprise).
From other shares
SURPLUSES FROM REPURCHASE OF OWN SHARES
INCOME FROM ORDINARY SAVINGS DEPOSITS
INTEREST FROM GOVERNMENT BONDS 24.11.2011 - 02.12.2011
Income from agreements concluded as from 1 March 1990
Income from agreements concluded before 1 March 1990
Income from some distribution common investment funds
ROYALTIES, LIFE ANNUITIES AND TEMPORARY ANNUITIES
Income from agreements concluded as from 1 March 1990
Income from agreements concluded before 1 March 1990
(*) And of which more than 50% of the shares, representing the majority of voting rights, are in the hands of natural persons.
The tax rates applying to these incomes are the following:
Rates of separately taxed miscellaneous income (2012 income)
Type of income
Occasional profits and proceeds
Allowances “research workers”
Prizes and subsidies
Prizes attached to debenture bonds
Income from sublease or from transfer of a lease
15% for post-March 1990 contracts and 25% in the other cases
Income from permission to place advertising boards
Income from permission to place GSM masts (*)
Income from sporting rights (fowling, fishing, shooting)
15% for post-March 1990 contracts and 25% in other cases
Capital gains from built property
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
In many cases earned income which can enjoy the separate taxation is taxed at an average rate, calculated by dividing the reduced “base tax” by the aggregate taxable income. The reduced “base tax” is the tax subsisting after application of the tax credits for replacement income and overtime pay.
Separate taxation of earned income (2012 income)
Salary arrears, replacement income arrears
the previous year’s average rate
Gross termination compensation
Prepaid holiday pay
the current year’s average rate
Arrears of maintenance payments
Capital gains from professional activities
Gross regional employment premiums < 180 euro per month
Young sportsmen’s remunerations, first 18,000 euro gross bracket
Volunteer sporting activity as a self-employed secondary activity, first 18,000 euro gross bracket
Setting-up allowance for general practitioners (*)
(*) A setting-up allowance amounting to 20,000 euro is granted to general practitioners who decide to set up in an area with a lack of general practitioners.
Capitals 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 at the “usual date” or earlier.
“Usual date” means:
Taxation upon the liquidation of the capital of a group insurance
Liquidation of capital or surrender value upon usual termination or assimilated date
Contributions made until 31.12.1992
Contributions made from 01.01.1993
separate taxation, 16.5% rate
10% rate (*)
separate taxation, 10% rate
Liquidation of capital or surrender value before legal date
taxation at marginal rate
taxation at marginal rate
taxation at 33% rate
(*) As far as the capitals liquidated as from 01.01.2006 are concerned, the entire capital is taxed at a 10% rate where the liquidation takes place at the earliest at the legal retirement age, in favour of the beneficiary who actually kept on working at least until this age. In order to verify fulfilment of that condition, a reference period of three years before the legal retirement age has been defined. In case of liquidation resulting from the death after the retirement age, the 10% rate remains acquired where the deceased actually kept on working until this age.
Situation for tax year 2013:
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 and the debtor of the income had to communicate to a central contact point the information relating to interest and dividends allocated, e.g. the identification of the beneficiaries of the income.
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 compulsory report of all movable income (and miscellaneous movable income) was planned initially in the 2013 tax return, except for movable income on which the additional levy of 4% would have already been withheld. Finally, an exemption from reporting has been maintained for interest and dividends on which a withholding tax on income from movable property has been levied and of which the cumulated amount does not exceed the threshold of 20,020 euro.
For further details, see the corresponding file (withholding tax on income from movable property).
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:
(1) A tax increase is applied when these payments are not made or when they are insufficient.
Federal Public Service Finance.
The following relates to withholding tax on income earned in 2012. The data hereafter are not the most recent available but are used to determine the personal income tax on income earned in 2012.
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. See below (section 'Exemption of payment').
1. Employees’ remunerations
The tax deducted at source is withheld by the employer and computed in seven main steps:
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
on lower limit
% above lower limit
0 - 5,490.00
5,490.00 - 10,900.00
10,900.00 - 18,140.00
18,140.00 - 61,852.33
61,852.33 and more
The common scale applies as it is,
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
0 - 8,350
8,350 - 11,340
11,340 - 16,430
16,430 - 36,290
36,290 and more
A particular provision applies:
The withholding tax on earned income is then computed as follows:
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 € 1,546.15, 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 € 3,092.30, 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 childrenand peculiar family situations
for each child beyond the eighth
single person (except where the taxable income consists of pensions or prepensions)
widow(er) not married again, with dependent children
single parent family
for ascendants and collaterals up to the second degree and aged 65 at least: for each dependent person
for all other dependent persons
Disabled children and other disabled dependent persons count for two.
A tax credit of 1,236 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 206 euro per month.
A tax credit of 2,466 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 411 euro per month.
The ceilings of 206 euro and 411 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
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.
Remark : There is no more distinction according to the amount of the termination compensation for the calculation of the withholding tax on earned income.
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.
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 € 2,575 a month.
WITHHOLDING TAX ON EARNED INCOME – SOME SPECIAL FEATURES
Exemption of payment
1. Structural reduction
The law of 17 May 2007 introduced a structural exemption of payment, calculated on the basis of the gross remunerations. This exemption applies to the profit sector, the non-profit sector and autonomous public undertakings (the SNCB/NMBS Group, bpost and Belgacom).
The rate of this exemption has been progressively increased and has amounted to 1% since 1 January 2010. This increase does not apply de facto to the non-profit sector because the additional exemption of payment has been replaced by a payment to the "Maribel Social" Funds.
2. Research workers
A partial exemption of payment to the tax administration of withholding tax on earned income has been brought in with respect to remunerations paid to research workers. This exempted part that is deducted but not paid to the tax administration stays at the disposal of the employer. The research workers are allowed to set off that part (not paid to the tax administration) against their income tax liability in their tax return.
The payment to the tax administration of withholding tax on earned income is exempt up to 75% (new percentage as from January 2009) :
3. Team bonuses and night shift differentials
Where companies’ work schedules include team work or night shifts, these companies enjoy a partial exemption of payment to the tax administration of the withholding tax on earned income that is normally deducted on the concerned workers’ remunerations.
However, the eligible companies shall withhold the entire normal amount of the withholding tax on earned income and on bonuses, and the workers are entitled to set off the same amount against their income tax liability in their tax return.
The part of the withholding tax on earned income not to be paid to the tax administration has been set at 15.6% of the aggregate taxable remunerations, including team bonuses but excluding holiday allowances, end-of-year payments and salary arrears.
This exemption of payment has been extended to the following autonomous public undertakings: Belgacom, bpost and companies from the SNCB/NMBS Group.
4. Overtime pay
For the employees, the tax relief consists of a tax credit implemented in the calculation of the withholding tax on earned income and for their employers in the market sector or temping sector, the advantage consists of a partial exemption of payment to the tax administration of withholding tax on earned income. The tax relief has been extended to the following autonomous public undertakings: Belgacom, bpost and companies from the SNCB/NMBS Group.
The exempted amount of withholding tax on earned income not to be paid to the tax administration amounts to:
This exemption applies to the first 130 hours overworked, per employee and per year.
Since 1 January 2008, a partial exemption of payment of withholding tax on earned income up to 80% has been granted for remunerations paid or granted by sporting clubs to sportsmen younger than 26.
Sporting clubs may also benefit the partial exemption of payment of withholding tax on earned income for sportsmen aged 26 or older, on the understanding that half of this exemption of payment is devoted, within a given period, to the training of young sportsmen. Amounts devoted to the training of young sportsmen cover the payment of trainers’ and coaches’ wages on the one hand, and of young sportsmen’s wages on the other hand.
As from 1 July 2010, young sports men's remunerations considered as valid devoted amounts cannot exceed, per young sportsmen, eight times the minimum remuneration entitling to the status of remunerated sportsman, that is presently 8,850 euro (*).
(*) Amount applicable from l July 2011 to 30 June 2012.
Another change came into force on 1 July 2010: remunerations earned by the sportsman as manager, no longer entitle to the partial exemption of payment of withholding tax on earned income.
Lump sum credit granted by the Flemish Region
End of the lump sum tax credit which was granted by the Flemish Region.
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.