BELGIUM Law and Practice Contributed by: Robin Minjauw and Anouk Van der Mast, Tiberghien
Tax Domicile The primary criterion for tax residency is the individu - al’s tax domicile, defined as the place where a person effectively and habitually lives with a certain degree of stability and continuity. This concept differs from the civil law notion of domicile, as Belgian tax law empha - sises actual circumstances rather than intention. Belgian law provides a rebuttable presumption: indi - viduals registered in the Belgian National Register of Natural Persons are presumed to have their tax domi - cile in Belgium, unless they can provide sufficient evi - dence to the contrary. For married couples or legally cohabiting partners, tax residency is irrebuttably pre - sumed to be at the location of their shared household. In determining the tax domicile, authorities consider factors such as: • the place where the individual effectively and per - manently resides; • where the individual lives and works; • the location of the family household; and • where the individual maintains their vital personal and social relations. If these factors point to different jurisdictions, the location of the individual’s family and personal ties is generally a more decisive factor than, for example, temporary work or physical presence. Seat of Wealth If an individual has no tax domicile in Belgium, they may still be considered a Belgian tax resident if Bel - gium is the place from which they manage their wealth or business affairs. This refers to where the person administers assets, supervises wealth management, or maintains the centre of their economic and profes - sional interests. The physical location of assets is not decisive; the key factor is where the wealth is effec - tively managed. 2.3 Taxation of Resident Individuals Individuals who are Belgian tax residents are gener - ally subject to personal income tax on their worldwide income. This means that income earned both in Bel - gium and abroad is, in principle, taxable regardless of where it is paid or received.
However, in order to mitigate double taxation, world - wide income may not be fully taxed in Belgium due to (i) the application of a double tax treaty or (ii) a unilateral tax reduction. If a tax treaty applies, certain foreign-sourced income (eg, income from immovable property) could be exempt from taxation in Belgium. It should be noted that under the “exemption with progression” method, the exempt income could still be considered when determining the applicable progressive tax rate on the taxpayer’s income taxable in Belgium, which can increase the effective tax rate. Second, if no tax treaty applies, Belgium may grant a unilateral tax reduction to partially relieve double taxation. This relief typically applies to specific types of foreign income and is generally limited to a portion of the Belgian tax that would otherwise apply, ensur - ing partial mitigation of double taxation even in the absence of a treaty. 2.4 Taxation of Non-Resident Individuals Non-resident individuals in Belgium are taxed on income that is earned or sourced within Belgium. The Belgian tax system relies on the principle of territori - ality: only income with a sufficient connection to Bel - gium can be taxed. That connection may arise from the location of a property, the place where the activity is carried out, or the allocation of costs for a particular form of remuneration. Such income includes, among others, remunerations for employment exercised in Belgium, profits from business or professional activi - ties carried out in Belgium through a Belgian estab - lishment, rental income from Belgian property and certain dividends, interest, and royalties. The specific tax treatment varies depending on the type of income. 2.5 Tax Residence of Legal Entities In Belgium, a legal entity is generally considered a Bel - gian tax resident if it meets three cumulative criteria: • first, the entity must have legal personality under Belgian law or be a foreign entity established in a form comparable to a Belgian company with legal personality; • second, the entity must carry out business or profit-making activities; and
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