BELGIUM Law and Practice Contributed by: Robin Minjauw and Anouk Van der Mast, Tiberghien
3.5 Employment Income In Belgium, employment income is subject to personal income tax at progressive rates ranging from 25% to 50% (increased with municipal surcharges and social security levies). Employment income is broadly defined and includes not only base salary, but also bonuses, benefits in kind, etc. Belgium also provides a specific expatriate tax regime for inbound employees and qualifying researchers recruited abroad or seconded to Belgium. Under this regime, and subject to meeting several conditions – including a minimum remuneration requirement for employees or relevant qualifications for researchers – the employer may grant a tax-free allowance of up to 35% of the employee’s gross remuneration as a lump-sum reimbursement of expenses. In addition, certain specific costs (eg, moving expenses, school fees for minor children, home set-up costs) can be reimbursed tax-free in addition to the 35% lump sum allowance. The regime applies for a maximum period of five years, which can be extended once by three additional years. Belgium does not have a specific tax regime for remote working. Belgian residents are taxed on their worldwide income in Belgium; however, as a general rule, under tax treaties, employment income is taxable in the state where the work is physically performed (the “work state”). An important exception is the so- called 183-day rule which may shift taxing rights to the residence state. More specifically, this applies if the following conditions are cumulatively met: • the presence of the employee in the work state does not exceed 183 days; • the remuneration is paid by an employer not resi - dent in the work state; and • the remuneration is not borne by a permanent establishment in the work state. 3.6 Other Income Belgium broadly aligns with the OECD Model Conven - tion: income not covered by specific treaty provisions is dealt with under the “other income” provision, which generally allocates exclusive taxing rights to the resi - dence state.
through a step-up mechanism at the end of 2025. The capital gains tax also provides for an annual exemp - tion of EUR10,000 per person and a limited carry-for - ward (maximum EUR1,000 per year) up to a maximum exemption of EUR15,000. Specific rules also apply to (i) shareholders holding a substantial participation (ie, more than 20%), including a threshold exemption and progressive rates for higher capital gains and (ii) internal capital gains (33%). With respect to real estate located in Belgium, capital gains are taxable depending on the type of property and the holding period. Capital gains on buildings are, in principle, taxed at 16.5% if the property is sold within five years of acquisition. Capital gains on land are taxed at 33% if sold within five years and at 16.5% if sold between the fifth and eighth year. After these holding periods, capital gains on real estate are gen - erally exempt. Corporate Income Tax Capital gains are taxed as profits of the company and therefore subject to the general corporate income tax rate. Capital gains on shares should be exempt from taxation if the three conditions of the participa - tion exemption (“dividend received deduction”) are cumulatively met. • Minimum participation requirement: the company must hold either at least 10% of the share capital of the subsidiary, or a participation with an acquisi - tion value of at least EUR2.5 million (in which case the shares must be qualified as “financial fixed assets” unless the company qualifies as a “small company”). • Minimum holding requirement: the shares must be held in full ownership for an uninterrupted period of at least one year. • Subject-to-tax requirement: the subsidiary whose shares are sold must be subject to a normal cor - porate income tax regime. This means that it may not be established in a tax haven, nor benefit from a substantially more favourable tax regime than the ordinary tax regime. In other words, the subsidiary must be effectively subject to a tax comparable to Belgian corporate income tax.
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