Filing taxes can be a dreaded task for many, especially for international residents in Belgium. Seeking guidance from a tax expert can help simplify and ease this daunting process for expats.
Eric Laurent, a partner at ERYV law firm specializing in international income, sheds light on the diverse groups falling under the term “expat.” From EU institution employees to NATO affiliates, each group has unique tax considerations. Additionally, cross-border workers and those on work assignments make up other significant subcategories, as noted by Laurent in an interview with The Brussels Times.
The initial step is to establish your tax residency, which is determined by two key factors.Your domicile is the heart of your personal and professional life. It’s important to note that your tax domicile can differ from your civil domicile.The main location of assets is not where your money is stored, but where your assets are effectively managed.
According to the Belgian Income Tax Code, being registered with a Belgian commune automatically makes you a tax resident in Belgium. However, you can reverse this status by providing evidence to the tax administration that you do not reside in the country.
For those uncertain about their status, it is recommended to seek guidance from a tax advisor due to the intricacy of this concept.
Are you wondering what you need to declare? Let’s find out!
Your tax residency determines what income you need to report. As a resident of Belgium for tax purposes, you must disclose all income earned worldwide to the Belgian tax authorities.
One important part of tax return forms in Belgium focuses on foreign income, whether it’s from work or a pension. It’s essential to report total income in both Belgium and the country of origin. For Belgian tax residents, any income from foreign bank or savings accounts must be declared, including interest earned. Similarly, individuals with a broker account abroad need to report dividends or interest received from assets.
It is crucial to declare all foreign bank accounts, regardless of the income they generate or their balance. Before submitting your tax returns in Belgium, you must register the bank account number and its country with the National Bank. Remember to tick the box on your tax return to disclose the presence of a foreign bank account, as emphasized by Laurent.
If you are not a tax resident in Belgium but earn income from renting out property here, you need to report this rental income.
If you own property outside Belgium, you need to contact the Belgian tax authorities to assess its cadastral income. Details such as the property’s location, purchase date, and price are required. A specific section on foreign real estate is included in the tax return for this purpose.
If your income varies, it’s crucial to review the simplified tax declaration sent by the Belgian government. Expats might have unique circumstances that the government overlooks, leading to inaccurate proposals.
Expats in Belgium must ensure their proposals are accurate, as Belgian authorities may access detailed information through the Common Reporting System (CRS) later on. This system helps verify the correctness of declared foreign income, discrepancies could result in penalties.
When it comes to taxes, nobody wants to pay twice! Double taxation can be a headache for businesses and individuals.
When declaring income globally, it may not always lead to double taxation. This is because numerous countries have entered into agreements to prevent being taxed twice on the same income source.
Sometimes, the tax paid in the country where you work is subtracted from what you owe in your home country. Other times, the money you make in the country you work in is only taxed there, meaning you won’t be taxed in your home country.
Foreign pensions can be tricky to navigate. The responsibility lies with the taxpayer to determine where the pension is taxable – in the source country or in Belgium. You can find this information in the tax treaty between Belgium and the country issuing the pension. Generally, pensions are taxed in the source country and are exempt from income tax in Belgium. However, it is important to report them to calculate the average tax rate for other taxable items in Belgium.
Determining your tax residency is crucial to prevent being taxed twice. If you’re a Belgian tax resident earning income in a country with a double tax agreement, it’s wise to obtain a tax residency certificate. This document confirms your tax status in Belgium and can be provided to foreign tax authorities.
Let’s talk about exemptions and anomalies.
Civil servants employed by the EU in Belgium and without any other income here are not required to pay taxes or declare assets. They are considered tax residents of the EU country where they work for the EU institution. However, if they own property in Belgium that they rent out, they must report this rental income.
Non-civil servants employed by institutions are typically seen as Belgian tax residents. Trainees at these organizations are usually taxed in Belgium, but this can vary based on their tax residency. For instance, a trainee staying for just six months may not be classified as a Belgian tax resident, even if they are registered with a Belgian commune.
If you are working in Belgium on an international assignment, like a Spanish employee working for their company’s branch in Belgium, you are probably seen as a Belgian tax resident. However, there are exceptions. For instance, if your family stays in Spain and you handle your finances from there, you might not be considered a Belgian tax resident.
Cross-border workers in Belgium face unique tax challenges. Commuters from neighboring countries, such as the Netherlands, France, Germany, or Luxembourg, who work in Belgium but live elsewhere must navigate tax rules in both nations. They report their global income to Belgian tax authorities and their income earned in their work country. This situation can be particularly intricate for those crossing borders for work.
Married or cohabiting couples in Belgium share a tax residence based on where they live together. They are considered either both tax residents of Belgium or not.
In Belgium, the tax rules can vary for the partner of a civil servant. If the partner has no income, they will be under the civil servant’s tax regime. However, if the partner earns income from Belgium, they must file a tax return in the country.
Belgium still holds title for highest tax burden, despite slight decrease. Get ready to file your taxes online starting April 24th - here's what you need to know.
For individuals owning properties and earning income in both Belgium and another country, the “tie-breaker rule” comes into play. In this scenario, various factors influence tax residency determination. Tax authorities from both countries may need to collaborate to reach a decision on the individual’s tax status.
In Belgium, tax return deadlines vary depending on your situation. Most individuals must file by 30 June (paper) or 15 July (via Tax-on-Web). Self-employed individuals and those with foreign incomes have until 16 October. Meanwhile, for those with a split payroll or non-residents filing in Belgium, the deadline extends to 22 November.
If you have questions about your tax status or what you need to declare, sign up for the free Expat Welcome Desk webinar on tax returns happening on 11 June. You can register by emailing inscriptions@commissioner.brussels.
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