Tax rates in Belgium

Company Tax

25%

Tax Rate For Foreign Companies

Belgian permanent establishments and branches of foreign companies are subject to normal corporate tax on their worldwide income. Foreign-source income may be exempt based on a tax treaty.

Certain income attributed by a Belgian tax resident to a non-resident is taxable in Belgium provided all of the following conditions are met:
•    Revenues stem from any provision of services
•    Revenues qualify as benefits or profit in the hands of the non-resident beneficiary
•    The services are provided to an individual tax resident in Belgium in the framework of one’s business activity, a corporation, a taxpayer subject to the legal entities tax, or a Belgian establishment
•    There are (in)direct links of interdependence between the foreign supplier and its Belgian client
•    Such revenues are taxable in Belgium according to a double tax treaty (DTT) or, in the absence of any DTT, if the non-resident taxpayer does not provide evidence that income is actually taxed in the state where the taxpayer is resident.
After a lump-sum deduction of 50% as professional expenses, the 25% rate on the gross fee paid goes down to an effective rate of 12.5%.

Capital Gains Taxation

Capital gains derived by companies from the sale of tangible and intangible fixed assets generally are fully taxable at the normal corporate tax rate (or the reduced rate for SMEs, if appropriate). Nevertheless, taxation of gains on such assets can be deferred if the assets were held for more than five years before the disposal and the entire sale proceeds are reinvested in qualifying assets within three years. In the case of a qualifying reinvestment, the tax due will be spread over the life of the asset in which the sale proceeds have been reinvested.

Net capital gains on shares are fully exempt provided that the shares have been held for at least one uninterrupted year; the acquisition value is of at least EUR 2.5 million or 10% of shareholding; the payer company must be subject to corporate income tax on the profits out of which the distribution is made.

Main Allowable Deductions and Tax Credits

Companies may deduct all business expenses when calculating taxable income, on the general condition that they are legitimate, at arm’s length and that they are incurred in order to maintain or to increase taxable income. Royalties and all fees generally are deductible without additional requirements. Various deductions and incentives are provided for R&D-related activities. Under the notional interest deduction, Belgian companies and branches are also entitled to an interest expense for qualifying equity (within a thin capitalisation/30% EBITDA limit). Belgium offers an innovation income deduction regime that reduces the effective rate of taxation on qualifying net IP income (raising the tax deduction rate that applies to gross patent revenue from 80% to 85%, resulting in an effective rate of 3.75%).

Goodwill arising on the occasion of an asset deal can be amortised in a period of minimum five years by applying a straight-line method (client lists can be amortised over a period of 10-12 years). Start-up expenses may be deducted fully in the year of incorporation or can be depreciated over a period of up to five years. Provisions and bad debts can be deducted (conditions apply). Charitable contributions (above EUR 40 and within 5% of the total net income of the taxable period, with a maximum of EUR 500,000) can be eligible for deduction. Belgian companies can claim a deduction for royalties, management service fees, and interest charges paid to foreign affiliates (the arm's length principle must be respected). The cost of company cars can be deducted between 40% and 100% depending on the CO2 emission, with fuel costs deduction also being linked to the level of CO2 emission (from 2026 onwards, only zero-emission company cars will be able to benefit from a tax deduction).
With some limitations, tax losses can be carried forward without any limitation in time; however, a minimum tax base should be taken into account: some deductions, like DRD, innovation income deduction, and investment deduction, have no restrictions, whereas for other deductions only 70% (or 40% in 2023) of the taxable amount that exceeds EUR 1 million can be offset. This category of deductions includes carried-forward losses, among others. The remaining 30% will be taxed at the CIT rate without any deduction.. Losses carry-back is generally not allowed.

The following expenses are not deductible: taxes (with some exemptions, like the real estate tax and foreign taxes), capital losses on shares, half of the representation expenses and business gifts, 31% of restaurant expenses, 17% of the benefit in kind of company cars or 40% if the fuel costs are fully borne by the company, hospitalisation insurance premiums and small gifts for employees.

Other Corporate Taxes

Indirect taxes include a real estate tax on annual rental income calculated in function of the cadastral income of the property, stamp duties, a fixed fee on increase in capital of EUR 50, a transfer or registration tax on the transfer and leasing of real estate (at rates varying between 0.2% and 12.5%). A tax is imposed on the notional rental income of immovable property located in the country, with rates varying according to the region.

Belgium also applies a secret commissions' tax at a rate of 50% for payments to legal entities or 100% in all other cases, which is due if taxpayers fail to report on a timely basis, wages, fees, commissions, rebates and other benefits or gratifications that constitute professional income in the hands of the beneficiary unless a legal exception or administrative tolerance applies. The secret commissions' tax assessment is applied to the amount of the costs or the fringe benefits. The secret commissions' tax also applies to turnover not reported as such (“hidden gains"), at a rate of 100%.
Banks are subject to a bank levy and a subscription tax on savings deposits.

Social security contributions - generally fixed at 30.57% of 1.08 times the gross salary for blue-collar employees and 25% of the gross salary for white-collar employees - in practice vary according to the size and industry of the company and the salary of the employee. For blue-collar employees, an additional annual contribution of 10.27% is due on 1.08 times the gross salary.
In accordance with the program law of 26 December 2022, employers are entitled to a 7.07% reduction of the “total employer’s net basis contribution” to the social security scheme (for the first and second quarters of 2023) and partial deferral of payment (for the third and fourth quarters of 2023).

Other Domestic Resources

Service Public Fédéral Finances (FPS)

Tax Rate

Allowable Deductions and Tax Credits

The Belgian regime of personal allowances, deductions and reductions has been revised with a partial transfer to the competency of the regions. Because the regions have issued their own modifications, consultation with a professional advisor is highly recommended. However, allowable deductions include: business expenses, social security contributions, alimony payments (up to 80%) and a marital quotient for a non-working spouse (a part of the professional income of one of the spouses may be allocated to the other if the income of this other spouse does not exceed 30% of the couple’s total professional income).

Several personal exemptions are provided by the law, including a personal basic exemption of EUR 10,160; and an exemption for dependent children (from EUR 1,850 for one child to a total of EUR 17,250 for four children, plus EUR 1,850 for any other dependent person - increases are granted for handicapped children and children less than three years old).

Employment-related expenses are deductible unless the taxpayer decides to claim standard deductions (equal to 30% of the gross earnings, up to a ceiling of EUR 5,520 for employees or a flat 3% up to EUR 2,910 for remunerated directors).

Federal tax credits are available for pension contributions and life insurance premiums (30% with a maximum of EUR 2,350), childcare costs (up to EUR 15.7/day), donations (minimum EUR 40, giving right to a 45% tax reduction) and mortgage loans. Regional tax credits are also available for mortgage loans as well as costs for prevention against burglary, certain government schemes and roof insulation.

Special Expatriate Tax Regime

Non-residents are subject to personal income tax on Belgian source income only, notably on Belgian source professional income, on property income located in Belgium and on Belgian source investment income. Resident and non-resident taxpayers are taxed at the same rates, but some deductions or tax rebates are only granted to non-residents, provided that they earn at least 75% of their worldwide professional income in Belgium. For non-residents, a flat surcharge of 7% is due en-lieu of communal taxes, irrespective of the rate applied by the commune in which they reside.

For foreign employees with short-term assignments in Belgium who continue to contribute to the social security schemes of their home country, an exemption from social security may be granted, depending on the home country of the claimant.

A special expatriate tax status is obtained through a written application filed jointly by the employer and employee to the Belgian tax authorities within 6 months of arrival in Belgium. Foreign executives, specialists and researchers that qualify under this regime are treated as non-residents and as such are taxed only on Belgian-sourced income. Certain relocation expenses or allowances can be treated as deductible expenses for the employer and are non-taxable for the employee, capped at EUR 11,250 (or EUR 29,750 for certain recognised companies or professions). These expenses are generally cost of living allowances, housing differentials, home leave and income tax and may also include moving expenses and primary and secondary schooling expenses.
From income year 2022, a new regime designed for inbound taxpayers and researchers replaces the previous regime, with transitional measures in place until the end of 2023.