QROPS Advice: Taxation of ‘Non-Residents’ Living in Belgium

The taxation of non residents living in Belgium is different from that of residents. Non-residents are taxed on Belgian-source income only, namely income from employment in Belgium, Belgian-source property income, interest and dividend income paid by Belgian companies, as well as Belgian-source capital gains. They are not taxed on foreign capital gains or foreign investment income received outside the country. If, on death, a non resident leaves property in Belgium, an inheritance tax liability arises, with the tax chargeable being based on the gross value of the property.
Special Tax Regime for non-resident expatriates Expatriates in Belgium are generally regarded as Belgian tax residents and are therefore subject to Belgian income tax on their worldwide income. However, the Belgian authorities have encouraged multinational companies to transfer foreign executives to Belgium by introducing special tax concessions to non-Belgians who are ‘temporarily’ working in the country. The tax concessions allow such expatriates to be treated as non-residents for tax purposes. The concessions do not apply to inheritance tax.
To qualify for these special concessions, a number of factors are considered e.g. ‘does the employment contract specify a limited time?’, ‘has the expatriate’s family moved to Belgium?’, ‘is the expatriate’s centre of economic and/or personal interest in Belgium?’, and ‘is the employment with a qualifying entity?’
Under the special concessions:
• Only Belgian source income is taxable, including property income and dividend income.
• Additional taxes are payable at 7% of total federal income tax payable.
• Capital gains tax applies only to Belgian-source gains.
• Under certain circumstances, temporary expatriate workers who qualify for the special regime may be exempt from paying social security contributions (typically up to 5 years).
Expatriates who benefit from the non-residents’ special tax regime may not invoke double taxation agreements because they only apply for the benefit of Belgian residents. For certain expatriates qualifying under the special regime who originate from other EU Member States, the EU Savings Directive may have an impact on their Belgian-source interest payments, with a withholding tax of 20% being levied on such payments (increasing to 35% as from July 2011).

http://www.ailo.org/common/externalPage.asp?intURL=/publications/default.asp&extURL=/downloads/Belgium_2009.pdf