Belgian tax authorities introduce non-taxable per diems for long term business trips

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Executive summary

On 10 October 2013, the Belgian tax authorities issued a Circular Letter introducing non-taxable daily allowances (per diems) for long-term foreign business trips.

Although the Belgian tax authorities did already allow a tax exemption for per diems for business trips of 30 days or less, they have now extended the exemption to longer business trips up to 24 months.

Background

When an employee travels abroad for business purposes, the employer will often reimburse small expenses incurred by the employee (e.g. transportation, meals).

To reduce the administrative burden of keeping a full record of the expenses reimbursed, the Belgian tax authorities accepted that the reinbursement as a daily lump-sum allowance (per diem) should qualify as tax exempt provided the following conditions are met:

  • The amount does not exceed the allowance for civil servants posted abroad.
  • The stay abroad is limited to 30 consecutive days.

In the event that these conditions are not met, the Belgian tax authorities only accept the exemption based on actual expense reports. However, due to a growing demand from employers for an administrative simplification for longer business trips, the Central Ruling Commission recently confirmed that the same rules for short business trips would apply for longer trips, up to a maximum of 12 months.

In the Circular Letter Ci.RH.241/609.972 (AAFisc 38/2013), issued on 10 October 2013, the Belgian tax authorities confirmed the position adopted by the Ruling Commission, and in fact extended this, by allowing per diems to be used for business trips up to 24 months.

It should be noted that, although these costs may be exempt from taxation, the treatment for social security in Belgium remains unclear. Furthermore, consideration should be given to the taxation of such allowances in the country of assignment.

Next steps

Employers should consider the integration of per diem allowances in their traveler policy and/or review existing policies for compliance with the new conditions set out above to mitigate cost and the administrative burden for its employees.