A new era for inbound tax payers and researchers

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Hendrik Serruys
11 Jan 2022
Subject Tax alert
Categories People Advisory Services
Jurisdictions Belgium

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With the Program Law voted and published in the Belgian Gazette end of December 2021, the new expat tax regime for inbound tax payers and researchers entered into force on January 1, 2022. Although no significant changes appear in the final text compared to what has been announced earlier (see our previous alert), we seize the opportunity to compare the former with the new regime, and summarize what it could mean to you or your international workforce.

A. Procedural aspects

The new regime will be applicable for all employments or assignments starting as of January 1st, 2022. In order to benefit from the new system well-defined steps are to be followed, annual follow-up actions are required:

Old tax regime New tax regime
Joint application by employer and employee within 6 months following the start Application by employer (with employee’s consent) within 3 months following the start
Uncertainty about the timeline of the decision process of the application Authorities will send back a confirmation within 3 months
No annual check from the authorities on the continued eligibility for the special tax regime (except “10 year audit” practice) Employers will have to provide tax authorities on an annual basis before January 31, X+1 with a listing of all qualifying employees for the preceding year (authorities will link the information with the fiche 281.10/20)
A change of employer in Belgium meant the end of the special status When meeting all qualifying requirements, a re-application is possible when changing employer in Belgium

An opt-in from the old to the new tax regime is possible, but should be requested before July 31, 2022. A potential negative decision from the authorities on the opt-in does not imply the end of both regimes as initially announced; the two years grandfathering period of the old special tax regime (ending on December 31, 2023) can still be applied.

B. Qualifying requirements

In order to create a more transparent and simplified system, most of the existing conditions under the former tax regime have been abolished. To align with European standards, some new settings were introduced.

Old tax regime New tax regime
  • Foreign citizenship (Belgian citizens are excluded)
  • Assigned to Belgium by a foreign affiliate of an international group or directly hired abroad
  • To perform in Belgium a function which requires specific knowledge or to occupy an executive position
  • The assignment or employment in Belgium should be of a temporary nature (in this respect, although there is no explicit time limit imposed, ten years was assumed to be the maximum length during which the tax authorities extend the concessions)
  • The expatriate should have maintained sufficient connections (economical and personal) with the home country
  • Either assigned to Belgium by a foreign affiliate of the group or directly hired abroad
  • No connection to Belgium in a 60 month period
    • Not have been considered as a tax resident
    • Not have been taxed as a non-resident on professional income
    • Not have lived closer than 150km from Belgian border

For inbound tax payers (employee and company director status)

  • Minimum gross package of EUR 75.000 required

For researchers (employee status)

  • Master degree or at least 10 years of experience in R&D (based on CV)
  • ≥ 80% of the employee’s professional activities should be related to R&D

C. Benefits

The benefits of the new special tax regime are different from the regime introduced in 1983.

Old tax regime New tax regime
  • Administrative concession of a non-resident tax status which restricted the taxation in Belgium to Belgian source income only
  • Tax deduction for the business days spent abroad (frequently audited by the authorities).
  • Expenses incurred as a result of the Belgian employment can be considered as costs proper to the employer:
    • Unlimited expenses
      • Moving costs to and out Belgium
      • Settling in costs in Belgium
      • School fees
    • Limited recurring additional costs
      • Up to EUR 11.250
      • Up to EUR 29.750 (R&D roles / controlling or coordinating functions)
  • Recurring expenses up to 30% on top of the gross remuneration can be considered as a cost proper to the employer
    • Based on lump sum evaluation
    • Should be explicitly included in the employment contract
    • Capped at EUR 90.000 (Pro rata in case no full employment in Belgium)
  • Following expenses are considered as a tax-free reimbursement of employer’s business expenses (not included in the 30% ceiling)
    • Moving costs
    • Furnishing costs (up to EUR 1.500)
    • School fees as from the age of 5

The new regime and its benefits will be available for a maximum period of 5 years as of the start of the employment in Belgium. A possibility is foreseen to apply for a 3 year extension through the filing of a new request within 6 months following the end of the 5 year period by demonstrating that the qualifying conditions are still met.

Next steps

Although the new regime’s procedure, conditions and benefits are rather straightforward, the impact on a company’s workforce, employment costs and business processes are less clear and are to be analyzed individually for every employer. In parallel with having current expatriates informed, also other stakeholders should be properly informed and trained, such as recruiters, HR and payroll, …

Our expert PAS teams have developed a roadmap to guide companies though this change process, indicating short term actions and setting out a game plan for the next years. Do not hesitate to reach out for a detailed and tailormade planning schedule.