European Court of Justice ruling on non-resident taxation may trigger changes in Belgium

On 12 March 2026 the European Court of Justice (ECJ) issued a judgment holding that the current Belgian system of additional taxation applicable to non‑residents is incompatible with European Union law. The ruling could have important implications for non‑resident employees working in Belgium, particularly cross‑border workers.
 

Current Belgian framework: residents versus non‑residents

Belgian tax residents are subject to personal income tax on their worldwide income and, in addition, to a municipal surcharge (“municipal centimes”). This surcharge is levied as a percentage of the base personal income tax and is determined autonomously by each municipality. The surcharge rates vary depending on the municipality of residence and range from 0% to approximately 9%.

Belgian non‑residents are taxable only on their Belgian‑source income. Since they do not have their primary residence in Belgium, they are not liable to the municipal tax, but are subject to a federal surcharge of 7%, calculated in a similar manner on the base Belgian income tax. This surcharge is the equivalent of the resident municipal surcharge and is intended to ensure a broadly comparable tax burden between resident and non‑resident taxpayers.
 

ECJ ruling infringement of the free movement of workers

The ECJ ruled that this system can, in certain cases, result in non‑residents being taxed more heavily than residents, particularly compared to residents’ taxpayers living in municipalities with a low or zero municipal tax rate. According to the Court, such a difference in treatment is considered as a restriction of the free movement of workers.

The Court confirmed that it is not necessary for non‑residents to be systematically taxed more heavily. It is sufficient that this occurs in some situations for the legislation to be incompatible with EU law.
 

What’s next?

It is to be seen what the Belgian tax authorities and/or legislator’s reaction will be and whether an appeal will be filed or any legislative initiatives taken to address this European Court ruling. The government has meanwhile confirmed that they are analyzing and looking into the relevant legal provisions regarding the surcharge for non-residents.
 

Tax relief possibilities?

Non-resident taxpayers looking to challenge the 7% surcharge taxation on the basis of the ECJ ruling could file a tax claim or seek tax relief through one of the following options:

• Tax claim: A tax claim can be filed within one year following receipt of the Belgian tax assessment.
• Ex officio relief: As the ECJ ruling is considered as a new legal fact, taxpayers may request an ex officio tax relief, potentially allowing a reassessment of up to five years.

It should be noted that such claim or request for tax relief is not likely to be automatically accepted by the tax authorities, potentially leading to further litigation.
 

How EY can support you

EY closely monitors the legislative and administrative follow‑up to this ECJ ruling. We can assist employers and individuals with

• Assessing the potential impact of the ECJ ruling on your or your workforce’s particular circumstances
• Analyze and assess the possibility and appropriateness to file a tax claim or ex officio relief
• Preparing and submitting filings with the Belgian tax authorities

If you would like to discuss how this ruling may affect your personal situation or that of your employees, please contact your EY advisor.