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Taxes in Belgium

Taxes in Belgium

The Belgium tax system is based on federal and local taxes. The federal taxes are the income tax, the corporate tax, the social security tax and the value added tax and they are the ones bringing the biggest income to the state budget. Local taxes comprise property taxes, inheritance taxes and a few fees.

Any company operating in Belgium, as well as individuals earning an income in the country, need to comply with the special requirements for taxation. Companies also need to comply with the existing accounting principles and the filing of the annual financial statements.

The following video is a presentation of the main taxes in Belgium:

The income tax in Belgium

The personal income tax in Belgium is levied on the earned income, self-employment earnings, dividends, real estate or other properties incomes. The Belgian personal income tax applies to residents on their whole income, while for foreigners the tax applies only on the earnings they make in Belgium. However, tax exemptions exist on foreign income. The income tax rate in Belgium is applied in stages depending on the tax base, as it follows:

  • –        a 25% tax applies for earnings up to 7,560 EUR;
  • –        a 30% tax rate applies for incomes ranged between 7,561 to 10,760 EUR;
  • –        a 40% tax rate applies for incomes between 10,761 to 17,920 EUR;
  • –        a 45% tax applies for earnings that range from 17,921 to 32,860 EUR;
  • –        a 50% tax rate applies for incomes over 32,861 EUR.

Residents in Belgium are taxed on their worldwide income derived from salaries and wages as well as any income derived from owning real estate, securities, and other capital investments. An individual is considered a Belgian resident if he or she have their domicile in Belgium. Non-residents only have to pay taxes on their Belgian-source income. Employees in Belgium need to pay social security contributions, ranging from 0.05% to 13.7%. Married couples can file a joint statement but their incomes will not be aggregated. The tax year for individuals is the same as the calendar year and the deadline for filing the annual tax return is generally on June 30th. For more details about the taxes in Belgium for individuals, our Belgian lawyers are at your disposal.

The corporate tax in Belgium

The Belgian corporate tax applies to companies that are registered or have a management board in Belgium and is applied on the company’s worldwide incomes. For incomes earned by companies in foreign countries Belgium has signed double tax treaties that allow companies to benefit from tax reductions or exemptions. The normal tax rate is 33% but an additional charge 3 % applies which makes the total corporate tax rate to reach 33.99%. However, for small and medium-size enterprises (SMEs) the corporate tax can be reduced at 24.98% if its profit does not exceed 322,500 EUR.

Withholding taxes on dividends, capital gains and royalties apply at a normal rate of 25%, but deductions or exemptions apply if tax treaties are enabled. Also according to the EU parent-subsidiary directive no tax applies to a company incorporated in Belgium or in another EU country, if the company hold at least 10% of the shares for at least one year in the other company. 

Other taxes for companies in Belgium

Other taxes in Belgiumfor companies include the withholding tax on dividends and royalties, the payroll tax, the real property tax, the social security tax or the transfer tax, which applies to the transfer or lease of Belgian real estate. Belgium does not impose a branch remittance tax, not a stamp duty tax or a technical service fees tax. VAT in Belgium also applies for the provision of certain goods and services.

The tax tear in Belgium is the same as the accounting year. It can be the same as the calendar year or another period of 12 months. Tax returns should be filed at least one month following the date on which the annual general meeting of shareholders approves the financial statements. However, this cannot take place later than six months following the end of the financial year. Penalties do apply for failure to comply with the filing requirement and dates and are calculated according to an estimated annual income for the respective Belgian company.

Other taxes in Belgium

Apart from the personal income and corporate taxes, the Belgian tax system is made of other taxes such as:

  • –        the real estate property tax that applies as a presumed annual rental value and varies from region to region;
  • –        the social security tax that varies between 34.58% and 40.58% for employers and from 0.05% to almost 13% for employees;
  • –        the inheritance tax that is levied at different rates depending on the region;
  • –        the value added tax rate that has a standard value of 21%, but reduced rates of 12%, 6% and 0% apply on certain categories of products.

If you want to set up a company and need detailed information about the taxes in Belgium you can contact our Belgian lawyers.