New tax regime for inbound taxpayers and inbound researchers

• Belgian Official Gazette: Dutch | French

• Parliamentary Documents Dutch | French

• Circular letter 2022/C/47 dated 6 May 2022 regarding the provisions introducing a new tax regime for inbound taxpayers and inbound researchers (NL │ FR)

• Annex 1 to the Circular letter 2022/C/47 - Diplomas and scientific fields for the purpose of the new tax regime for inbound researchers (NL │ FR)

• Annex 2 to the Circular letter 2022/C/47 - Royal Decree of 5 March 2022 determining the form and content for the application of the new tax regime for inbound taxpayers and inbound researchers (NL │FR)

• Annex 3 to the Circular letter 2022/C/47 - Application form for the new tax regime for inbound taxpayers (NL │FR)

• Annex 4 to the Circular letter 2022/C/47 - Application form for the new tax regime for inbound researchers (NL │FR)

Income tax measures

• New tax regime for “inbound taxpayers and inbound researchers”;

• Changes to the tax benefits for sportspersons and sports clubs;

• Changes to the tax regime of regulated real estate companies (GVV / SIR);

• Non-deductibility of amicable settlement and regularization levies;

• Tax reduction for day care;

• Changes to the tax shelter regime for start-ups and scale-ups;

• Increase of tax beneficial overtime with overtime premium in construction industry;

• Extension of the validity of meal and eco vouchers.

Indirect tax measures

• VAT: changes to the VAT treatment of the supply of furnished housing;

• Excise duties: changes for professional diesel and energy.
  

Special tax regime for inbound taxpayers and researchers

The special tax regime for “inbound taxpayers and researchers” is applicable since 1 January 2022 and puts an end to the almost 40-year old “special tax status for foreign executives” put forward by the administrative circular of 1983.

Conditions

To benefit from the new regime, employees and self-employed executives in charge of day-to-day management of the company who do not qualify as “researchers”, need to meet following conditions:

• A gross compensation threshold of more than EUR 75,000 (before payment of an addi-tional lump sum “cost proper to the employer” of up to 30% (see “Benefits” below)). The entitlement to the 30% lump sum must be contractually agreed. The threshold will be pro-rated where the employment/directorship does not cover a full calendar year;

•  During the 60 months prior to the start of the employment in Belgium the individual must:
  
  • Have lived at least 150 kilometres from the Belgian border;
  • Not have been considered Belgian resident; and
    
  • Not have been subject to Belgian tax on professional income in Belgium;
• The individual must be recruited directly from outside Belgium by a Belgian entity (not necessarily part of a multinational group) or an association with legal personality.
  

Belgian nationals satisfying all of the above conditions also may qualify for relief under the new regime.

For qualifying researchers as defined in the legislation the minimum compensation threshold does not apply.

Benefits

• The employer may pay an additional tax-free cost proper to the employer of up to 30% (capped at EUR 90,000) on top of the agreed compensation. A lower percentage or exclu-sion of specific types of income is also possible (but should be contractually agreed). The EUR 90,000 threshold is pro-rated where the employment/directorship does not cover a full calendar year.

•  The payment of school fees and certain relocation expenses continues to be tax exempt, subject to conditions;

•  The benefits under the special regime are available for an initial period of five years, with a possible three-year extension; and

•  The new regime can continue to apply where there is a change of employer (and provided all other conditions are met).

The Program Law is silent on the social security treatment of the exemption. It is expected and hoped that the social security position will be aligned with the tax exemption.

Belgian residency

Under the new regime, benefiting individuals a priori qualify as Belgian tax residents, as opposed to the non- resident status for Belgian tax purposes under the previous regime, resulting in additional tax and other reporting formalities. It is still possible to establish Belgian non-residency where an annual residency certificate is provided by the other State. On the other hand, benefiting individu-als are entitled to invoke double tax treaties concluded by Belgium to prevent potential double taxation.

Procedure

• The application process for the new regime is shortened, requiring applications to be made within three months after joining the company or association with legal personality (re-duced from six months following the month in which the assignment starts under the pre-vious regime); and

• Employers are required to provide an annual listing of beneficiaries to the tax authorities by 31 January of the following year.

Transitional measures

Detailed and complex transitional measures with opt-in/opt-out mechanisms are foreseen which require close attention and case-by-case consideration.

Individuals who have been in Belgium and subject to the previous special expatriate tax regime for more than five years and individuals subject to the previous regime who have been in Belgium for less than five years but do not meet the conditions to qualify for the new regime, may continue to benefit from the previous regime until 31 December 2023, provided they meet all the requirements of the previous regime. They then will become Belgian tax residents as from 1 January 2024, unless being a tax resident in another State.

Individuals who have benefitted from the previous special tax regime for less than five years and also meet the conditions to qualify for the new regime have the choice either to opt-in to the new regime (for the remainder of the five plus three years) or to opt-out and remain subject to the former regime until 31 December 2023 (provided they meet all the required conditions).

The employer’s request (on behalf of each individual separately) in order to opt-in to the new re-gime needs to be made and communicated to the Belgian tax authorities by 31 July 2022 at the lat-est. When not able or not willing to opt-in, no communication will be required.

Reform of tax benefits for sportspersons and sports clubs

In Belgium, sports clubs, athletes, agents, etc. used to benefit from various advantageous tax and parafiscal schemes (partial wage tax exemption from the withholding tax; a favourable tax rate for young people and foreign sportspeople; reduced social security contributions).

The Program Law changes those advantages on various points:

Wage tax exemption

• The wage tax exemption percentage is reduced from 80% to 75%;

• The spending obligation is increased from 50% of the wage tax exemption to 55%;

• The exemption can only be granted provided the wage tax was withheld in full from the salaries;

• To counter ‘secondment abuses’, remuneration of sportspersons is only eligible for the wage tax exemption insofar as the sportsperson actually provides sports perfor-mances to the wage tax debtor.

Entry into force: remuneration paid or attributed as from 1 January 2022.

Young sportspersons

The age up to which an athlete is considered "young" is set consistently at 23 years, both for the application of the separate taxation regimes and for the application of the wage tax ex-emption (was previously either 23 or 26 years).

Entry into force: 1 January 2022 – however, a transitional measure exists for sportspersons who, at 1 January 2022, are already 23 years old but younger than 26 years old.

Reduced tax deductibility of sports agent fees

Sports agent fees are no longer deductible to the extent they exceed 3% of the gross annual remuneration of the sportsperson during the entire duration of the employment contract.

These disallowed expenses are also (part of) the sports club’s minimum taxable base, in or-der to avoid that the disallowance has no impact on loss-making clubs.

Entry into force: 1 January 2022.

Reform of extra-legal pensions

By way of exception to the general rule, remunerated sportspersons can receive their extra-legal pension already at age 35 to the extent they definitively and completely cease their professional sports career. Payments are subject to the separate tax rate of 20%.

The Program Law abolishes this exception. However, the exception continues to apply to pension engagements for which the individuals were affiliated on 20 October 2021. For these engagements extra-legal pensions can continue to be paid out at age 35 while being subject to the 20% separate tax rate.

Entry into force: 1 January 2022.

Residential or health care GVV’s / SIR

The reduced dividend withholding tax rate for dividends distributed by regulated real estate companies (“GVV’s / SIR”) henceforth only applies when they invest at least 80% (instead of 60%) in real estate exclusively or mainly used for, or dedicated to, housing units adapted for residential or health care.

In addition, a new paragraph clarifies how to calculate the proportion of qualifying real es-tate in the total real estate.

Entry into force: income attributed or paid as from 1 January 2022.

Non-deductibility of amicable settlement and regularisation levies

The law is clarified to provide that constitute a disallowed expense:

• Regularisation levies further to the tax and social amnesty law of 21 July 2016 as well as regional legislation; and

• Sums of money paid that trigger forfeiture of criminal proceedings as meant by Art. 216bis Code of Criminal Proceedings.

Entry into force: 10 days after publication in the Belgian Official Gazette.

Tax reduction for day-care

The law increases the maximum amount, per day and per child, of the tax reduction for day-care from EUR 13.70 to EUR 14.

Entry into force: date of publication in Belgian Official Gazette, applicable as of tax year 2022.

Tax shelter regime for start-ups and scale-ups

A “tax shelter” regime has been introduced (respectively in 2015 and 2018) for start-ups and scale-ups, granting a tax reduction to investors under certain conditions.The law doubles the maximum amounts that can be collected by these companies under the existing regime.

Entry into force: date of publication in the Belgian Official Gazette and applicable to pay-ments for the acquisition of shares as of 1 January 2021.

Increase of tax beneficial overtime with overtime premium in construction sector

The Program Law increases the number of overtime hours that can benefit from a beneficial tax regime from 130 to 220.

An increase to 280 hours is provided for employees working for employers who are princi-pally involved in road works and on which the government imposes work during week-ends, legal holidays or at night.

The government will notify this aid measure to the European Commission.

Entry into force: 1st day of the second month following the Commission’s pre-approval and applicable to overtime performed as of that date.

Extension of validity of meal and eco vouchers

Meal and eco vouchers that expired in 2021 and that have not been used will be reissued with a new validity period of 12 months (meal vouchers) or 24 months (eco vouchers).

Entry into force: date of publication in Belgian Official Gazette.

VAT

The supply of furnished housing is excluded from the exemption regime for small enterpris-es. However, this exclusion does not apply to physical persons who act in the context of the special regime for the sharing economy.

Entry into force: 1 January 2022 – by way of transitional measure, the exception to the ex-clusion is available between 1 January and 30 June 2022, even if the platform through which the individual offers his services would not be recognised according to Art. 50, §4 VAT Code. 

Excise duties

Professional diesel

The Program Law provides for a decrease of the exemption of the special excise duty for professional diesel. The (limited) phasing out the existing exemption from the special excise duty for professional diesel is postponed from 1 January 2022 to 1 January 2023.

Entry into force: 1 January 2022.

Energy

The Program Law provides for a shift in the federal taxes applicable on the supply of gas and electricity.

The federal contribution on electricity and natural gas is reduced to 0 EUR/MWh, and re-placed by a new special excise duty, with rates as high as 14,21 EUR/MWh for electricity and 0,66 EUR/MWh for gas.

Entry into force: 1 January 2022