As indicated in our headline of 23 July 2012, the federal government of Belgium approved a draft bill laying down various tax and financial provisions. These proposed measures include various elements that may impact the taxation of non-resident taxpayers in Belgium.
Individuals who are not a resident of Belgium (for income tax purposes) are only subject to taxation in Belgium on their income that is earned or received in Belgium. This concerns (but is not limited to) the professional income that is borne by (1) a Belgian taxpayer or (2) a Belgian permanent establishment of a foreign company. The draft legislation seeks to clarify the wording of the current tax law and proposes that taxation should be triggered if remuneration is ‘indirectly’ borne by any of the above entities.
Furthermore, a new paragraph will be added to the Belgian Income Tax Code. This provision will function as a catch all clause for payments made by a resident of Belgium to a non-resident of Belgium.It enables the Belgian tax authorities to tax certain income that, based on the double tax treaty, is taxable in Belgium but could not be taxed based on pre-existing Belgian domestic legislation. Situations in which this may apply seem to be rather exceptional though.
In addition, the draft bill introduces the possibility for certain non-residents to deduct alimony payments in their Belgian income tax return even if the payments are made to other non-residents.
