Income earned by a tax resident of Belgium in The Netherlands, Germany and/or France is exempted from Belgian income tax (be it with progression reserve). The exemption however only relates to federal tax and not to municipal taxes.
Therefore it is important to know on which basis the municipal tax is calculated: on the ‘net foreign source income’ (i.e. after deduction of foreign social security and income taxes) or on the gross amount.
In its decision of 11 May 2011, the Brussels Court of Appeal clearly stated that any municipal taxes due must be calculated on the ‘net foreign source income’.
