Anticipated change in the taxation of expatriates and other non-residents

Nicolas de Limbourg 10 January 2014


Within the framework of the 6th Belgian state reform there is a focus on i.a. empowering our regions (Brussels, Flanders and Wallonia) via a limited degree of autonomy in respect of income taxes. As a result, our tax law will fundamentally change in the upcoming months. Although non-resident taxation remains a federal matter, certain regional tax concessions will apply to some categories of non-residents.

In this context, our government is preparing new legislation on non-residents, with the aim of being ‘EU-proof’. These changes are likely to cause a probably unintended side-effect for some of the expatriates living in Belgium. These expatriates are so called ‘non-residents with an abode’. Because of this classification, they are entitled to the full personal deductions (concession for non-working spouse, children at charge etc.), regardless of the degree of intensity of their business travel.

The category of ‘non-residents with an abode’ will however be abolished.

This will mean that as of January 2014, expatriates living in Belgium as well as other non-residents (except where tax treaties provide an entitlement) would only be entitled to personal deductions provided they earn at least 75% of their worldwide professional income in Belgium.

This pre-draft legislation (containing among others the abovementioned anticipated change) still has to be brought before Parliament.