On 21 July 2025, the Belgian government reached a summer agreement to implement reforms in the fields of pensions, the labour market, healthcare, and income tax. This agreement needs to be incorporated into draft legislation, which still requires approval through the legislative process.
A high-level summary of the envisaged measures in the fields of income tax and pensions is included based on publicly available information:
Income Tax Measures
- The tax-free allowance will gradually increase from €10,910 per year to €15,300 by 2029.
- The tax-free allowance for the first child will increase from €1,980 to €2,650 by the end of the legislature. The special social security contribution (BBSZ/CSSS) will be reduced, benefiting single taxpayers who can receive up to €365 net per year.
- The “work bonus” will be enhanced for the lowest incomes.
Additionally:
- The maximum value of meal vouchers will be increased from €8 to €10, paid by the employer.
- A tax deduction for self-employed individuals will be introduced and will rise to €650 as of 2026 and up to €900 by 2029.
- The marital quotient will be gradually phased out.
- Measures will be taken to disincentivise corporate structuring:
- The minimum remuneration for company directors will be increased from €45.000 to €50.000 and will be indexed.
- For company directors, a limitation of the benefits in kind (calculated based on a lump-sum basis) to 20% of annual gross salary will be introduced. Exceeding this threshold will result in the loss of the reduced corporate tax rate (20%) for small enterprises.
- A separate taxation of 7.5% on the portion of the benefits in kind (calculated based on a lump-sum basis) exceeding 20% of the annual gross salary will be applicable from 2026 for employees.
- A new regime will be provided regarding overtime, including a reduction in employer contributions and a tax credit for the employee.
- The tax reduction on unemployment benefits will gradually be eliminated and the social integration income will be subject to personal income tax
- The copyright regime will once again be allowed in the IT sector, as from 2026.
- The income from occasional online sales will be tax exempt (the so-called “Vinted exemption”) when it does not exceed €2,000 per year (avoiding a 33% tax).
Pension Reforms
- Retirees who work after retirement will have their additional professional income taxed at a maximum rate of 33%, instead of the progressive rates up to 50%.
- A ‘bonus-penalty’ system will be introduced, where those who have not worked at least 35 years effectively half-time and retire early will initially lose 2 percent of their pension, with this penalty increasing to 5 percent over time. Periods of care leave and temporary unemployment will be considered as ‘effectively worked’ for this calculation.
- The pensions of civil servants will gradually be harmonised with those of employees and self-employed individuals, with the pension being calculated based on their entire career instead of just the last 10 years.
For further details or to assess the impact of these new measures, please contact your usual PwC representative.
