As stated in a press release on 30 October 2020, the European Commission decided to refer Belgium to the Court of Justice of the European Union regarding its legislation on the deductibility of alimony payments from the taxable income of non-resident taxpayers.
According to current Belgian legislation, alimony payments cannot be deducted from the taxable income of non-resident taxpayers who earn less than 75% of their worldwide income in Belgium. Belgium refuses the deduction if the 75% condition is not met, even when the taxpayer has no significant taxable income in his State of residence, which makes it impossible to deduct alimony payments from taxable income in the State of residence.
Because of this refusal, the alimony payments are deducted neither from their taxable income in their State of residence nor in Belgium (State of employment). It penalises non resident-taxpayers of Belgium, who have exercised their right of freedom of movement for workers. Therefore, this Belgian tax legislation constitutes an infringement of EU Law and is contrary to article 45 TFEU and Article 28 of the EEA Agreement.
In the past the European Court of Justice had already ruled that such legislation (in other countries) is contrary to the freedom of movement for workers.
In 2016 the Commission sent a letter of formal notice to Belgium, followed by a reasoned opinion in 2019.
In case of any questions, please do not hesitate to contact Sandrine Schaumont or Philip Maertens.