COVID-19: impact on the expatriate tax regime in Belgium


Even though national containment measures, to flatten the curve and ultimately stop the further spreading of the coronavirus, are gradually being phased out by many countries and we can even start to see a silver lining, the COVID-19 pandemic has a major impact on how people and organisations are functioning today and how they will organize themselves in the near future.

The past weeks there was a lot to say about the individual income tax impact on salaries for cross-border employees who found (and often still find) themselves forced to work from home. The home office treatment is maybe not the cure, but it certainly has an impact on tax liability of individual employees, and by extension the companies they work for. This is especially true for employees and company directors who are (staying and) working in Belgium under application of the Belgian special tax regime for foreign executives and specialists.

A specific feature of the special expatriate tax regime is the “foreign travel exclusion”. In practice, following a specific method of counting, the professional income in relation to the foreign working days (spent by these executives during business trips abroad) is excluded from the taxable base and thus not taxed in Belgium. Therefore, it is always very important to determine the travel percentage as accurately as possible, backed-up by underlying evidence and supporting documents.

However, due to the exceptional COVID-19 measures, these people are no longer able to perform part of their professional activities abroad. As business trips are being postponed and/or cancelled and they are forced to work from their ‘home office’ in Belgium (or even abroad). It is anticipated that international travel restrictions will remain in force the coming weeks and months. Depending on the contractual arrangements, the international travel ban has an immediate and significant impact on the net income and salary cost of the employees, as the income in relation to the Belgian home working days, during which – under normal non-COVID-19 circumstances – the executive would have worked in another country than Belgium, now becomes fully taxable in Belgium (rather than exempt under normal conditions).

In our newsflash of 13 March 2020 we have raised this concern and highlighted that employers should monitor this carefully, as payrolls may have to be amended. Ultimately, a significant drop in foreign travel percentage will also have to be reflected in the Belgian non-resident income tax return.

Despite the specific “force majeure” tolerances regarding teleworking agreed between Belgium and Luxembourg (i.e. 24 days rule) and between Belgium and France (for certain French frontier workers), as well as the (more general) mutual agreements (on the taxation of employment income for cross-border workers) concluded between Belgium and the Netherlands, Germany and France, there is currently still no administrative tolerance foreseen for foreign executives with respect to the foreign travel which is impacted solely because of COVID-19 measures. Moreover, it seems that no such tolerance will be foreseen, going forward.

If you may have any questions, please do not hesitate to contact Sandrine Schaumont or Philip Maertens.