Belgian Tax reform – Individuals – Personal income tax

Latest update: 22 July 2025

Draft law containing various provisions at the Chamber

The draft law providing various provisions has been tabled at the Chamber early July. It should be reviewed by the Finance Commission after the Parliamentary holiday. 

From an employer and personal income tax perspective, the most important measures are the following: 

 From an employer perspective:  

 Hybrid company cars  

• The transitional regime related to the deductibility of hybrid car costs initially applicable to both companies and self-employed will only be available for taxpayers subject to the personal income tax. The amended art. 198Bis ITC would remain applicable to companies. 
• Fuel costs would be fully non-deductible from 1 January 2026. 
• The definition of benefit in kind would be adapted to include “false hybrid cars” as defined with the reference to the new standard. “False hybrid cars” would also include cars with a CO2 emission higher than 75 gr/km calculated on the basis of the new Euro 6e-bis standard. 

Expat regime 

• The exempted amount would be limited to 35% (instead of 30%) of the gross remuneration (uncapped; the cap of 90,000 EUR would be abolished).  
• The minimum remuneration required to qualify for the regime would decrease from 75,000 EUR to 70,000 EUR. 
• This more attractive regime would be applicable to remunerations paid or attributed from 1.1.2025 

From a general personal income tax perspective:  

Hybrid company cars  

• For self-employed, hybrid car tax deductibility would remain possible up to 75% until 2027 (based on CO2 emissions) or higher for cars acquired before 1 January 2028 with maximum 50 gr CO2 emission (limited to 95%)
• Hybrid vehicles purchased, leased, or rented in 2028 or 2029 would be subject to a degressive deductibility depending in which year the vehicle has been acquired
• No deductibility for fuel costs after 1 January 2026. The deductibility of electricity would be aligned with the deductibility of costs related to fully electric vehicles. 
• In view of simplification, the factor related to fuel would no longer be considered in the formula to calculate deductibility. 
• The “false hybrid” definition would include the reference to the new standard, i.e. cars with a CO2 emission > 75 gr/km calculated on the basis of the new Euro 6e-bis standard 

Flexi-jobs

Exemption would be increased (from 12,000 EUR to 18,000 EUR as of income year 2025), indexed annually.  

Student work and dependents

The doubling of the exempt amount has already been implemented by the Law of 10 April 2025 (MB/BS, 8 May 2025)   The net subsistence income would be increased up to 12,000 EUR.  

Loan interest deduction (secondary residence) 

It would be abolished as from fiscal year 2026 (hence as of January 1st, 2025) .  

Alimony payments

Deductibility gradually reduced (70% in 2025, 60% in 2026 and 50% by 2027). Payments outside EEA would be non-deductible (except those to a beneficiary resident in Switzerland).  

Freeze of tax reductions or deductions

Several amounts related to tax reductions or deductions would be frozen from 2025 until tax year 2030.  

Tax simplification

several tax exemptions and tax reductions would be abolished such as the additional allowance for long-distance travel, the tax reduction for the salaries of a domestic employee, the tax reduction for adoption expenses, tax reduction for premiums for legal protection insurance, the exemption for employer’s contribution to the purchase of a computer (private), etc. The tax reduction for gifts would be reduced from 45% to 30%.  

Tax procedure  

Investigation and assessment periods would be reduced to:  

• 3 years for standard tax returns,  
• 4 years in absence of tax return or for late or complex tax returns which will be exhaustively detailed in the draft law, and;  
• 7 years in the case of fraud. The latter would apply for both income tax and VAT.  

These changes essentially partially reverse and simplify the procedural reforms introduced in 2022.  

 These provisions would enter into force from tax assessment year 2023. 

The measures of this draft law are still subject to change as they have to follow the legislative process and have not yet been voted in the plenary session.

Program Law adopted by the Chamber

On 17 July, the Chamber adopted a first set of tax measures. The Program law has still to be published in the Official Gazette.  The other measures included in the Easter agreement are part of a draft bill containing various provisions, which is currently under review at the Chamber. The main measures adopted are as follows:  

Carried Interest

The law introduces a new regime for individuals or related persons receiving carried interest from Belgian/foreign AIFs (alternative investment funds). The law defines the concept of “carried interest vehicle” and of “carried interest beneficiaries”. The income will be treated as investment income, taxed at a flat 25% rate (via withholding & income tax). The income that will be considered as “carried interest” can be the share of profits, dividends, capital gain, … after deduction of the acquisition value. The carried interest will not be reclassified as “professional income”. This measure will enter into force on the date of its publication in the MB/BS and will apply to income paid or attributed from this date. Carried interest vehicles being liquidated before the date of entry into force of the law will not be affected.

Liquidation reserve and VVPRbis regime

The law provides for an alignment of both regimes with, for the liquidation reserve, a reduced waiting period from 5 to 3 years and a new rate at 6,5%. The regime will depend on the date of creation of the reserve and the date of distribution. In this respect, note that the law provides for the possibility of distributing reserves created before January 1, 2026, at a rate of 6.5% if they have been held for a period of 3 to 5 years (provided that all other legal requirements are also met). For the VVPRbis regime, the rate of 20% applicable to dividends allocated or distributed during the second financial year after the cash contribution (made on 31 December 2025 at the latest) will gradually phase out. In respect of other cash contributions, the rate of 15% will be applicable to dividends distributed or allocated during the third financial year following the contribution or later. The changes regarding the liquidation reserve will apply to dividends attributed or paid from the date of the publication of this law in the Moniteur Belge/Belgisch Staatsblad (hereafter “MB/BS”). Those related to the VVPRbis regime will apply ten days after the publication of the law in the MB/BS.

Exit tax

This new tax introduces the concept of a “deemed dividend” (representing the latent capital gains) for shareholders when a company emigrates or restructures in a way that transfers assets abroad. Shareholders will be taxed on this deemed dividend as if they received an actual dividend, subject to applicable personal or corporate income tax rates. A tax credit mechanism will be available to prevent double taxation when these gains are eventually realised and distributed. The taxpayer will also be able to defer the tax payment. The company that transfers the assets must provide individual slips to shareholders. The new provisions will enter into force on the date of their publication in the MB/BS and apply to transactions referred to in art. 210, § 1er, 1er, 1°bis, or 4° ITC that take place from this date.

Tax on securities account

A new anti-abuse measure aiming to prevent taxpayers from circumventing the tax through artificial conversions or transfers of financial instruments is introduced. The new anti-abuse measure will enter into force on the date of its publication in the MB/BS and the first reporting obligation must be fulfilled by 31 December 2025 at the latest.

Tax procedure

The 10% tax increase for a first-time offense committed in good faith will be automatically waived. The good faith is presumed, except in case of an ex officio assessment (such as i.a. late tax return or absence of tax return). In case of an ex officio assessment, the taxpayer can still prove his good faith. This amendment is applicable for assessments enrolled as of the publication of this law in the MB/BS.

Update: 31 January 2025

Since the long-awaited tax reform was ultimately not implemented in 2024, there were no major changes in personal income tax. Nevertheless, below we will go into some details on certain elements.

1.Transition period of old expat regime ends

As of January 2024, the ‘old’ special tax regime applicable to certain expats in Belgium under the administrative tolerance (i.e. Circular n°Ci.RH.624/325.294 dated 8 August 1983) has been terminated, leading to significant changes for expats who benefited from this regime. This development has had profound implications from a personal income tax point of view and has also resulted in additional reporting obligations, necessitating a reassessment of tax positions for expats.

National residency and reporting obligations

The benefits of the ‘old’ regime have ended, and unless the individual can demonstrate that their tax residence is outside of Belgium, the individual is now no longer a non-resident, but a resident under Belgian tax law. As Belgian residents, these individuals now have to declare their worldwide income (with the possibility to claim exemptions based on tax treaties), unlike the previous regime where they were only taxed on Belgian source income.

Specific reporting obligations for foreign assets

Compared to non-residents, Belgian residents have stricter reporting obligations, particularly with regard to foreign assets, including:

• foreign bank accounts must be reported to the National Bank of Belgium and included in the annual personal income tax return;
• policyholders of an individual life insurance contract concluded with a foreign insurance company are required to declare this in their annual personal income tax return;
• the purchase and sale of real estate abroad must be spontaneously reported to the authorities within 4 months of the transaction. If a non-resident taxpayer becomes a resident taxpayer, the period is shortened to 30 days after the first day of the tax period. In addition, the (deemed or effective) real estate income must be declared in the annual personal income tax return, with the possibility of claiming an exemption based on the relevant tax treaty;
• under the so-called Cayman tax (see also below), Belgian residents are obliged to report interests in legal structures via the annual personal income tax return and the new appendix 276CJC, with possible tax consequences.

When switching from non-resident to resident, there are many reporting requirements to consider, including various filings with their own forms and specific deadlines. It is crucial to ensure compliance to avoid fines and penalties.

New special tax regime

A ‘new’ special tax regime has been introduced for incoming taxpayers and researchers. This regime replaces the ‘old’ special tax regime that has been in force since 1983. In a competitive labour market, the special tax regime plays a crucial role in attracting talent from abroad.

2. Cayman tax: appendix 276 CJC

Since its introduction in 2015, the so-called Cayman tax has been tightened several times. In a nutshell, the Cayman tax is essentially a look-through tax aimed at taxing the income collected by a legal construct at the level of the founders as if they had received this income directly themselves. Distributions by the legal construct are in principle considered as dividends and taxed at 30%. The law also provides for some fictitious distribution moments. The primary objective of the measure is to combat the abuse of legal arrangements designed to isolate the private assets of Belgian taxpayers in order to avoid tax control and taxation.

As for reporting obligations, in the past it was sufficient to report the existence of the legal arrangement in the individuals’ tax return. As of the 2024 tax year, there is an obligation to file a specific annex (known as the annex ‘276 CJC’) in the tax return. This new annex requires detailed information on the legal structures involved and the income distributed, including, for example, identification data, the share of assets contributed by the founder, and the equity of the legal structure.

The Cayman tax remains difficult to apply in practice. The analysis can become very complex, especially in the case of layered structures. The taxpayer may not have access to all the data that must be reported or are necessary to analyse the consequences in terms of income tax. In addition, certain provisions may conflict with the free movement of capital and services in the EU. For example, income that arises due to the transfer of the legal structure to a state or jurisdiction outside Belgium is deemed to constitute a fictitious dividend. The exit tax upon emigration of the founder of the natural person abroad may also conflict with the free movement of capital and services within the EU.