Belgian Tax reform – Individuals – Personal income tax
Latest update: 9 July 2025
Chamber: Draft Program Law adopted by the Committees
On 24 June, the Committees adopted a first set of tax measures. 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 would introduce a new regime for individuals or related persons receiving carried interest from Belgian/foreign AIFs (alternative investment funds). The law would define the concept of “carried interest vehicle” and of “carried interest beneficiaries”. The income would be treated as investment income, taxed at a flat 25% rate (via withholding & income tax). The income that would be considered as “carried interest” can be the share of profits, dividends, capital gain, … after deduction of the acquisition value. The carried interest would not be reclassified as “professional income”. This measure would enter into force on the date of its publication in the MB/BS and would apply to income paid or attributed from this date. Carried interest vehicles being liquidated before the date of entry into force of the law would not be affected.
Liquidation reserve and VVPRbis regime
The law would provide 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 would depend on the date of creation of the reserve and the date of distribution. 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) would gradually phase out. In respect of other cash contributions, the rate of 15% would be applicable to dividends distributed or allocated during the third financial year following the contribution or later. These rules would enter into force 10 days after the publication in the MB/BS.
Exit tax
This new tax would introduce 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 would 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 would be available to prevent double taxation when these gains are eventually realized and distributed. The taxpayer would also be able to defer the tax payment. The company that transfers the assets must provide individual slips to shareholders. The new provisions would enter into force on 1 July 2025 and apply to transactions referred to in art. 210, § 1er, 1er, 1°bis, and 4° ITC.
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 would be introduced. The new anti-abuse measure would enter into force on 1 July 2025 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 would 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 would be applicable for assessments enrolled as of the 1st of July 2025.
These measures are still subject to change as they have to follow the legislative process and have not yet been voted in the plenary session.
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.
