If the relevant double tax treaty allocates the right to tax employment income to another state, the income will in principle be exempted from taxes in Belgium. However, for tax residents of Belgium, foreign source professional income still needs to be reported in the Belgian personal income tax return and an exemption (with progression reserve) can be claimed in the individual tax return.
In this respect, it should be noted that the Belgian tax authorities are increasingly performing tax audits focusing on ‘foreign source professional income’ for which a tax exemption is claimed in the Belgian resident income tax return. Recently, the Belgian tax authorities issued a new series of specific questions targeting employment income in relation to professional activities physically performed outside Belgium (confirmation of physical presence outside Belgium, information regarding the residency of the employer, the number of working days outside Belgium etc.). Furthermore, the provision of supporting documents (working schedules, rental agreements, expense reports etc.) and a detailed breakdown/calculation of the foreign source professional income has become very important. An overview of the specific questions is attached.
Therefore, it is recommended to check existing situations of salary split, taking into account that working days performed outside Belgium have to be supported by underlying evidence.
Click here to find out what some of the frequently asked questions are.
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