Upcoming changes to the Belgian expat regime – What’s on the table?


What has been in the air for some time is probably becoming a reality, at an accelerated pace. In the framework of the agreement on the Belgian budget, the Federal Government announced its intention to amend the special regime for foreign executives, who are working temporarily in Belgium under specific conditions, by reducing certain benefits / applying certain limitations to the well-established regime.

What’s on the table? 

At this point, it seems that nothing is carved in stone, but it is clear that something will change. 

A measure which is currently being discussed, is the duration to what extent the special expat regime can be applied. In the past, the element of duration of the tax regime already resulted in uncertainty for companies and their expatriates in Belgium. Following current practice, the Belgian tax authorities will often perform a tax audit after a certain period of time (typically ongoing files were audited, for example after 10 years of application).  In such a case, the expats typically need to demonstrate that they still  maintain sufficient links with their home country and hold assets abroad. It is possible that the regime will, going forward, be ‘officially’ limited in time, which can then result in a fixed (ultimate) end date… 

Also on the table is the matter of so-called ‘statelessness’ due to the fact that an expat, who is a non-resident taxpayer in Belgium, is also no longer resident in another country. Here the Belgian Government is looking into the possibility of qualifying expatriates (under the regime) as tax residents of Belgium. This would mean that the foreign executives will need to mention their worldwide personal income (such as  foreign movable income) in their Belgian tax return, leading to an increased Belgian tax burden.  

Under the current special tax regime, the executive’s remuneration must be divided into the part corresponding to work performed in Belgium (which is taxable) and the part corresponding to remuneration for professional activities performed abroad (which is ultimately not taxable in Belgium).  This foreign travel exclusion (and its specific counting method) and the non-taxable allowances may be abolished and replaced by a standard percentage/deduction, somewhat comparable to what is used in the Netherlands (the Dutch 30% rule).  Moreover, the income which qualifies for a tax deduction could become capped up to a certain limit. Specific expenses may perhaps still be reimbursed on top as tax-free allowances.

Finally, in order to benefit from the special tax regime, a certain “minimum wage level” may be required, which will have an impact on the eligibility of the regime for a number of expats.  This minimum wage level could be substantially higher than what is required for immigration/employment purposes. 

However, what will exactly be changed (i.e. what combination of measures will be applied) and as of when these changes to the special tax regime will become applicable, is still uncertain at this point in time. It is also unclear whether there will be a transition or phase-out period available. 

We have no view on any draft legislation and of course – when texts become available, the parliamentary process will also need to be followed. We will of course keep you posted!

In case of any further questions, please do not hesitate to contact Philip Maertens or Sandrine Schaumont.