Belgium Income Tax Rates

Belgium personal income tax rates for income year 2009 (payable in 2010) are progressively between 25% - 50%.

Taxable Income (EUR)   /   Tax Rate %

EUR 0 - 7,900                        25%
EUR 7,900 - 11,240                30%
EUR 11,240 - 18,730              40%
EUR 18,730 - 34,330              45%
Above EUR 34,330                 50%

Zero-bracket Amount: EUR 6,430 for each taxpayer

Additional tax-free allowance for dependant children:
- 1 child: EUR 1,370
- 2 children: EUR 3,520
- 3 children: EUR 7,880

Municipal taxes must be added to the tax rates above.

An individual resident in Belgium is liable to personal income tax on his worldwide income and on certain capital gains. Special rules apply to foreign employees temporarily resident in Belgium. An individual is regarded as resident only if he spends a certain period of time in Belgium and has his main home or his centre of economic interest in Belgium. A nonresident individual is liable to tax on his Belgian-sourced income only.

Total taxable income is the aggregate of net income or profits arising from an occupation or business, real estate, personal property, and miscellaneous sources, reduced by deductions that may be set against total income.

In Belgium there is no wealth tax, or as such. Capital gains tax is only levied on private individuals in certain circumstances such as transactions which go beyond the normal management of a private estate, certain sales of property and sales to a company resident outside the European Economic Area of substantial holdings in a Belgian company.

Belgium residents are subject to personal income tax on their total income from all sources. Taxation on a sliding scale is applied to successive portions of net taxable income. Rates in 2009 vary between 25% and 50%. Belgium residents also pay additional municipal taxes at rates that vary between 0% and 9,5% of the total income tax payable.

Nonresidents are subject to personal income tax on Belgian source income only, notably on Belgian source professional income, on property income located in Belgium and on Belgian source investment income (i.e. interest and dividends paid by a Belgium company). Nonresidents have to pay additional taxes at a rate of 7% of the total income tax payable.

Belgium personal income tax is calculated by determining the taxable base and by assessing the tax due on that base.

In determining the taxable base, compulsory social security contributions paid either in Belgium or abroad are fully tax deductible. Professional expenses can be claimed either on an actual basis. Belgium personal income tax is calculated on the taxable base after allowing for part of that base to be exempt from tax by applying a number of reductions related to marital status, the number of dependent family members and other matters.

Belgium Tax Year: Tax year in Belgium is the calendar year.

Special Social Security Contributions

Taxable Family Income (EUR)     /     Rates

EUR 0 - 18,592.02                              0
EUR 18,592.03 - 21,070.96                 9% in excess of > EUR 18,592.02
EUR 21,070.97 - 60,161.85                 EUR 223.10 + 1.3% on excess of EUR 21,070.96
Above EUR 60,161.86                         EUR 731.28

Belgium Corporate Tax Rates

The standard corporate income tax rate in Belgium for 2009 (assessment year 2010) is 33.99%, including a surcharge of 3%.

A resident company in Belgium is liable to corporation tax on its worldwide profits. A company is resident in Belgium if its registered office or centre of management is situated in Belgium. The place of incorporation is irrelevant.

Small and medium-sized companies in Belgium benefit from a reduced progressive tax rate, provided certain conditions are met (e.g. taxable income does not exceed EUR 322,500 and no more than 50% of the shares in the Belgian company are held by another company).

Reduced tax rates apply only if the following conditions are met:

- the company does not distribute dividends during the year that exceed 13% of the paid-up capital at the start of the year
- the profits of the company do not exceed EUR 322,500
- the company pays an annual taxable income of at least EUR 36,000 (tax year 2009) to at least one director
- the company does not belong to a group of companies with an approved Belgian co-ordination centre
- the company is not a holding company
- the company is not 50% or more owned by one or more companies.

These reduced tax rates are as follows:

Taxable Profit (EUR)   /   Tax Rate %

EUR 0 - 25,000                24.98% (24.25% + 3% surcharge)
EUR 25,001 - 90,000        31.93% (31.00% + 3% surcharge)
EUR 90,001 - 322,500      35.54% (34.50% + 3% surcharge)

Tax rates above include 3% crisis contribution.

Secret Commissions Tax

A secret commissions tax of 309% (300% tax rate + 3% surcharge) applies to certain fees and commissions in Belgium, if payments are not documented.

Risk Capital Deduction

Ass. year 2008: 3.781% (small companies: 4.281%)
Ass. year 2009: 4.307% (small companies: 4.807%)
Ass. year 2010: 4.473% (small companies: 4.973%)
Excess carry-forward during seven years

Belgium Capital Gains Tax: Capital gains are normally treated as ordinary business income and are taxable at the normal corporation tax rates. However, there are exceptions such as gains on shares qualifying for the participation exemption.

Belgium Branch Profits Tax: There is no separate branch profits tax in Belgium. Trading profits and capital gains of the Belgian branch of a foreign company are calculated and taxed on the same basis as those of a Belgian resident company.

Local Taxes in Belgium: Several local taxes of varying rates apply for advertising, machinery, unimproved real estate, office furniture, producing copies and enterprises that pollute the environment. Unlike the individual income tax, there is no additional local tax as a surcharge on company income taxes.

Registration Duty: Certain legal transactions are subject to registration duties. Transactions that are subject to proportional duties include sales of real estate situated in Belgium. A registration duty of 12.5% (10% in the Flemish Region) applies to the price or market value of the real estate.

Real Estate Tax: Owners of real estate located in Belgium pay real estate taxes on the deemed rental value of their property. The applicable rate depends on the location and use of the property.

Losses: Losses can be carried forward indefinitely. However, this rule will no longer apply if there is a change in the control of a company which cannot be justified by financial or economic reasons other than the recapture of losses. Losses cannot be carried back.

Previous and current losses may not be set off against income from abnormal or gratuitous advantages granted by enterprises that are related to the company receiving the benefit.

Foreign Source Income: There are no provisions similar to the UK's controlled foreign company rules. Foreign-sourced income and capital gains are normally subject to Belgian corporate income tax, unless exempt by treaty provisions.

Belgium Tax Incentives: There are special tax regimes in Belgium for foreign sales corporations, distribution centres, co-ordination centres and service centres. There are also exemptions from real property tax and accelerated depreciation.

Foreign Tax Relief: For foreign dividends received by a Belgian company, a 95% exemption system is available under certain conditions. For foreign interest and royalties on which foreign tax has been levied, there is a fixed foreign tax credit. In the case of interest, however, the tax credit is variable but subject to a maximum rate (15%). The tax credit is not refundable. The 'fixed' foreign tax credit will be limited to the amount of Belgian tax related to the net foreign income. In case of royalties, the tax credit is 15/85 of the royalties net of foreign tax.

Corporate Groups: Belgium tax law contains no special provisions for groups of companies. A Belgium company is always treated as an independent unit. Consolidated tax returns are not allowed.

Capital Gains and Losses: Capital gains are treated as ordinary business income taxable at normal corporation tax rates of Belgium. However, there are a few exceptions:
- under certain conditions, rollover relief is granted for gains on fixed assets held for business purposes for more than five years
- unrealised gains are exempt provided they are credited to a specific non-distributable reserve
- realised capital gains on shares are exempt from tax if dividends on the shares qualify for the participation exemption.

Capital losses are tax-deductible if they relate to fixed assets used for business purposes. Unrealised capital losses on shares (booked devaluations) are not tax-deductible.

Realised capital losses on shares are generally not deductible. Capital losses realised on the liquidation of a company are deductible up to the
value of the capital actually paid-up.

Taxation of Dividends: Dividends received by a company with a participation of at least 10% or an investment of at least EUR 1.2 million in the distributing company, are 95% deductible from the fiscal profits of the recipient if the shares have been held for an uninterrupted period of at least one year. For example, all dividends are first included in taxable income and then 95% of eligible dividends are deducted out again (subject to a maximum of the net taxable profits of the company for the period). The remaining 5% is taxable at normal corporation tax rates as part of the overall taxable profits of the company.

The 95% deduction is not available where the profits of the payer are subject to a tax regime which is substantially more advantageous than the Belgian tax regime. This will be deemed to be the case if the effective tax rate suffered by the company making the distribution is less than 15%. However, this criterion does not apply to companies established in the European Union.

Withholding Tax: Belgium withholding tax on dividends is normally 25% or 15%. Full withholding tax exemption can be obtained for dividends paid by a Belgian resident company to a parent company resident in another EU Member State, subject to certain minimum holding requirements, in accordance with the Parent-Subsidiary Directive. Furthermore, an exemption from withholding tax is granted on dividend distributions on substantial participations held by foreign companies that reside in a country which has concluded a bilateral tax treaty with Belgium.

Interest payments are subject to a withholding tax, although there are several exemptions. The tax rate is also generally 25% or 15% depending on whether or not the loan is contracted before or after 1 March 1990). Under certain conditions, the tax does not apply to interest payments distributed to EU-resident companies after 1 January 2004.

Payments of royalties are normally subject to a withholding tax at the rate of 15%. Tax treaties negotiated by Belgium generally exempt royalty payments from withholding tax or reduce the withholding tax rate. In accordance with the EU Interest and Royalty Directive, royalty payments by a Belgian resident company to a related company in another EU Member State are, under certain conditions, exempt from withholding tax.

A 15% withholding tax applies to income from the granting of cessions or licences on copyrights and similar rights. If the income constitutes business income or professional income, the 15% withholding tax only applies if the income does not exceed EUR 37,500. Otherwise, the income is taxed at the corporate income tax rate of 33.99% or the progressive individual income tax rate.

The income received from the granting of cessions or licences on copyrights is reduced by a lump-sum cost deduction of:

- 50% on income up to EUR 10,000
- 25% on income between EUR 10,000 and EUR 20,000.

Belgium Tax Year: Belgium tax year is the calendar year.

Belgium Sales Tax / Value Added Tax (VAT) Rate

The general rate of Value Added Tax in Belgium is 21%. For certain supplies, reduced rates of 12%, 6% or 0% applies.

Value added tax has to be charged by registered suppliers of goods and services in Belgium unless those supplies are 'zero-rated', 'exempt' or outside the scope of VAT.