Tax rates in Belgium

Company Tax

25%

Tax Rate For Foreign Companies

Belgian permanent establishments and branches of foreign companies are subject to normal corporate tax on their worldwide income. Foreign-source income may be exempt based on a tax treaty.

Certain income attributed by a Belgian tax resident to a non-resident is taxable in Belgium provided all of the following conditions are met:
•    Revenues stem from any provision of services
•    Revenues qualify as benefits or profit in the hands of the non-resident beneficiary
•    The services are provided to an individual tax resident in Belgium in the framework of one’s business activity, a corporation, a taxpayer subject to the legal entities tax, or a Belgian establishment
•    There are (in)direct links of interdependence between the foreign supplier and its Belgian client
•    Such revenues are taxable in Belgium according to a double tax treaty (DTT) or, in the absence of any DTT, if the non-resident taxpayer does not provide evidence that income is actually taxed in the state where the taxpayer is resident.
After a lump-sum deduction of 50% as professional expenses, the 25% rate on the gross fee paid goes down to an effective rate of 12.5%.

Capital Gains Taxation

Corporations are taxed on capital gains from tangible and intangible asset disposals at the standard corporate income tax rate of 25%, or at a reduced rate for SMEs if applicable. However, if assets are held for over five years before disposal and sale proceeds are reinvested in qualifying assets within three years (or five years in certain cases), capital gains taxation can be deferred. In such cases, tax due is spread over the reinvested asset's lifespan.

Capital gains from fixed income securities are taxed as profits, while net gains from share disposals are exempt under specific conditions, including meeting the subject-to-tax requirement, holding shares directly for at least one year, and meeting minimum holding requirements. Special rules apply to trading companies and restructuring transactions like mergers and splits, where hidden capital gains remain tax-free under certain conditions, including having principal business locations in Belgium or the EU and meeting business purpose tests.

Main Allowable Deductions and Tax Credits

Companies may deduct all business expenses when calculating taxable income, on the general condition that they are legitimate, at arm’s length and that they are incurred in order to maintain or to increase taxable income. Royalties and all fees generally are deductible without additional requirements. Various deductions and incentives are provided for R&D-related activities. Under the notional interest deduction, Belgian companies and branches are also entitled to an interest expense for qualifying equity (within a thin capitalisation/30% EBITDA limit). Belgium offers an innovation income deduction regime that reduces the effective rate of taxation on qualifying net IP income (raising the tax deduction rate that applies to gross patent revenue from 80% to 85%, resulting in an effective rate of 3.75%). A company can avail a one-time investment deduction of 20.5% for the tax year 2024, applicable to accounting periods ending between December 31, 2023, and December 30, 2024 (inclusive), based on the acquisition value of eligible investments. Additionally, concerning environmentally friendly R&D investments, a company has the option for a staggered investment deduction of 27.5% for the tax year 2024, calculated on the depreciation of qualifying environmentally friendly R&D investments.

Goodwill arising on the occasion of an asset deal can be amortised in a period of minimum five years by applying a straight-line method (client lists can be amortised over a period of 10-12 years). Start-up expenses may be deducted fully in the year of incorporation or can be depreciated over a period of up to five years. Provisions and bad debts can be deducted (conditions apply). Charitable contributions (above EUR 40 and within 5% of the total net income of the taxable period, with a maximum of EUR 500,000) can be eligible for deduction. Belgian companies can claim a deduction for royalties, management service fees, and interest charges paid to foreign affiliates (the arm's length principle must be respected). The cost of company cars can be deducted between 40% and 100% depending on the CO2 emission, with fuel costs deduction also being linked to the level of CO2 emission (from 2026 onwards, only zero-emission company cars will be able to benefit from a tax deduction).
With some limitations, tax losses can be carried forward without any limitation in time; however, a minimum tax base should be taken into account: some deductions, like DRD, innovation income deduction, and investment deduction, have no restrictions, whereas for other deductions only 70% (or 40% in 2024) of the taxable amount that exceeds EUR 1 million can be offset. This category of deductions includes carried-forward losses, among others. The remaining 30% will be taxed at the CIT rate without any deduction. Losses carry-back is generally not allowed.

The following expenses are not deductible: taxes (with some exemptions, like the real estate tax and foreign taxes), capital losses on shares, half of the representation expenses and business gifts, 31% of restaurant expenses, 17% of the benefit in kind of company cars or 40% if the fuel costs are fully borne by the company, hospitalisation insurance premiums and small gifts for employees.

Other Corporate Taxes

Indirect taxes include stamp duties, a fixed fee on increase in capital of EUR 50, a transfer or registration tax on the transfer and leasing of real estate (at rates varying between 0.2% and 12.5%). At the regional level in Belgium, an annual tax is levied on the notional rental income of immovable property, including land, buildings, and industrial equipment. The rate varies by region: 3.97% in the Flemish region and 1.25% in the Brussels and Walloon regions. Provinces and communes may impose additional surcharges. While the tax and surcharge are deductible for corporate income tax, they are not deductible for individual income tax unless the building is used for business purposes.

A 100% special assessment is applied to "secret commissions," which refer to expenses where the beneficiary isn't properly identified through correct forms filed with Belgian tax authorities. These expenses encompass various forms of professional income, including commissions, bonuses, and benefits in kind, paid to beneficiaries, as well as remuneration to company personnel or former members and lump-sum allowances for staff expenses. The reporting scope extends to variable allowances, albeit only resulting in administrative fines for omissions rather than the secret commissions tax. Additionally, income from copyrights and related rights falls under this assessment. Under specific conditions, the secret commissions tax may be reduced to 50%, and in certain instances, it may not apply at all.

Banks are subject to a bank levy and a subscription tax on savings deposits.

Social security contributions - generally fixed at 30.57% of 1.08 times the gross salary for blue-collar employees and 25% of the gross salary for white-collar employees - in practice vary according to the size and industry of the company and the salary of the employee. For blue-collar employees, an additional annual contribution of 10.27% is due on 1.08 times the gross salary.
Certain components of the salary package are subject to specific social security contributions. These include a carbon dioxide solidarity contribution for personal use of a company car, an 8.86% contribution on the employer's contribution for group insurance, and a 3% contribution known as the "Wijninckx contribution" on supplementary pension premiums exceeding certain thresholds.

An annual tax is levied on securities accounts held by both resident and nonresident individuals, companies, and legal entities, including those subject to the "Cayman tax." This tax aims to prevent Belgian residents from exploiting tax advantages by holding assets in low-taxed entities, implementing "look-through taxation" and taxing distributions. For residents, the tax encompasses both Belgian and foreign securities accounts, while for nonresidents, it applies primarily to Belgian securities accounts. However, certain tax treaties may exempt nonresident-held securities accounts from taxation. The tax rate is 0.15% on the average value of taxable financial instruments within the securities account, excluding nominative securities, exceeding EUR 1 million during the reference period, which spans from October 1 to September 30. Certain financial undertakings are exempt from this tax.

Other Domestic Resources

Federal Public Service Finance (FPS)

Tax Rate

Allowable Deductions and Tax Credits

The Belgian regime of personal allowances, deductions and reductions has been revised with a partial transfer to the competency of the regions. Because the regions have issued their own modifications, consultation with a professional advisor is highly recommended. However, allowable deductions include: business expenses, social security contributions, and alimony payments (up to 80%).

Special rules apply when one spouse has low or no earned income:
- If only one spouse has earned income, 30% of the gross taxable earnings (up to EUR 13,050) is attributed to the non-earning spouse and taxed in their name ("marital quotient"). For self-employed or liberal professions, if one spouse assists the other, up to 30% of the earning spouse's net earnings is attributed to the assisting spouse if their net earnings do not exceed EUR 16,950. This can increase to 50% with sufficient evidence of assistance.
- If both spouses have earned income and one earns more than 70% of the total earnings while the other earns less than EUR 13,050, up to 30% of the total earnings (not exceeding EUR 13,050) can be attributed to the lower-earning spouse.

Several personal exemptions are provided by the law, including a personal basic exemption of EUR 10,160; and an exemption for dependent children (from EUR 1,920 for one child to a total of EUR 17,940 for four children, plus EUR 1,920 for any other dependent person - increases are granted for handicapped children and children less than three years old). For each child under three years old on January 1 of the tax year, the amount is increased by EUR 690, provided no child custody expenses are deducted.

These rules, along with exemptions and deductions, generally apply to both residents and non-residents. Non-residents must earn at least 75% of their worldwide professional income in Belgium and maintain tax residency in another EEA member state to qualify for regional tax benefits.

Employment-related expenses are deductible unless the taxpayer decides to claim standard deductions (equal to 30% of the gross earnings, up to a ceiling of EUR 5,520 for employees or a flat 3% up to EUR 2,910 for remunerated directors).

Certain non-business expenses qualify for tax reductions:
At the federal level:
- Pension savings contributions: Up to EUR 1,020 (30% tax reduction) or EUR 1,310 (25% tax reduction).
- Employee contributions to group insurance: 30% reduction.
- Charitable contributions of at least EUR 40 to recognized EEA institutions: 45% reduction.
- Life insurance premiums: 30% reduction, up to EUR 2,450.
- Domestic personnel remuneration: 30% reduction, within certain limits and conditions.
- Child custody expenses: 45% reduction, up to EUR 16.4 per day for children under 14 years in 2024.
At the regional level:
- Mortgage loan capital repayments.
- Payments for services through local employment agencies or with service checks.
- Security investments against theft or fire.
- Maintenance and renovation expenses for certain real estate.

Special Expatriate Tax Regime

Non-residents 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. Resident and non-resident taxpayers are taxed at the same rates, but some deductions or tax rebates are only granted to non-residents, provided that they earn at least 75% of their worldwide professional income in Belgium.

For non-residents, a flat surcharge of 7% is due en-lieu of communal taxes, irrespective of the rate applied by the commune in which they reside.

For foreign employees with short-term assignments in Belgium who continue to contribute to the social security schemes of their home country, an exemption from social security may be granted, depending on the home country of the claimant.

Inbound taxpayers and researchers starting employment in Belgium can apply for the special expatriate regime for five years, with a possible three-year extension, within three months of starting work. Eligibility requires a minimum gross compensation of EUR 75,000 (indexed every three years), except for researchers, and living at least 150 kilometers from Belgium, not being a Belgian tax resident, or subject to Belgian tax in the prior 60 months. Applicants must be recruited from abroad or posted to a Belgian entity. Benefits include a 30% tax-free allowance (capped at EUR 90,000, indexed) for recurring employment-related expenses, and tax-free payment of school fees and certain relocation and furnishing costs. Individuals under this regime are default Belgian tax residents but can establish nonresidency with an annual certificate from another state.