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Taxation in Belgium

Taxation in Belgium

Updated on Friday 11th September 2015

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The Belgium tax system is based on federal and local taxes. The federal taxes are the income tax, the corporate tax, the social security tax and the value added tax and they are the ones bringing the biggest income to the state budget. Local taxes comprise property taxes, inheritance taxes and a few fees.

The income tax in Belgium

The personal income tax in Belgium is levied on the earned income, self-employment earnings, dividends, real estate or other properties incomes. The Belgian personal income tax applies to residents on their whole income, while for foreigners the tax applies only on the earnings they make in Belgium. However, tax exemptions exist on foreign income. The income tax rate in Belgium is applied in stages depending on the tax base, as it follows;

  • -        a 25% tax applies for earnings up to 7,560 EUR;
  • -        a 30% tax rate applies for incomes ranged between 7,561 to 10,760 EUR;
  • -        a 40% tax rate applies for incomes between 10,761 to 17,920 EUR;
  • -        a 45% tax applies for earnings that range from 17,921 to 32,860 EUR;
  • -        a 50% tax rate applies for incomes over 32,861 EUR.

The corporate tax in Belgium

The Belgian corporate tax applies to companies that are registered or have a management board in Belgium and is applied on the company’s worldwide incomes. For incomes earned by companies in foreign countries Belgium has signed double tax treaties that allow companies to benefit from tax reductions or exemptions. The normal tax rate is 33% but an additional charge 3 % applies which makes the total corporate tax rate to reach 33.99%. However, for small and medium-size enterprises (SMEs) the corporate tax can be reduced at 24.98% if its profit does not exceed 322,500 EUR.

Withholding taxes on dividends, capital gains and royalties apply at a normal rate of 25%, but deductions or exemptions apply if tax treaties are enabled. Also according to the EU parent-subsidiary directive no tax applies to a company incorporated in Belgium or in another EU country, if the company hold at least 10% of the shares for at least one year in the other company.

Other taxes in Belgium

Apart from the personal income and corporate taxes, the Belgian tax system is made of other taxes such as:

  • -        the real estate property tax that applies as a presumed annual rental value and varies from region to region;
  • -        the social security tax that varies between 34.58% and 40.58% for employers and from 0.05% to almost 13% for employees;
  • -        the inheritance tax that is levied at different rates depending on the region;
  • -        the value added tax rate that has a standard value of 21%, but reduced rates of 12%, 6% and 0% apply on certain categories of products.

If you want to set up a company and need detailed information about the taxation system you can contact our lawyers in Belgium.

 

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