Tax for non-residents, pay tax in Belgium even if you don't live here

Personal situation

When calculating the tax for non-residents, it is not obvious that the personal or family situation is taken into account (eg for tax-free sum, dependent children, etc.). To enjoy such benefits, you must earn a substantial part of your income (75%) in Belgium.

The question is whether this does not create any form of discrimination. According to the Court of Justice, a distinction based on residence is in practice often related to different nationalities and there is a risk of discrimination. Belgium must therefore properly justify its arrangement. The complex state structure does not make things any easier, because after determining whether there is a Belgian connection point, one also has to determine a Region because certain tax measures have been taken at that level (see Article 248 of the Income Tax Code).

Professional income

Professional income can be divided into four categories: profits, income, remuneration, pensions

Profits

The profit of the foreign company is only taxable in Belgium if it has a Belgian permanent establishment, which can be a tangible, personal or services permanent establishment.

Benefit

This concerns income from a liberal profession, office or post related to a professional activity performed in Belgium.

Remuneration

The situation depends on whether it is a Belgian debtor or a foreign debtor and whether there is foreign activity or not. In the case of a Belgian debtor who indemnifies for activity in Belgium, Belgian tax is due. If it pays for an activity abroad, it is also taxed here, unless there is an exception regime (attribution to permanent establishment or linked to development projects). In the case of a foreign debtor, tax is charged in Belgium if there is more than 183 activity in Belgium. Fees by a foreign debtor for activities abroad are not taxed in Belgium.

Pensions

If there is a Belgian debtor or if there was a tax advantage (eg deductibility of premiums) or if the pension is related to an activity in Belgium, in principle Belgian taxable income arises. This means that even with limited professional activities (eg working for 1.5 years in Belgium with foreign pension contributions) a connecting factor for taxes in Belgium arises.

Artists and Athletes

When the performances have taken place in Belgium, there is in principle taxability here.

When there is a permanent establishment, this leads to taxable professional income in Belgium. But even if there is no permanent establishment, a tax liability can still arise (in the absence of a tax treaty) at the foreign affiliated company (art. 228 §3 WIB) of the amounts paid from Belgium.

Real Estate Income

To determine whether you as a non-resident have to pay taxed real estate income, the location of the real estate is used as a reference point. The exemptions apply here as well as in the 'normal' personal income tax.

You must make a distinction between non-let and non-let real estate. For immovable property that has not been let, the property tax is the final levy, unless you have to declare other income (eg a pension). For rented real estate you will have to declare the real estate income (the calculation of which varies according to private or professional use), but there is an exception when the net real estate income is below 2,500 euros (per partner), even if there is no other income to it. to be given. You must, however, check the matrimonial property regime, because in a system of separation of property, both have to file a return even if one partner has a higher income.

Capital gains

Capital gains on real estate are taxed in the GNI through various income (in the case of non-professional capital gains) or through a deduction of a (non-exempting) withholding tax (in the case of a professional capital gain that is then added to the profits or income). . For companies, this is done at the corporate rates (25%), the progressive rates apply for natural persons, unless you have been using the real estate for more than 5 years for professional activity, in which case the rate of 16.5% (+ surcharges) applies. . There are, however, special arrangements for restructuring.

Movable income

When the debtor is a Belgian entity or when a payment is made by a Belgian institution, taxable income in principle arises in Belgium, but there are many exceptions to this (European Directives, double tax treaties, arrangements for financial intermediaries, foreign establishment, savers, etc. .).

In principle, the withholding tax is the final tax in the GNI, but when there is a permanent establishment, this is not the case.

Miscellaneous income

This category includes incidental profits or benefits, but also maintenance payments or certain income from immovable property or, furthermore, the proceeds of a larger participation (more than 25%) on resale by the non-resident to a non-European company.

A special case: payments by a company affiliated in Belgium

If such payments are made by a resident/permanent establishment of/in Belgium to an affiliated service provider in a country without a treaty, the foreign affiliated company is taxed on this sum paid for the services rendered (art. 228§3 WIB) if proof of tax is not available. For countries with which a tax treaty has been concluded, it depends on whether this income can be taxed in Belgium.

Calculation

The calculation for non-residents also takes place after submitting a declaration. Please note that in some cases the withholding tax has a liberating effect and there is no need to file a return. In the declaration, a distinction is made between people who receive 75% or more of their income in Belgium and between people who are residents of an EEA member state or not. Depending on these circumstances, you may or may not enjoy federal personal benefits or regional reductions. Non-discrimination clauses have been included in the treaty for France, the Netherlands and Luxembourg, so that tax benefits there also apply at lower percentages.

Collection

Unlike residents, the tax is often collected through a deduction. For example, in the case of a taxed capital gain on the sale of real estate, the notary must transfer the money (cf. art. 301 WIB, art. 177 RD WIB). Another example: when a foreign artist performs in Belgium, the organizer has to withhold and transfer the tax even if the organizer of a foreign company (the so-called rent-a-star company) receives the invoice. It is true that one can still opt for a declaration and thus enjoy certain advantages (eg deduction of expenses).

In the case of non-residents tax, there is also the obligation to withhold and transfer withholding tax (on the creation of a permanent establishment) and to draw up forms (for wages, costs, etc.). When a treaty provision (which by definition takes precedence) applies, there will be no effective withholding.