Employment Tax
Belgium | Personal income tax reflections
Summary
With the first deadlines for the filing of Belgian resident tax returns in relation to income year 2023 (notably 30 June 2024 ‘for paper filing’ and 19 July 2024 ‘for electronic filing of non-complex tax returns’) now behind us, the time seems right to reflect on this and to prepare for the next upcoming tax return deadline of 16 October 2024 for ‘complex’ tax returns. Furthermore, in the light of the 2024 government formation we are looking ahead to some of the proposed (federal) tax measures, which may ultimately come into effect in 2025.
Deadlines Belgian resident tax returns
With respect to the resident tax returns related to income year 2023, assessment year 2024, the following
deadlines are applicable:
● Paper filing: 30 June 2024
● Online filing (Tax-On-Web):
Belgian resident taxpayers – which deadline?
The final deadline (October 16, 2024) applies for taxpayers in any of the following situations:
● The taxpayer has self-employed income (e.g. profits and/or gains, company director income) or foreign professional income which is fully or partially exempted from taxation in Belgium;
● The taxpayer declares for the first time this year:
● The taxpayer declared a legal construction (Cayman tax) last year.
The tax return must be filed online (via Tax-On-Web) in order to benefit from the extended deadline of October 16. If the return is submitted by post, the deadline is 30 June 2024. In case of a proposal for a simplified tax declaration (these cases are increasing), the taxpayer had to notify the Belgian tax authorities in advance to be able to benefit from the extended deadline for ‘complex’ tax returns.
The Belgian resident tax return: not a walk in the park
The Belgian resident tax return can be a complex exercise for many taxpayers, especially for those who are new to the Belgian tax system and/or those who receive income from abroad / hold foreign assets. For example, resident taxpayers have additional mandatory reporting obligations (outside of their individual tax return) if they hold foreign accounts or if they own foreign real estate. These specific obligations are intended to ensure transparency and accurate tax assessment (on the taxpayer’s worldwide income) for all income and assets, regardless of where these are situated.
Furthermore, even for those familiar with the Belgian tax system, the filing of the tax return can be quite a challenge. As of income year 2023, there are two cases whereby taxpayers are required to attach a new annex to their tax return.
● Annex 270 MLH regarding the deductibility of rent paid as actual professional expense
● Annex 276 CJC regarding legal constructions
Taxpayers in these situations often require professional assistance to ensure compliance with all legal reporting obligations. Fortunately, the extended deadline provides some additional time to gather and accurately report all necessary information, reducing the risk of errors and penalties.
Please reach out to Vialto Partners in case you require assistance with the Belgian resident tax return.
Tax reform 2025?
Mr Bart De Wever, leader of the New Flemish Alliance (N-VA) and in charge of the formation of a new federal government in Belgium, has proposed various measures including a reform of the personal tax system in Belgium, which (if agreed upon and ultimately voted/accepted by parliament) could take effect as of 2025. Please find a high level overview of the proposed measures below.
One of the key elements of the potential tax reform is a reduction of the personal income tax burden for individual taxpayers (assuming this can be funded). The plan aims to increase the net salaries as of January 1, 2025 by lowering the personal income taxes through the following measures:
1) Increase of the lump-sum tax-free allowance towards the level of the minimal subsistence income for a single person (currently EUR 15.460).
2) Adjustment of the progressive income tax brackets. This would include an expansion of the 25% tax bracket, lowering the tax rate of 40% to 35% and increasing the income threshold for the application of the 50% marginal tax rate.
3) Abolishing the special social security contribution and increasing the job bonus. Finally, the socio-economic note from Mr. De Wever mentions that the tax benefit for child care expenses should gradually be increased from 45% to 100% to make work more rewarding.
It is anticipated that the reduction of the personal income tax burden can be financed, among other things, by a reform of the existing Belgian tax on securities accounts, and the introduction of a new capital gains tax in case of selling of shares.
The discussion on a potential tax reform will continue during the coming weeks and months. More news to
come.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Sandrine Schaumont
Partner
Philip Maertens
Partner
Further information on Vialto Partners can be found here: www.vialtopartners.com
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