Personal Income Taxation in Belgium is levied on worldwide income, as far as residents are concerned. This is irrespective of the nationality of these individuals. However, non-residents are mostly taxed on the income that has been sourced from within Belgium.
Personal Income Tax is calculated by determining a relevant tax base, and then estimating the tax due on basis. Taxation in this regard is charged using a sliding scale, in successive portions of the net taxable income.
Tax Rates are same for both, residents, as well as non-residents. However, non-residents are also eligible for tax rebates, granted that they have earned at least 75% of their worldwide income within Belgium.
Personal Income Tax Rates in Belgium
For the Fiscal Year 2021, the following Personal Income Tax Rates are applied:
- For a taxable income between EUR 0 and EUR 13,450: A tax rate of 25% is levied. The cumulative tax amounts to be EUR 3385.
- For a taxable income between EUR 13,450 and EUR 23,900: A tax rate of 40% is levied. The cumulative tax amounts to be EUR 7529.
- For a taxable income between EUR 23,900 and EUR 41,360: A tax rate of 45% is levied. The cumulative tax amounts to be EUR 15386.
- For a taxable income above EUR 41,360: A tax rate of 50% is levied.
In exception to the tax rates mentioned above, there are also local personal income taxes levied in Belgium. They are levied at varying rates from 0% to 9% to the income tax due. The average rate, however, is 7%. As far as non-residents are concerned, a flat surcharge is levied at a rate of 7%. However, in some cases, communal taxes might also be imposed on federally exempted foreign-sourced income.
Other Personal Income Taxation in Belgium
- Social Security Contributions: For employed persons, social security contributions are levied at a rate of 13.07% of the gross compensation. The corresponding share of the employer amounts to 27% of the gross remuneration.
- Consumption Taxes: Consumption taxes are levied in the form of Value Added Tax (VAT). The standard VAT rate of 21% is applicable on most goods and services. However, some supplies of goods and services also have a reduced VAT rate. The reduced VAT is applied at a rate of 12%. It is applicable on catering services, pharmaceutical chemicals, tubes, as well as combustible material. In the same manner, there is a further reduced rate of 6% that is applied on immovable property, printed materials, hotels, as well as basic food necessities.
Lastly, there are also some goods and services that are zero-rated when it comes to incidence of VAT. They include exports, as well as certain related services, as well as intra-community supplies of goods.
- Net Wealth/Net worth Tax: A draft bill was established under which a solidarity tax of 0.15% was imposed on all securities accounts that were around the threshold of EUR 1,000,000.
- Inheritance and Gift Tax: Gift taxes vary across different regions in Belgium. In the Flemish and Brussels capital regions, there are registered gifts of movables, which are taxed at reduced flat registration rates of 3% and 7%. The 3% rate is applied for spouses, children, as well as grandchildren. On the other hand, the 7% rate is applied across all individuals that do not fall under the categories mentioned above.
Corporate Income Taxation in Belgium
As far as Corporate Income Taxation is concerned, it can be seen that it is mostly determined on an accrual basis. It comprises of all worldwide income, after accounting for the respective deductions. These rules are applicable on both, companies as well as Permanent Establishment (PE) in Belgium. For purposes of corporate income tax, it can be seen that all the income that is received by a given business is regarded as business income.
The general rate of corporate income tax is 25%. This rate is levied on Belgian companies as well as Belgian Permanent Establishment of foreign companies.
In the same manner, capital gains on all qualifying shares are exempt from corporate income tax, whereas non-qualifying shares are mostly subject to the general rate of 25%.
Additionally, a reduced rate of corporate income tax is also levied on small and medium enterprises that are in the first bracket of profit, which has a threshold of EUR 100,000. The reduced rate that is applied is 20%.
Minimum Tax Base
A minimum tax base is levied on companies that have a taxable profit greater than EUR 1 million. However, certain deductions need to be accounted for, and these deductions can be claimed up to the amount of 70% of the profits in excess of EUR 1 Million. The remaining 30% tends to be fully taxable under the normal corporate income tax rates.
Other Corporate Taxation in Belgium
Other than corporate income tax rates mentioned above, there are a couple of other taxes too that are levied on corporations in Belgium.
- Import Duties: Import duties that are placed on all goods that are imported from outside the EU. Import Duties are imposed on three main elements that include classification, origin and valuation.
- Excise Duties: Excise Duties in Belgium are broadly categorized into two categories, Community Excise Products, and National Excise Products. They differ on basis of origin, and the type of goods that are imported in Belgium.
- Property Tax: Property Tax Rates in Belgium are also subject to an immovable Withholding Tax (WHT) that is contingent on the on the location of the property.