Belgian Income Tax: Rates, Deductions, and Exemptions

If you are new to filing your returns in Belgium, it might feel a bit overwhelming, as Belgium’s tax system is a little overwhelming. But as you understand the system better, you’ll realize it’s not as complicated as it seems. 

In Belgium, Individuals and Corporations have to pay taxes on their income. The taxes paid by individuals are known as Personal Income Tax, and the taxes paid by corporations are known as Corporate Income Tax.

To understand these changes and the entire income tax system, we have got you this guide that covers a comprehensive view of income tax returns in Belgium, covering:

• Personal income tax: Rate, Slab, Deductions, Return and payment
• Corporate income tax: Rate, Deductions, Return and payment

Recent Updates In Belgian Tax Regime

• A minor update to the tax brackets has been made, resulting in lower taxes for middle-class taxpayers.

Overview of Income Tax in Belgium

The Belgian government imposes income tax on individual and corporate income to fund public services and infrastructure. The Federal Public Service (FPS) Finance administers and regulates it. 

There are mainly two types of income tax:

• Personal income tax
• Corporate income tax

The rates of these are progressive for personal income tax, ranging from 25%-50%. The corporate tax starts at a flat 25% with some reductions for SMEs. These rates are among the highest in the EU. But corporate tax reforms have brought rates closer to the EU average.

Personal Income Tax in Belgium

Personal income tax is for individuals who are tax residents of Belgium. This means they have lived in Belgium for more than 183 days or considered it their financial centre. 

Non-residents are only taxed on their income within Belgium. 

Taxable income includes:

• Employment earnings
• Self-employment income
• Property income
• Investment Income
• Pensions and Annuities
• Miscellaneous Income

Updated personal income tax rates in Belgium for 2024 are summed up below:

Note: The rates in this table apply for residents and non-residents, both equally. But, non-residents are taxed only on their income that they have earned in Belgium. 

Personal Income Tax Deductions

Key deductions for personal income tax in Belgium include:

Note: The above-mentioned reductions are for residents only. Non-residents must earn 75% of their income in Belgium to qualify for these deductions.

Personal Income Tax in Belgium: Return and Payment

All individuals, both residents and non-residents, who earned income in Belgium are required to file a tax return. Failure to file a tax return may result in fines ranging from €50 to €1,250.

Taxable Period

• Tax Year: The Belgian tax year runs from 1 January to 31 December.
• Return Filing: Tax returns for income earned in year 'x' are submitted in year 'x+1' (e.g., income year 2023 → tax year 2024).

Filing Deadlines (2024 Assessment Year)

Filing deadlines vary each year and depend on the type of return (e.g., resident or complex cases). No deadlines have been announced yet for the 2025 assessment year (income year 2024).

2024 Assessment Year Deadlines

• Online Returns: General deadline: 15 July 2024 and for Complex tax cases: 14 November 2024.
• Paper Returns: 30 June 2024.
• Non-Resident Returns: 22 November 2024.

How to File Personal Income Tax Return?

• Preferred Method: File online using MyMinfin (Tax-on-web) for efficiency and faster processing.
• Paper Forms: Available upon request; contact the tax office if you do not receive them.

Payment Methods

• Online: Use MyMinfin and scan the QR code for quick and convenient payment.
• Bank Transfer: Include the specific reference number provided.
• Payments to Bailiffs: Applicable in legal cases; additional costs may apply.
• Withholding Tax (WHT): Automatically deducted from salaries and other forms of income.

Key Notes

• Residents: Taxed on their worldwide income.
• Non-Residents: Taxed only on income sourced in Belgium. To qualify for certain tax reliefs, at least 75% of worldwide income must be Belgian-sourced.

Corporate Income Tax (CIT) in Belgium

CIT is a tax on company profits that impacts net income and funds public services. It is also governed by the Federal Public Service (FPS). 

In Belgium, corporate tax is applied to:

1. Belgian resident companies on worldwide income
2. Branches of foreign companies only on profits generated within Belgium.
3. Subsidiaries of foreign companies in Belgium on worldwide income, similar to Belgian companies.

The current rates for corporate tax in Belgium are:

• Standard Rate: 25%
• Reduced Rate for SMEs: 20% for profits up to €100,000

Corporate Income Tax Deductions

The exemptions for corporate tax in Belgium mainly promote R&D and FIIs in the country.

The deductions and rates are summarised below:

Corporate Income Tax in Belgium: Return and Payment

All companies operating in Belgium must file a corporate income tax (CIT) return. Filing failure may result in administrative penalties, ex-officio assessment, or criminal sanctions.

Taxable Period

• Tax Year: The Belgian tax year runs from 1 January to 31 December.
• Return Filing: Tax returns for income earned in year 'x' are submitted in year 'x+1' (e.g., income year 2023 → tax year 2024).

Filing Deadlines (2024 Assessment Year)

The standard deadline for filing corporate income tax returns is the last day of the seventh month following the end of the accounting year. 

CIT Return Deadline 2024

• For FY ending 31 Dec 2023 to 29 Feb 2024: The deadline is 7 October 2024.
• Expedited Refund: File by 30 August 2024 for quicker processing.
• Extension Requests: Only granted in exceptional cases..

How to File Corporate Income Tax Return?

• Preferred Method: File electronically via the Biztax application. This is mandatory unless an exemption is granted.
• Exemptions: Companies without the necessary IT resources must request paper forms by submitting a written statement to their tax office each year.

Payment Methods

• Online: Pay via MyMinfin for automatic payment allocation to the correct account and reference.
• Bank Transfer with the specific reference number provided in the tax assessment notice.
• Payments to Bailiffs (sworn officers who enforce court orders)  in cases where legal proceedings are initiated. Additional costs apply.

Federal Public Service Finance (FPS Finance)

The FPS Finance is the central authority for federal taxes:

• Corporate income tax
• Personal income tax
• VAT
• Customs duties

The FPS Finance overlooks the compliance with the income tax rules when it collects taxes and provides taxpayer support. For this, it has created specialized divisions responsible for different functions, like, auditing, processing tax returns, educating, and offering advisory services.

Conclusion

Personal and corporate income tax rates in Belgium are among the highest in Europe. No one wants to pay fines and penalties on top of that. 

That’s why it is important to understand how compliance works. In case of any issues you might have to face:

• Fines
• Penalties
• Audits by the FPS
• Interest on Overdue
• Legal consequences

So, ensure that you have a strong record-keeping system so that whenever there is an issue, you have a strong record to get back on track.