Belgium Tax Guide: Everything You Need to Know

Belgium ranks 26 in the Tax Foundation’s 2024 International Tax Competitiveness Index. This ranking reflects Belgium’s position compared to other countries regarding its tax policies. While Belgium offers a well-structured tax system, individuals and businesses face relatively high tax rates and complex regulations. Understanding how the tax system works is essential for anyone working, investing, or living in Belgium.

That’s why we have created this guide, which covers everything you need to know about Belgium’s Tax System.

Overview of Belgium's Tax System

In Belgium, taxes are levied at two levels: Federal (National) and Regional and Local Taxes. Each level is responsible for different types of taxes, which impact residents and businesses in various ways.

1. Federal Taxes

These are national-level taxes collected by the federal government and apply uniformly across Belgium. It includes:

• Income Tax
• Corporate Tax
• Value Added Tax (VAT)
• Excise Duties
• Withholding Tax
• Customs Duties

2. Regional and Local Taxes

Belgium is divided into three regions—Flanders, Wallonia, and Brussels—each with the authority to levy certain taxes independently.  Revenue from regional taxes funds region-specific services, such as recreational activities, transportation, education, and housing policies. These taxes include:

• Inheritance Tax
• Gift Tax
• Property Tax
• Environmental Taxes
• Municipal Surtax on Income Tax
• Waste Collection Tax
• Property Maintenance Tax
• Tourism Tax (where applicable)

Belgium Taxes Overview 

To understand who pays taxes in Belgium, refer to the table below

Types of Taxes in Belgium

There are two main types of taxes in Belgium: Direct and indirect taxes. Direct taxes are taxes levied directly on individuals or businesses based on their income, wealth, or other financial activities. 

Income Tax

Income tax in Belgium is a direct tax levied on individuals' earnings, including salaries, investments, and other sources of income. The tax is progressive, meaning the rate increases as the income rises. Residents are taxed on their international income, while non-residents are taxed on their income generated only within Belgium.

A new slab rate for residents has been introduced for the accounting year 2024-25. A brief look at the slab rates look like:

Corporate Tax

Corporate tax in Belgium is a direct tax levied by the federal government on the profits of companies operating in the country. Belgium has a flat rate of 25% for corporate tax and a slight deduction for SMEs. Corporate tax is a major revenue stream for the government, used to fund public services, infrastructure, and economic development initiatives. 

A brief look at the corporate tax structure in Belgium is shown in the following table.

Municipal Tax

Local governments impose municipal taxes in Belgium, and the tax rate vary across municipalities and cities ranging from 2.5% to 9.5%. Click here to find the Municipal Tax Rate of your municipality.

Municipal taxes primarily support local services and infrastructure, such as education, healthcare, public transportation, and local development projects.

 These taxes typically include:

• Property Tax
• Tax on Buildings (Immovable Property Tax)
• Local Service Tax: Some municipalities charge this tax for local services like waste collection and street cleaning.
• Taxes on Advertising: Municipalities may levy taxes on billboards, signs, and other forms of advertising.

Social Security Contributions

Social security contributions in Belgium are mandatory payments made to the social security system and managed by NSSO. They are directly deducted from an individual’s salary (employee contributions) or paid by employers on behalf of employees.  Employees contribute 13.07% of their salary, while employers pay approximately 27% on their behalf.

Social security funds are used to cover various programs like:

• Health Insurance
• Pension System
• Unemployment Benefits
• Family Benefits

Value Added Tax (VAT)

VAT is a type of tax that you pay when you buy goods and services. It applies at every step of production. It is one of the most important sources of income for the government in Belgium. Businesses collect VAT on behalf of the government and deduct any VAT paid on their inputs.

• 21%: Applies to most goods and services
• 6%: Essentials such as food, books, and medicines.
• 12%: Certain services, including restaurant meals (excluding alcohol).

Excise Duties

Excise duties are taxes imposed by the Belgian Government on certain goods to reduce their consumption. Common goods with excise duties include alcohol, tobacco, and energy products. These taxes often change based on health and environmental concerns. 

Environmental Taxes

Environmental taxes aim to reduce activities and products that harm the environment. These taxes are applied regionally and may vary based on environmental policies. Common examples include taxes on carbon emissions, plastic use, and waste management.

• Petrol and diesel: €10.75/GJ for motor fuel​
• Heating fuels: €0.9/GJ​
• Electricity: As low as €0.15/GJ​
• Landfill waste: Regional taxes, varying rates​
• CO₂ emissions: Penalty rates vary by industry
• High-emission vehicles: Higher registration and usage taxes

Conclusion