BelgiumTax Obligations Detailed

Belgian employers face various tax obligations for their employees in 2025.

Income Tax

• Withholding: Employers withhold income tax directly from employee salaries based on progressive rates.
• Rates: These range from 25% to 50%, increasing with income levels. The specific brackets are:
  • €0 - €15,200: 25%
  • €15,201 - €26,830: 40%
  • €26,831 - €46,440: 45%
  • Above €46,440: 50%
• Payment: Withheld taxes must be paid to the tax authorities by the 15th of the following month.
• Tax Return: Tax returns for the 2024 income year are due by June 30, 2025 (paper) or July 15, 2025 (electronic).

Social Security Contributions

• Employer Contributions:
  • Rate: Employers contribute approximately 25% of the employee's gross salary. Additional contributions apply, potentially reaching around 27.50% total.
  • Coverage: Contributions cover pensions, healthcare, disability, unemployment insurance, workplace accidents, occupational diseases, and family allowances.
• Employee Contributions:
  • Rate: Employees contribute 13.07% of their gross salary towards social security.
  • Ceiling: A ceiling applies to some contribution types, like pensions. The 2024 ceiling for pension contributions is €116,554.16. No further pension contributions are calculated on earnings above this amount (2025 amount to be confirmed).

Other Taxes and Obligations

• CLA 90 Bonus Plan: This plan offers favorable tax treatment for bonuses. The maximum bonus amount for 2025 is €4,164 gross (€3,622 net, subject to official confirmation). Employee contributions are 13.07% and employer contributions are 33%.
• Tax Forms: Employers must submit tax forms (281.10) for the 2024 income year to the tax administration by February 28, 2025.
• Employment Plan for Older Employees: Companies with more than 20 employees (FTE) as of January 2, 2025, need an employment plan to maintain or increase employees aged 45+. The draft plan must be submitted to the works council by March 31, 2025, if the financial year aligns with the calendar year.
• Prepayments: Quarterly prepayments of income tax can reduce the final tax payment. Payment dates for the 2024 tax year were April 10, July 10, October 10, and December 20, 2024. (Dates for 2025 are to be confirmed.)

Upcoming Tax Reform (Expected 2026)

A new government agreement proposes changes including stricter participation exemption rules and adjustments to liquidation reserves. Specific details and effective dates are still pending.

General Information

• The Belgian tax system is considered one of the highest in Europe.
• Tax laws and rates are subject to change. Always refer to official sources for the latest information.
• The tax year in Belgium follows the calendar year.

It is highly recommended to consult with tax professionals or use payroll services for precise calculations and compliance in Belgium. This overview is current as of today, February 5, 2025, and might change due to legal modifications or new official publications.

In Belgium, employee tax deductions encompass various areas, including social security contributions, professional expenses, and specific personal deductions.

Social Security Contributions

• Employee Contributions: These are compulsory and deducted directly from gross salary, currently at a rate of 13.07%. These contributions cover healthcare, pensions, and unemployment insurance.
• Employer Contributions: Employers also contribute a significant portion, set at 25% of the employee's gross wages.

Professional Expenses

Employees can deduct work-related expenses, either through:

• Standard Deduction: A simplified method where 30% of gross earnings are deducted, capped at €5,750 annually. For company directors, this is a flat 3% up to €3,030.
• Actual Expenses: Itemized deduction of specific, documented professional expenses, if preferred over the standard deduction.

Personal Deductions

Several personal deductions can further reduce taxable income:

• Support Payments (Alimony): 80% of alimony paid to close relatives or a separated spouse is deductible, subject to certain residency conditions.
• Pension Savings Contributions: Tax reductions apply, with maximums of €1,020 or €1,310 depending on the reduction rate (30% or 25%, respectively).
• Group Insurance Contributions: Employee contributions receive a 30% tax reduction.
• Charitable Donations: Donations of at least €40 to recognized EEA institutions qualify for a 45% tax reduction.
• Life Insurance Premiums: A 30% reduction up to €2,450 annually.
• Domestic Personnel Costs: A 30% reduction subject to specific limits and conditions.
• Child Custody Expenses: Up to €16.4 per day (as of 2024) for children under 14, with a 45% tax reduction.
• Other Deductions: Additional deductions exist, such as those related to mortgage loan repayments and services paid through local employment agencies or service checks (at regional levels).

Tax Rates and Brackets

Taxable income is divided into brackets with progressive rates, where higher income falls into higher tax brackets:

• Up to €15,820: 25%
• €15,820 to €27,920: 40%
• €27,920 to €48,320: 45%
• Above €48,320: 50%

A personal tax allowance (€10,570 for the 2024 income year, rising to €10,910 for 2025) provides a tax-free portion of income.

Tax Filing and Deadlines

Tax returns for the 2024 income year must be filed in 2025. The exact deadlines for 2025 have not yet been published but usually fall around July for online filings and June for paper filings. Online filing via MyMinfin (Tax-on-web) is the preferred method. Payment can be made online, via bank transfer, or through deductions from salary (withholding tax).

Additional Notes

This information pertains to the 2024 income year and is current as of February 5, 2025. Tax laws and regulations are subject to change. Always consult official sources for the most up-to-date information. For individualized tax advice, consult with a tax professional.

Value Added Tax (VAT), known as Taxe sur la valeur ajoutée (TVA) in French and Belasting over de toegevoegde waarde (BTW) in Dutch, is a consumption tax applied to most goods and services in Belgium.

VAT Rates

• Standard Rate: 21% (most goods and services)
• Reduced Rates: 12% (restaurant and café non-alcoholic services, public housing), 6% (food and beverages, basic foodstuffs, books, ebooks, journals, hotel accommodations, domestic heating, medicine, minor repair services, passenger transport, bikes)
• Zero Rate: Intra-community passenger travel (air and sea), exports and intra-community supplies of goods, gold to central banks, weekly e-journals

VAT Registration

• Threshold: €25,000 (domestic supplies only). Businesses exceeding this threshold must register with the VAT office and charge VAT. Those below may register voluntarily.
• Non-Residents: Immediate registration required for non-resident businesses making taxable supplies in Belgium.
• Distance Sales Threshold (from another EU Member State to individuals in Belgium): €35,000.
• Sharing Economy Earnings: €6,390.

VAT Filing and Payment

• Frequency: Monthly or quarterly.
• Monthly Filers: Deadline is the 20th of the following month. As of January 1, 2025, monthly filers may request refunds for excess VAT monthly.
• Quarterly Filers: Deadline is the 25th of the following month (effective from January 1, 2025, for Q4 2024 reporting period onwards).
• Corrective Returns: No longer possible after the filing deadline. Corrections must be made in the subsequent VAT return.
• Payment: Due by the filing deadline.

VAT Exemptions

• Exempt without Credit: Healthcare, education, certain social, sport, and cultural services, banking and financial services, insurance, land and real estate sales, property leasing (option to tax available).
• Exempt with Credit (Zero-Rated): Exports and related services, intra-community supplies and related services, certain imports and trades within VAT warehouses, cross-border passenger transport (ship or aircraft), supplies to diplomats and international organizations, supplies to certain international transport vessels and aircraft.

Annual Sales Listing

• All businesses are required to submit this listing detailing domestic B2B sales.
• Deadline: March 31st of the following year.

Other Relevant Information

• A fiscal representative is required for most non-EU businesses.
• A VAT group registration is available.
• Foreign businesses can recover VAT.
• E-invoicing will be mandatory for B2B transactions from 2026, with real-time reporting from 2028.

It is important to note that this information is current as of February 5, 2025, and might be subject to change due to legislative updates or future announcements. Consulting with a tax advisor for specific situations is always recommended.

In 2025, Belgium offers various tax incentives for businesses and individuals, focusing on innovation, research and development, and investments in sustainable technologies.

Corporate Tax Incentives

• Innovation Income Deduction (IID): A deduction of 85% on qualifying innovation income. For assessment year 2025 and onwards, companies can choose to convert any unused deduction into a non-refundable tax credit, carried forward indefinitely. This offers flexibility for companies subject to Pillar 2 rules, enabling maintenance of effective tax rates above 15% while preserving the tax advantage associated with innovation income. However, other deductions following the IID must be calculated as if the IID was fully applied to maintain compliance with the 15% minimum tax rate. Additionally, the tax credit itself can also be deferred if desired.

• R&D Incentives: Several incentives support R&D activities. These include accelerated depreciation, with large companies deducting 40% in the first year and SMEs utilizing degressive depreciation. Exemptions for wage withholding tax payments for researchers are clarified and improved. The regional attestation requirement for the investment deduction is abolished. Companies achieving research center recognition benefit from a stable fiscal framework.

• Investment Deduction: A tax credit based on investments in R&D equipment and acquired patents.

• Dividends-Received Deduction: This deduction will transition to an exemption. The minimum participation condition remains at 10%, but the minimum acquisition value increases from €2.5 million to €4 million. This only applies to transactions between large companies; SMEs are exempt from the stricter conditions. For DBI-Beveks/RDT-Sicavs, there will be a 5% tax on capital gains upon exit and withholding tax credits are conditional on a minimum director's salary being allocated.

Personal Tax Incentives

• Pension Savings Plan: Contributions to pension savings plans are eligible for a tax reduction. Depending on the contribution limit (either €1,050 or €1,350), the reduction will be 30% or 25%, respectively.

• Other Deductions: Tax reductions are also available for various expenses, including life insurance premiums (up to €2,450), charitable contributions (minimum €40 to recognized EEA institutions), and remuneration for domestic personnel (subject to specific limits and conditions).

Tax Changes Related to Real Estate

• Registration Fees: For authentic deeds of sale signed on or after January 1, 2025, the registration fee for acquiring a single-family home is reduced to 3% (previously 12.5%). This also applies if a homeowner sells their existing property within three years of purchasing a new one. The "housing voucher" tax incentive is abolished, as is the reduced 6% rate for modest homes (cadastral income below €745).

Additional Information

Belgium actively encourages R&D and innovation. Tax incentives are regularly reviewed and updated, so staying informed about the latest regulations is essential. For further details, consulting with a tax advisor or referring to official government resources is recommended. Note that the information provided is current as of February 5, 2025, and may be subject to change.