New favourable regime for expats in Belgium
On 1 January 2022, two new favourable tax regimes for expats entered into force, the special tax regime for incoming taxpayers (STRIT) and the special tax regime for incoming researchers (STRIR).
Together, they replace the old tax status for foreign executives, which remains in force for another 2 years through a transitional regulation.
1 FOR WHOM?
The STRIT applies to both employees and managers (bedrijfsleider (Dutch) or dirigeant d’entreprise (French)), whereas the STRIR applies only to employees.
For both regimes, the persons concerned must:
- either be directly recruited abroad, or be posted within a multinational group; and
- have lived at least 150 km from the Belgian border and have not been subject to Belgian income tax (as a resident or non-resident) during the 5 years (60 months) prior to the start of the employment in Belgium.
In addition, for the STRIT, the person concerned must receive an annual gross salary of at least EUR 75,000 (before deduction of social security contributions). This amount:
- includes holiday pay, end-of-year bonus, variable pay and benefits of all kinds;
- excludes severance indemnities, replacement income, various exempted benefits (such as meal vouchers and eco vouchers), costs arising from employment in Belgium (which are charged by the employer) and costs specific to the employer
For the STRIR, this salary threshold does not apply, but an additional condition is that the employee actually qualifies as a researcher. For this, the employee must have a specific scientific master’s or doctoral degree or demonstrate at least 10 years of relevant professional experience. The researcher must also spend at least 80% of his/her working time on research activities.
In contrast to the old regime, Belgians are also entitled to the STRIT and the STRIR.
The benefits of the STRIT and the STRIR are entirely based on the concept of costs specific to the employer.
If it is contractually stipulated, the new regimes allow for the payment, on top of the salary, of a lump-sum allowance as costs specific to the employer for regularly recurring costs resulting from the employment in Belgium. The allowance may amount to a maximum of 30% of the total gross annual salary, with a maximum of EUR 90,000. No further supporting documents are required.
Examples are additional costs related to the accommodation and cost of living in Belgium compared to the country of origin, costs of private trips to the country of origin,…
Employers can additionally charge three types of additional expenses as costs specific to the employer, without limitation and provided that supporting documents are available:
- costs caused by moving to Belgium;
- costs related to the furnishing of the house in Belgium (incurred in the first 6 months after arrival);
- schooling costs in Belgium for the children.
In contrast to the old regime, the retention of the status of non-resident (and the associated foreign travel exclusion) is not guaranteed in the new regimes. Expats will now often be considered Belgian residents, have to declare their worldwide income in Belgium and fall under the application of double taxation treaties.
The STRIT or STRIR can be awarded for a maximum of 5 years, but can be extended for a period of 3 years.
The STRIT or STRIR must be applied for by the employer within a period of 3 months from the start of employment. The application must be accompanied by a certificate in which the employee or manager declares his/her agreement with the application.
The administration than has a period of 3 months to decide on the application.
At the latest on 31 January of each calendar year, the employer must provide the tax administration with a nominative list of employees and managers who have benefited from the STRIT or STRIR.
Beneficiaries of the new status who continue to qualify as non-residents must annually submit a certificate to the Belgian tax administration confirming that the expat is subject to income tax in that state.
5 ENTRY INTO FORCE AND PLANNED TRANSITIONAL REGIME
The STRIT and STRIR entered into force on 1 January 2022.
Expats who fall under the old regime can remain in that old regime for another 2 years. They can also choose to switch to the new regime, (a) provided they apply for this before 31 July 2022, (b) demonstrate that they meet the new conditions and (c) have not already been subject to the old regime for 5 years.
If the application is approved, their time period under the old regime will be counted towards the 5 (or if renewed 8) years under the new regimes.
6 CONCLUSION AND TO DO
From 1 January 2022 onwards, employees and managers who did not yet make use of the old system, can only make use of the STRIT or STRIR.
Employees and managers who already fall under the old system have the choice: either they switch to the new system (for the remaining 5 or 8 years, if the conditions are met), or they stay in the old system for another 2 years.
Note that under the STRIT or STRIR, there is a risk that the employee or manager concerned will be qualified as a national resident and taxed on his/her worldwide income, which is not possible under the old system.