Belgium has attracted many English-speaking expats due to its prominent location in Europe and high concentration of international organizations. American expats in Belgium mostly reside in Brussels that is a capital of European Union. Due to complex Belgian residency rules and taxation of international assignees it is important for expats Belgium to understand the expat tax filing requirements in Belgium. The expatriate tax rules in Belgium affect US expatriate tax returns.
We get a wide range of expat tax questions from our clients who plan to live and work in Belgium. Do you provide US expatriate tax services for American expats in Belgium? What are foreign income tax rates for residents and non-residents in Belgium? Should American expats in Belgium file US expatriate tax returns, although, they earn income only in Belgium?
Expatriate Tax Rules for Expats Belgium
First and foremost, US citizens or green card holders are required to report their worldwide income to the IRS and pay US taxes whether they reside in Brussels or New York. However, due to tax treaties and IRS tax provisions American expats Belgium can minimize US expat taxes. There are three major tools to avoid double taxation.
- Foreign earned income exclusion. American expats Belgium with foreign earned income can exclude up to $101,300 for 2016.
- Foreign housing exclusion. Additionally, American expats Belgium may be able to claim foreign housing exclusion and to deduct certain foreign housing expenses.
- Foreign tax credit. American expats Belgium can take a foreign tax credit for foreign income taxes paid in Belgium and they can minimize their US expat tax liability on a dollar-for-dollar basis.
Additionally, American expatriates in Belgium may be required to file the FBARs to report foreign financial accounts. Please read more about What is FBAR.
Tax system in Belgium – FAQ
Are American expats Belgium subject to the worldwide taxation?
American expats Belgium who are classified as residents are taxed on a worldwide income. Non-residents are subject to tax only on the income from Belgian sources.
Who is considered a tax resident in Belgium?
Residency is determined by a number of criteria in Belgium. As a general rule, American expat in Belgium is considered a resident if s/he has a permanent home in Belgium or s/he has a center of economic interests in Belgium. In case of a married person, an expat is considered a resident in Belgium if his/her family accompanies him to Belgium. Some highly specialized expatriates may be considered non-residents. Further expatriate tax consultation is required.
What is the tax year in Belgium?
Belgium has a calendar tax year. This fact simplifies the process of tax preparation for expats Belgium
What are income tax rates in Belgium?
Personal income tax rate for residents is based on a progressive scale from 0% to 50%. Residents also have to pay municipal taxes at the rate of 0%-9.5%. Non-residents have to pay a municipal tax at a fixed rate of 7%.
Which income is taxable in Belgium?
Generally, all types of remuneration and benefits are subject to income tax: salary, bonuses, commission, foreign service allowance, housing allowance, private use of a company car etc. Compulsory social security contributions are fully tax-deductible. Professional expenses can be deducted from the taxable income too.
Can American expats Belgium file an expatriate tax return with a spouse?
Spouses are taxed separately, although, tax returns as well as assessments are issued in joint names.
Is it a requirement to file a Belgian tax return and pay overseas taxes every year?
American expatriates in Belgium who are considered residents have to file a tax return by June 30. Non-residents have to file by September 30.
Does Belgium have a tax treaty and social security agreement with the USA?
The USA and Belgium signed a new double tax treaty agreement in 2006. Also, a social security/totalization agreement between the USA and Belgium came into effect in 1984 to improve social security protection. American expats in Belgium must consult an expatriate tax professional to review issues related to overseas taxes.
The above questions are the most common expat tax questions among American expats in Belgium who plan to move and/or to file US expatriate tax returns.
American expats Belgium with additional questions about overseas taxes, US expatriate tax preparation, FBAR, FATCA or any other international tax issues, please seek help of an expat tax CPA. International tax experts at Artio Partners will be pleased to assist with a wide range of expat tax inquiries.