Attracting foreign talent: the special tax regime for inbound taxpayers and inbound researchers
Different governments in Belgium are currently looking into ways to attract foreign talent to address structural shortages in the Belgian labor market.
In this regard, the Special Tax Regime for inbound taxpayers and inbound researchers still remains a very beneficial measure.
What is it about?
The Special Tax Regime for inbound taxpayers and inbound researchers has been introduced by the Belgian government on 1st January 2022, and is a replacement of the almost 40-year old ‘special tax status for foreign executives’. This new regime has since been introduced by a law and therefore provides more legal certainty than the old regime which was based on an administrative circular letter.
The special tax regime is a very effective measure to lower the salary costs for the company of its qualifying employees/directors working in Belgium.
What are the benefits?
Recurring expenses
The employer may pay the individual a tax-free allowance (so called ‘cost proper to the employer’) amounting to maximum 30% of the gross remuneration.
This cost proper to the employer is capped at a maximum of EUR 90,000 on an annual basis. This cap should be pro-rated based on the number of days in case of incomplete years.
These recurring expenses are applicable without a need to provide any evidence in this respect.
Please find a hypothetical example below:
| No application special tax status | Application special tax status | |
| Gross remuneration | 130,000 | 100,000 |
| (Minus) Belgian employee social security | < 16,991 > | < 13,070 > |
| Taxable remuneration | 113,009 | 86,930 |
| (Minus) Belgian income taxes | < 48,662 > | < 34,710 > |
| (Plus) Cost proper to the employer | 0 |
30,000 |
| Net remuneration | 64,347 | 82,220 |
| Cost for the company (estimated employer social security contributions of 27.5%) | 165,750 | 157,500 |
Non-recurring expenses
Apart from the recurring expenses, the employer can also take charge of the non-recurring expenses resulting from the employment in Belgium, such as:
- Moving costs to Belgium;
- Costs relating to furnishing the home in Belgium during the first 6 months as from the individual’s arrival in Belgium (cap of EUR 1,500);
- Costs relating to school fees of the children in Belgium.
The amount and reality of these non-recurring expenses must be proven with supporting documents.
What are the conditions?
Qualifying employer
First of all, the employer should be qualifying. The employee should be either:
- Directly recruited abroad by:
- A domestic company, or
- A Belgian establishment of a foreign company, or
- A national or international non-profit association.
Or
- Seconded by a foreign group company that is part of a multinational group to:
- One or more domestic companies, or
- One or more Belgian establishments of a foreign company, which is part of the same multinational group, or
- A national or international non-profit association.
Qualifying employee or company director for inbound taxpayers
The employee or company director must carry out a taxable remunerated activity in Belgium.
Company directors from ‘category 1’ (director mandate and similar functions charged with daily management) and also certain company directors of ‘category 2’ (directors performing a leading function/activity of daily management of a commercial, financial or technical nature) can qualify.
The following conditions should be simultaneously met on behalf of the individual:
- For the 60-month period prior to the start of the employment in Belgium the individual
- has not been a Belgian resident and
- has not been living within a distance of 150 km from the Belgian border and
- has not been subject to taxation as a non-resident for professional income in Belgium.
- The individual must receive a gross remuneration of more than EUR 75,000 for services rendered in Belgium during a calendar year.
This threshold is pro-rated in case of incomplete years (start/end date of Belgian employment in course of the calendar year).
- The employer must receive approval from the Belgian tax authorities for the specific individual.
An application request must be filed by the employer towards the Belgian tax authorities within 3 months counting as from the start of the individual’s employment in Belgium. Late filing is not possible.
Qualifying employee for inbound researchers
A separate regime was introduced for qualifying inbound researchers. Only employees are eligible to benefit from this regime, company directors are excluded.
An inbound researcher is an employee who:
- Alone or in a group, carries out research activities of a scientific, fundamental, industrial, or technical character, in a laboratory or an enterprise carrying out one or more programs for research and development for at least 80% of his/her working time.
- Holds a PhD or a Master’s degree in STEM (Science, Technology, Engineering and Mathematics) or can demonstrate 10 years of relevant professional experience.
A minimum gross annual remuneration is not required for inbound researchers.
The other conditions are the same as those for the special tax regime for inbound taxpayer.
Limited in time
The special tax regime is limited in time. The regime is applicable for an initial period of 5 years. An extension of the application of the regime can be requested for an additional three-year period. Therefore, the total duration of the regime is 8 years.
The special tax regime will terminate for the individual in case the conditions would no longer be met (the employer/company conditions; the minimum remuneration of EUR 75,000 for inbound taxpayers; or the minimum 80% working time on R&D programs for inbound researchers).
Possible future changes?
In the new Federal Coalition Agreement, it has been announced that the special tax regime will be made even more attractive. This would be achieved by increasing the non-taxable cost proper to the employer from 30 to 35% and removing the current ceiling of EUR 90,000. In addition, the minimum gross salary requirement would be lowered from EUR 75,000 to EUR 70,000. We will keep you informed as further details about the implementation of these changes become available.
Time for action!
Feel free to send an e-mail to tax@propay.be if:
- You wish to receive more information on the special tax regime;
- You wish assistance with the preparation and filing of the application request for the special tax status
