This month marks the discontinuation of Belgium's former expatriate tax system, impacting approximately 27,000 expats, as reported by The Brussels Times. Renowned for its high tax rates,

Belgium previously provided expats in Brussels with certain tax advantages, including deductions on taxable income and exemptions for work conducted outside the country. Introduced in 1983 to attract international talent, the expat regime played a crucial role in positioning Brussels as an international hub.

Finance Minister Vincent Van Peteghem announced the phase-out of the old tax regime in 2021, coinciding with the introduction of new special tax rules for expatriates and researchers. Under the new rules, only those earning more than 75,000 euros gross annually are eligible for specific tax concessions, presenting a considerable pay cut for many. The conditions for the favorable regime have become more stringent, introducing a salary limit and a time constraint.

While existing beneficiaries had a transition period until the end of 2023, the new regime came into effect on January 1, 2022. Expats arriving after this date no longer qualified for the old regime. Expatriates subject to the previous system could choose to transfer to the new regime or remain under the old rules until December 31, 2023.

As of January 1, 2024, the old expat regime ceases to exist, and affected individuals are now considered Belgian tax residents. This entails taxation on foreign investment income and worldwide professional income, a shift from the previous focus on Belgian source income.

Data from tax authorities indicate that, in the assessment year 2023, 27,251 people benefited from the old tax regime, with just under 10 percent opting for the new special regime. Reasons for the remaining 25,000 not transitioning include individuals returning to their home country, finding alternative employment, or not meeting the conditions for the new regime.

The new tax rules also mandate expats to report foreign bank accounts to the National Bank, a requirement absent under the previous system. Additionally, expats with property abroad must report it to the administration, leading to the assignment of a foreign cadastral income.

Acknowledging the changes make Belgium less fiscally attractive for some expats, experts note that similar evolutions are occurring in other countries. The reshaping of tax regulations reflects a broader global trend impacting expatriates and their financial considerations. Photo by European Commission - Photographer: Claudio Centonze, Wikimedia commons.