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The special tax regime for foreign executives and specialists will be phased out

25 November 2021 Annick Mussen Employers

The government recently announced its plans to fundamentally reform the current tax system for foreign executives and specialists temporarily employed in Belgium, probably as from 1 January 2022. Acerta gives you a brief overview of changes based on the current bill.

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Who does this change affect?

Based on the current draft texts, the new Special Tax System for Incoming Taxpayers (BBIB) will be applicable to employees and company managers who meet the following conditions:

  • The employee is recruited outside Belgium by a company that is part of a multinational group (incl. non-profit organisations).
  • The employee must earn a gross annual salary of €75,000 or more, including benefits of all kinds and bonuses.
  • The employee must not have been subject to Belgian income tax (as a resident or non-resident) or have lived less than 150 km from the Belgian border during the last 5 years before recruitment.
  • The employee no longer needs to have special skills, and Belgian nationals are also eligible.

In addition to the BBIB, a Special Tax System for Incoming Researchers (BBIO) will be introduced for researchers. These "researchers" will have to have certain diplomas and/or professional experience (minimum 10 years) and be employed in a laboratory or company conducting one or more R&D programmes, but the conditions are otherwise less strict:

  • The employee is recruited outside Belgium by a Belgian company. This Belgian company, permanent establishment or non-profit association does not necessarily have to be part of a multinational group.
  • There is no minimum wage.

Only employees can be eligible for BBIO. Company directors are excluded.

The incoming taxpayer/resident researcher is required to submit an annual residence certificate from the tax administration of his/her country of residence. If he does not do so, he will be taxed in Belgium on personal income tax instead of non-resident tax.

What will change from 1 January 2022 for employers who wish to apply the BBIB/BBIO?

The employer will still have to submit an application file, but now within a period of 3 months from the start of employment (6 months under the current system).

Each year, the employer will also provide a nominative list to the FPS Finance with data on the employees who benefited from the BBIB/BBIO during that year.

The application of the BBIB/BBIO is limited in time to a maximum of 5 years; in certain situations this can be extended by another 3 years. The 'new' special tax system can be retained if there is a change of employer.

What are the advantages of the BBIB/BBIO?

30% of the employee's salary under the BBIB/BBIO - with a maximum of € 90,000 per year - will be regarded as an employer's cost.

Certain exceptional expenses (moving house, home furnishing in Belgium or school expenses) can be reimbursed tax-free by the employer, in addition to the limit of €90,000.

What does this mean for existing foreign executives who benefit from the current special tax regime?

The introduction of the BBIB/BBIO goes hand in hand with the phasing out of the current special tax regime for foreign executives/specialists temporarily employed in Belgium.

The current special assessment system will likely continue to apply until 31 December 2023 for employees who are in the current system. As from 1/01/2024, the 'current' system will probably no longer be applicable.

An "opt in" period is provided for foreign executives/specialists temporarily employed in Belgium - provided they have benefited from this regime for less than 5 years on 1 January 2022. They may submit a final application, no later than 30 June 2022, to be covered by the new BBIB/BBIO for the remainder of the maximum period of 5 years (which may be extended by 3 years) envisaged by the BBIB/BBIO, provided that they meet the conditions of the 'new' BBIB/BBIO.

If an application is made to transfer to the BBIB/BBIO and a negative decision is reached by the Belgian tax administration, the 'current' special tax regime for foreign executives may no longer be applied. So check whether the 'new' BBIB/BBIO is complied with before submitting an application.

The loss of the 'current' special tax regime for foreign executives/specialists, temporarily employed in Belgium, has as a consequence that they become Belgian residents and will be taxed in Belgium on their worldwide income.

Opt in, opt out, retain current system?

Are you currently considering attracting new employees from abroad, but do you have doubts about what to do in terms of applying for the status of foreign executives/specialists temporarily employed in Belgium or BBIB/BBO?

We'll provide you with some thoughts:

  1. If you wish to hire new employees who do not meet the conditions for the BBIB/BBIO, but who do meet the conditions of the current special tax regime for foreign executives, we recommend hiring them in 2021 and submitting an application for the special tax regime for foreign executives/specialists, temporarily employed in Belgium, before 31 December 2021.
  2. If your current foreign executives/specialists do meet the conditions for the BBIB/BBIO, it will be decisive how long these foreign executives/specialists have already enjoyed this system and how great the current benefits for these employees are.
    If your current foreign executives/specialists have already benefited from this regime for more than 5-8 years, we recommend you to keep this status until 31 December 2023. From 1 January 2024, they will no longer benefit from this status, without still being able to claim the BBIB/BBIO.
    For periods shorter than 5 years, it should be examined whether the application of the BBIB/BBIO is more interesting or not.
  3. For all recruitment as from 1 January 2022, you only need to check whether the BBIB/BBIO can be applied. No new applications can be made for the 'current' special assessment system for foreign executives from 2022 onwards.

Do you have questions about the application of the BBIB/BBIO?

Contact the experts of the Tax & International department of Acerta Consult by phone (+32 2 773 16 62) or mail (international@acerta.be).

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Written by Annick Mussen

Senior Consultant, Acerta Consult

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