Advantages / disadvantages of an expat contract

Hello,

Belgium has an attractive special tax regime for foreign nationals working in Belgium offering significant benefits and decreasing the cost of employing individuals in Belgium.

Expatriate concessions
The benefits are in four forms:
1. The individual is considered as a deemed non-resident for Belgian income tax purposes Personal income of non-Belgian source (interest, dividends,…) is not taxable and should not be reported on the Belgian income tax return.
2. Expatriate allowances or expense reimbursements are (partially) tax-free. The expatriate allowances or expense reimbursements received by the employee to cover the costs incurred as a result of the employment or secondment to Belgium will not be considered as taxable income. Non-recurring expenses (moving costs, installation costs) are not subject to Belgian income tax without any ceiling (if conditions are fulfilled). Recurring allowances or expenses paid during the employment in Belgium (cost of living differential between Belgium and the home country, housing differential, the difference in income taxes, the annual home leave, etc…) are in principle tax free subject to an annual ceiling of EUR 11.250 or EUR 29.750. The higher ceiling of EUR 29.750 is applicable for
activities of a controlling or coordinating nature or for scientific research. School fees paid or reimbursed by the company are not considered as taxable income (without any ceiling) (if conditions are fulfilled).
3. Remuneration relating to the days worked outside of Belgium is not taxable in Belgium (travel exclusion).
Employment income is only taxable to the extent that it relates to activities in Belgium. The exclusion of non-Belgian
remuneration is calculated according to presence rules provided by the Belgian tax authorities. Proof of the
presence abroad for professional reasons is required.
4. Expatriate allowances or expense reimbursements are not subject to Belgian social security contributions.
Expatriate allowances or expense reimbursements are not subject to Belgian employer and employee social security contributions (if conditions are fulfilled). The benefits mentioned above can already be applied during the income year by adjusting the official withholding taxes taking into account the Belgian expatriate tax regime.

Conditions
Both the qualifying company and the employee need to meet a number of conditions to be able to benefit from the Belgian expatriate tax regime. The conditions can be summarized as follows:
1. Qualifying company
The employer should be either a Belgian company — which is part of an international group — a subsidiary, branch office or permanent establishment of a foreign company —, which is part of an international group — a scientific
research center or a coordination office of an international group.
2. Individual
• The individual is not a Belgian citizen
• The employee should exclusively perform activities which require a special knowledge (specialist) and/or
responsibility, thus executive functions.
• The employment in Belgium should have a temporary nature
• The individual should demonstrate that he or she has maintained personal and economic ties abroad
• The individual has been assigned to Belgium by a foreign group company or has been recruited directly from abroad. The combination of the Belgian expatriate tax regime with a local Belgian employment contract is possible
3. Formalities
An application for the expatriate tax regime should be filed with the Belgian competent authorities within six months starting from the first day of the month following the month of the start of the employment or secondment in Belgium.

In conclusion, if you come on temporary basis, take the expat contract but if you want to stay take the resident one.

Thanks a lot phipiemar for your quick answer.
Do you see please any known disadvantage for this kind of expat contract ?
Regards
Zied

Hi,

It is written in conditions Chapter 2 & 3 --> Temporary basis / specific job so you can be fired on anytime / under belgian authorities decision for acceptance of your contract...

Dear Friends,

I have been offered a permanent position in an international company in Brussels. They insist to make an expat contract as it has the advantage of having a higher net salary.

I was wondering what are the drawbacks of having this type of contract on my residency in Belgium. I may try to stay there for a longer time, are they able to fire me whenever they want and avoid renewing my stay permit. Does this type of contract affect my pension program.

I would be really grateful if you would provide me the legal links describing pros and cons of having this kind of contract.

Thanks a lot,
A.

Welcome to the Forum arshia2002

This post is over 2 years old, for a better response, I recommend that you start a new posting.

SimCityAT
Expat.com Expert Team

Discussed in thread: https://www.expat.com/forum/viewtopic.php?id=727088

In a nutshell, expat contract is only impacting your taxation scheme, nothing else.

Thanks for your guidance!
A.

One major drawback of having this type of contract is that you are considered as non resident, so if you aim to stay in Belgium and request a citizenship after 5 years of "residence", the time you spent in the country having this special tax status is not taken into consideration ! it's only after you quit this system that your 5 years counter will start !

What are the conditions to get the citizenship?

Expational wrote:

One major drawback of having this type of contract is that you are considered as non resident, so if you aim to stay in Belgium and request a citizenship after 5 years of "residence", the time you spent in the country having this special tax status is not taken into consideration ! it's only after you quit this system that your 5 years counter will start !

Hey Expational, thanks for sharing this... Do you have more information about it? Any official link or document that can support it? Thanks in advance.

EloyBr wrote:

Expational wrote:

One major drawback of having this type of contract is that you are considered as non resident, so if you aim to stay in Belgium and request a citizenship after 5 years of "residence", the time you spent in the country having this special tax status is not taken into consideration ! it's only after you quit this system that your 5 years counter will start !

Hey Expational, thanks for sharing this... Do you have more information about it? Any official link or document that can support it? Thanks in advance.

This is incorrect. The time you are on expat tax regime will be counted for citizenship application.

Let's clarify that discussion on Tax status of foreign managers

The special tax regime for foreign executives applies to certain executives seconded in Belgium or recruited abroad to work temporarily in Belgium. To obtain the application of this special status, the manager concerned and his employer must fulfill a number of conditions.

Employers of foreign executives to whom the special status is granted can realize significant savings following the granting of this status.

Competence level:
Federal

Beneficiaries:

1. Conditions that must be fulfilled by any foreign executive

A. The manager must have a nationality other than Belgian nationality. The tax system does not apply to persons of Belgian nationality, even if they have dual nationality.

B. The person concerned must be an executive of the company. This means that the function performed is characterized by a high level of competence and responsibility. However, the following categories of staff are also taken into consideration:

B1_Specialized staff: These are people who, without being an executive, have a level of specialization such that their hiring on Belgian soil is excessively difficult, if not impossible.
Researchers who work in Belgian or foreign laboratories and research centers may also submit an application for the application of the special tax regime.
B2_Their employment in Belgium must be of a temporary nature. The temporary nature of the employment must necessarily be supported by a series of precise and concordant data, relating as well to the individual situation of the manager concerned as to the nature of the function performed.

The following data fall into the first category of determining factors:

- the stay of the spouse or children abroad;
- the availability of housing abroad;
- the fact that children continue their education abroad;
- ownership of movable or immovable property abroad;
- the existence of a life insurance policy abroad;
- the continuation of participation in a group insurance contract or any other pension savings plan abroad;
- the insertion of a "diplomatic clause" in the lease contract entered into by the manager concerned.
- Among the factors related to the nature of the function performed are:
         - submission to social legislation in force in another country
         - the existence of a fixed-term employment contract
         - temporary assignment to Belgium for the creation or restructuring of a company.
- However, other elements may be taken into consideration.
         - Requests from individuals with individual links to Belgium are likely to be rejected.

C. Are targeted persons:

- who studied in Belgium
- whose spouse is of Belgian nationality
- who own property in Belgium
- who, in the past, have lived in Belgium for a long time.
- In principle, a change of employer (outside the group) does not automatically lead to the abandonment of the particular tax system.

D. Conditions that must be fulfilled by any employer

D1_The employer must be part of an international group of companies.

- Targeted companies:

       - foreign-controlled enterprises. This control may include various facets, including shareholding. If this parameter is considered the most important, it is not the only element of appreciation.
       - international companies. Belgian groups of an international character are also taken into consideration.
       - As mentioned above, foreign researchers can also benefit from the special tax regime. They are likely to be employed by Belgian or foreign laboratories or research centers.

aid:
The special tax system presents a series of interesting advantages for foreign executives:

Certain allowances paid by the employer to the foreign executive do not constitute a taxable remuneration, but are considered as "expenses specific to the employer".

They represent the "additional expenses" resulting from the stay in Belgium of the staff member concerned.

E. Expenses covered:

E1_Expenditures and non-recurring expenses:
- non-recurring expenses and expenses resulting from the move to Belgium
- housing development expenditure in Belgium
- expenses and expenses incurred by Belgium's move abroad.
E2_Recurrent expenses and expenses:
- tuition fees for children attending primary or secondary education
- expenses of an annual trip to his home country for the manager and members of his family
- loss incurred if it is impossible to rent the dwelling located in the country of origin or if the rental of the property is only possible below the normal rental value
- travel expenses due to exceptional circumstances (death or serious illness of family members close to the manager or his spouse)
E3_exchange differences
-fiscal equalization or neutralization of tax differential
- travel expenses for children studying abroad and visiting their parents, up to two trips a year.

Other fees may be considered for reimbursement of "employer-specific expenses".

The difference between non-recurring expenses and expenses and recurrent expenses and expenses is of great importance because, excluding teaching costs, they are capped at € 11,250.00. In some cases, this amount is increased to € 29,750.00.

Foreign manager retains the status of non-resident

This means that the foreign executive is taxable only on income arising from the exercise of his professional activity in Belgium. Remuneration for any professional activity performed abroad is not taxable in Belgium.

After deducting allowances that may be considered a reimbursement of expenses specific to the employer, the total remuneration must be divided into a taxable portion and a non-taxable portion.

Working days other than Saturdays, Sundays, public holidays and annual vacation days and days of sick leave and convalescence justified by a medical certificate shall be taken into consideration.

In case of professional travel abroad, the day of departure from the Belgian territory is considered as a working day in Belgium; however, the day of return is not considered as such. One-day trips are likely to be considered work days worked abroad.

To justify his days of work abroad, the manager must double the proof:

demonstrate that he has actually spent a number of days abroad;
demonstrate the professional nature of these days spent abroad.
To do this, the executive must produce various elements and documents that are probative and certified, such as the following documents:

tickets;
expense reports relating to the stay abroad (hotel, rental of a vehicle ...);
records of purchases made abroad and paid by credit cards;
statements attesting to the participation of the staff member concerned in certain meetings;
documents attesting that the executive went to an enterprise abroad (extract from an attendance register, etc.);
certificates issued by third parties.

Procedure:
The application of the special tax regime to a manager is subject to the obligation of the employer to make a single application for that purpose. This request must be addressed to the Foreign Service Director.

It must be introduced within six months from the first day of the month following the hiring of the manager or his detachment in Belgium.

In case of late introduction of the application for admission to the benefit of this tax system, the manager concerned may still benefit under certain conditions:

From the year following the late submission of the application, if the delay is not attributable to special or exceptional circumstances

From the entry into service or the secondment, if the lateness of this request is attributable to such circumstances.

Any request of this nature must be accompanied by a rich file which makes it possible to:

- ensure that the officer in question enjoys non-resident status
- to check whether all the other conditions are fulfilled in order to be eligible for the special tax regime
- determine the precise nature of the employer's compensation package associated with the reimbursement of employer-specific expenses
- monitor the reality and amount of repayments, particularly with respect to children's school fees and tax equalization. Both aspects must be justified by the presentation of precise and detailed documents.

SPF FINANCES - FOREIGNER'S DEPARTMENT

Now it is necessary to delimit this status. It is intended for non-tax residents. Which means that you are present temporarily. And without intention officially declared to apply for permanent residence in Belgium. Because in this case, you must officially reside with the municipal administration. In this case, you will have to pay your taxes in Belgium.

So end of non-resident tax status ...

Hello friends,

I have accepted a job offer in Brussels as a manager. As per my discussion with HR, I was told that this is a non expat contract.

My question is, can I still apply for expat tax benefits after moving to Brussels on a non-expat contract?

Thanks in advance.

Regards,
Himanshu

Hello,

No you can't unless they change the contract to expat. The taxation linked to the type of contract.

Good luck

Of course not because the tax department will contact your employer to verify the accuracy of your information.

phipiemar wrote:

Now it is necessary to delimit this status. It is intended for non-tax residents. Which means that you are present temporarily. And without intention officially declared to apply for permanent residence in Belgium. Because in this case, you must officially reside with the municipal administration. In this case, you will have to pay your taxes in Belgium.

So end of non-resident tax status ...

Even if the employee is under special tax regime he still pays taxes in Belgium but less than Belgian. I don't find any text stating that the special tax regime will not allow foreign employee to request permanent residence permit.

Sooileh wrote:

phipiemar wrote:

Now it is necessary to delimit this status. It is intended for non-tax residents. Which means that you are present temporarily. And without intention officially declared to apply for permanent residence in Belgium. Because in this case, you must officially reside with the municipal administration. In this case, you will have to pay your taxes in Belgium.

So end of non-resident tax status ...

Even if the employee is under special tax regime he still pays taxes in Belgium but less than Belgian. I don't find any text stating that the special tax regime will not allow foreign employee to request permanent residence permit.

Dear,

Double check your sources of information. And above all read the special conditions correctly ...

The special status has three advantages:

1) The expatriate is considered to be a non-resident of Belgium. Take the example of a Foreigner who, with his family, moves to Belgium to (temporarily) exercise a professional activity there. In principle, he is presumed to be a resident of Belgium. This presumption does not apply to an expatriate who enjoys special status. --> So explain me how a non-resident can apply for a

2) The expatriate is not taxed in Belgium on his income relating to days spent abroad (‘travel exclusion’). Each day worked abroad therefore gives rise to a tax exemption.

3) The expatriate is exempt from tax in Belgium on an indemnity of costs (limited to 11,250.00 EUR or 29,750.00 EUR) which he receives from his employer to cover the additional expenses which are the direct consequence of the occupation or secondment to Belgium (for example the difference in cost of living, housing costs in Belgium, compensation due to higher tax burden in Belgium, ...). Some expense allowances are even unlimited, that is, school fees for children enrolled in international schools, moving fees and accommodation costs in Belgium.

Legal data provided by the legal assistance firm which has followed me for more than 15 years.

Expational wrote:

One major drawback of having this type of contract is that you are considered as non resident, so if you aim to stay in Belgium and request a citizenship after 5 years of "residence", the time you spent in the country having this special tax status is not taken into consideration ! it's only after you quit this system that your 5 years counter will start !

Do you have any official source regarding this point? My understanding is once you are Belgian you will lose the special tax regime automatically as you don't fulfill the conditions, but it will not blocking point to get citizenship or permanent residency.

phipiemar wrote:

Sooileh wrote:

phipiemar wrote:

Now it is necessary to delimit this status. It is intended for non-tax residents. Which means that you are present temporarily. And without intention officially declared to apply for permanent residence in Belgium. Because in this case, you must officially reside with the municipal administration. In this case, you will have to pay your taxes in Belgium.

So end of non-resident tax status ...

Even if the employee is under special tax regime he still pays taxes in Belgium but less than Belgian. I don't find any text stating that the special tax regime will not allow foreign employee to request permanent residence permit.

Dear,

Double check your sources of information. And above all read the special conditions correctly ...

The special status has three advantages:

1) The expatriate is considered to be a non-resident of Belgium. Take the example of a Foreigner who, with his family, moves to Belgium to (temporarily) exercise a professional activity there. In principle, he is presumed to be a resident of Belgium. This presumption does not apply to an expatriate who enjoys special status. --> So explain me how a non-resident can apply for a

2) The expatriate is not taxed in Belgium on his income relating to days spent abroad (‘travel exclusion’). Each day worked abroad therefore gives rise to a tax exemption.

3) The expatriate is exempt from tax in Belgium on an indemnity of costs (limited to 11,250.00 EUR or 29,750.00 EUR) which he receives from his employer to cover the additional expenses which are the direct consequence of the occupation or secondment to Belgium (for example the difference in cost of living, housing costs in Belgium, compensation due to higher tax burden in Belgium, ...). Some expense allowances are even unlimited, that is, school fees for children enrolled in international schools, moving fees and accommodation costs in Belgium.

Legal data provided by the legal assistance firm which has followed me for more than 15 years.

I know many friends who were in special tax regime for 4 years and then these years have been taken into account for permanent residency and citizenship. I think that this will not be a blocking point and once the foreigner becomes Belgian citizen, he will lose the special tax regime automatically. I also asked a lawyer and he confirmed that there is no impact of special tax regime on counting years for permanent residency and citizenship. 

Could you please provide official links for sources about the information you shared?

Thank you in advance.

Yes you can, but you can apply only during the 1st 6 months of living in Belgium.