Disadvantages of The Special Tax Status

NiiChe wrote:

Hello Everyone,

Thanks to all the active members, you helped me and gave me a clean overall picture of how living in Belgium – Brussels is.

I’m still stuck with one question regarding the Special Tax Status, I’m planning to move to Brussels, and I’ve been offered a permanent contract with this Special Tax Status.
SO is there anyone who can help me an answer my question, I’ll be grateful to everyone 😊

1.    What are the disadvantages of this Special Tax Status?
2.    I’m not married but planning to marry in the near future, so can My Future Wife join me once married?
3.    As I understood, with the Expat status I’ll be given the non-resident status, so can I move easily in the Schengen Area, as I like traveling so I’ll be visiting the neighboring countries?
4.    I read on Expat.com forums that with this status you will be considered as having a temporary job so the employer can fire you whenever he wants? Is that Right? If so what does a permanent contract mean?
5.    Will I have a pension plan?
6.    Is there any other benefit apart from the additional 200-300 euros in the net salary?
7.    Finally, for someone who is planning to live there for a long time, say more than 5 years, does this effect anything regarding your long stay in Brussels? Like the permanent residency, etc.

Thanks to every one.

Regards,
Niche

1. Nothing
2. Yes. She needs to apply for a visa as your dependant. This procedure has nothing to do with your tax regime in Belgium.
3. Your residence permit in Belgium entitles you to travel in Schengen states freely.
4. This is incorrect. Your contract with your employer and you availing a special tax regime are two completely unrelated things. Employer can fire you anytime no matter what type of contract you have, provided they do it in accordance with Belgian labor laws related to termination of employment.
5. You have to ask your employer. In my knowledge, all employers must subscribe their direct employees to a pension plan.
6. You have to ask your employer.
7. Taxation scheme does not impact duration of stay for permanant residence eligibility.

Dear aneeshks,

Thank you, I really appreciate your time!

I talked with the employer, and the special Tax Status, as he said, is only about getting some Tax exemption in form of deductions to reduce the Tax you pay.

And you still get the same benefits as any other employee..

Thanks,
Niiche

As an expat on Special tax status , you can avail tax free allowances based on the following

1. cost of living differential between your home  country and belgium (max 2500 eur)
2. Cost of rent differential between your home country and belgium (basically Actual rent paid in belgium -  theoritical rent calculated based on your salary)
3. Your tax paid in belgium cannot be greater than the tax in your home country. For this your 35% of belgian gross salary is taken into consideration for tax in home country calculation .

the max tax free allowance based on the above three factors  is 11250 euro.

Disadvantage:

If you plan to buy a dwelling in belgium you will not be able to avail regional tax benefits like interest paid on mortgage , tax benefit on house renovation for insulation  etc

thanks
Gajendra

Dear all,
I have a question regarding expat contract, I will be grateful if you would guid me.

I have been offered a position in Brussels and the company insists to offer me the expat contract. Now based on the info I gathered and also read here (Thanks to your comments) I figured out about pros and cons of expat contract.

Expat contract generally helps to reduce the tax and consequently increases net salary.

From another side I am married and I have read a reduction in tax as an allowence can be dedicated to my wife (as she has no job so her salary is less than me).

My question is whether or not we can use both of these tax reduction and if not which one is better to go for, from all pros and cons points of view. If you would share your ideas and make the reason it could be the best.

Thank you so much in advance,
A.

Hi Arshia,

Yes both tax reduction are combinable. For the dependent tax free allowance a portion of your salary (30%) max upto 10750 euros gets attributed to your spouse .then a tax is calculated on this amount which amounts to 750 euros so basically you only pay 750 euros tax on 10250 euros. this results in a benefit of approx 300 euros netto per month.

One thing I forgot to mention in my previous reply was  that expense for Child education are fully reimbursable and are above the max amount of 11250 euros.

Thanks a lot,

May I ask how much is the percentage of tax reduction for expat case?

Thank you again
A.

GajendraSPawar wrote:

Hi Arshia,

Yes both tax reduction are combinable. For the dependent tax free allowance a portion of your salary (30%) max upto 10750 euros gets attributed to your spouse .then a tax is calculated on this amount which amounts to 750 euros so basically you only pay 750 euros tax on 10250 euros. this results in a benefit of approx 300 euros netto per month.

Dear GajendraSPawar,

My calculation for around 10000 euro yearly for spouse shows sth around 700 euro monthly. As you mentioned it is gonna be 300 euro net/month, I was curious to ask which one you would think is correct and if 300 euro is how it's been calculated.

Thanks for the time you took,
A.

Hi Arshia,

Well if the 10k  was not attributed to your spouse and  if the tax and social security was calculated on this amount as part of your salary,  it would amount to around 60% (13.07% social security , followed by possibly 50% tax)  i.e 6000 euros of tax and social security .Therefore your netto you would have got on that 10k would have been just 4000 euros.

however since the 10k is allocated to your spouse she gets taxed at lower tax rates and as i mentioned the tax in this casse amounts to roughly 750 euros .. in this case you basically get around 9500 euros netto in hand  on that 10 k

the different in both scenario = 9500 - 4000= 4500

If you divide that by 13.92 which is the number of months you are paid for  it would be roughly around 300  euro per month.

Note that taxes in beligum are progressive, depending on which bracket you fall into tax rates will vary.

GajendraSPawar wrote:

Hi Arshia,

Well if the 10k  was not attributed to your spouse and  if the tax and social security was calculated on this amount as part of your salary,  it would amount to around 60% (13.07% social security , followed by possibly 50% tax)  i.e 6000 euros of tax and social security .Therefore your netto you would have got on that 10k would have been just 4000 euros.

however since the 10k is allocated to your spouse she gets taxed at lower tax rates and as i mentioned the tax in this casse amounts to roughly 750 euros .. in this case you basically get around 9500 euros netto in hand  on that 10 k

the different in both scenario = 9500 - 4000= 4500

If you divide that by 13.92 which is the number of months you are paid for  it would be roughly around 300  euro per month.

Note that taxes in beligum are progressive, depending on which bracket you fall into tax rates will vary.

Dear,

Thank you so much!

Absolutely no offence intended. But I guess what you've said is not completely right. The condition for expat tax benefit is that the employment is of temporary nature. So I guess it will affect permanent residence interests.

No. The key condition is that you have to prove your financial interests are outside Belgium. Expat special tax regime is applicable (for the first 10 years of) for a permanent job contract too. I have been on expat status and got PR and all expat hires in our organisation and many of my friends are in PR status after being in expat tax regime. By the way I am still in expat special tax regime

Really interesting topic, may I add 3 questions?

1 . As I understood, the job can be temporary or permanent for the first 10 years. That is correct ?
2 . And about the position, just apply for managers position ?
3 . What else is required to get the expat tax concession in Belgium?

1. Correct.
2. Not only restricted for managers.
3. No idea your employer payroll department can tell you more.

Thanks a lot for your reply.
This forum gives the purest information that I was looking for.

You guys know if there is any website where I can simulate my net income in Belgium tax regime.

Scenario 1 ) Without Special Tax Status [Married, non-working spouse, 2 children - 2 and 3 years old ];

Scenario 2) Special Tax Status [Married, non-working spouse, 2 children - 2 and 3 years old ];

a simple bruto netto calculator google search can give you a lot of calculators:
Some examples are as under: 
https://www.sdworx.be/nl-be/simulatieto … calculatorhttps://www.jobat.be/nl/test/bruto-netto-calculator

Hi

Thanks for the info.

Could you elaborate more about tax threshold and exemption you mentioned. If I understand correctly, Its been said 35% of salary considered for tax purpose? and tax payment shouldn't be more than tax in original country? I just logged for my tax return through sdworx and not only I pay more tax in Belgium than my country in Australia, they also asked me further 1800 euros to be paid back to taxation office.

Where I can find the tax rules for expat in Belgium? or whom I can talk to?
Thanks in advance.

Hi,

It is calculated like this

Base salary  for calculation of Tax in home country = 35% of belgian salary
Tax due in home country = Tax% in home country * (Base salary)


Tax due in belgium on the base salary = Tax% in Belgium * 35% of belgian salary.


Important to note is that  whether you would have paid lesser tax in you home country on 35% of belgian income (not on the whole of belgium income)

Your 1400 extra that you need to pay may be because of incorrect non taxable allowance calculation, or because  of change in family situation etc etc

Hello community!
I have got another question.
I am from Spain and I have been living in Belgium for 1 year 6 months. I am from Spain and I am in special tax regime. This year I meta belgian guy and we will start living together soon.
A question came to my mind soon...what if I would like to marry him in the future? Would I automatically lose my special tax regime? Would it be any other way to avoid loosing my condition of special tax regime?

Thank you!!

Hi everyone,

Please can someone help me with understanding the employee benefits of this expat tax system. I just moved to Belgium and qualify for the expat tax system but my employer made me sign a contract saying that my net salary will be fixed ( and the gross on my contract was the correct amount for my experience level) but now because of this expat status my gross salary is way below the rate for someone working as a postdoc in Belgium. From what I understand is the employer has used this to underpay my gross and pocket the tax benefit of an expat tax employee. When I asked for an explanation I was told that this is how we do it in Belgium ( not true as obvious from this thread) and the other excuse was 'we cannot give you the calculations as these are too complicated for you to understand'. Please can someone direct me to any official page that outlines the employee tax benefits as an expat.

@GajendraSPawar - if a person having special expat status buy a property in Brussels, will the net salary be impacted taking into consideration the point 2 that you have mentioned. Thanks.

yes it will get impacted .. it will mainly depend on the cadstral income of the property

Hi @aneesh,

Do you hold Belgium nationality?

Is there any implication on Belgium nationality of expat status?

I heard Belgium govt make people pay all previous year tax difference.

once you get nationality .. your expat tax status would  no longer be valid

I heard, to get the nationality, one has to pay all tax of previous years.