Welcome to the Brexit Brief! In this newsletter for UK citizens living in Brussels or thinking of moving here, we will explore some of the more complicated aspects of life after Brexit. Each edition will start from a puzzling everyday question, using it as a chance to explore the rules that UK citizens should know about.
In this month’s Brexit Brief we tackle a complex question for cross-border workers and cross-border families: where do we pay tax? We will explore the various impacts of different constellations, using practical cases like the one above to guide the discussion.
In this article, we will not be exploring in detail how you might move to Belgium with your spouse while keeping your employment in the UK. We will presume you have joined your spouse here and registered as a resident, then focus on the income tax consequences of this situation. However, remember that UK citizens no longer have an automatic right to move to Belgium, so this will be complex process in its own right. You can refer to this previous newsletter for information about family reunification, which is one possible route to residency.
What if I do not have a spouse or family in Belgium? If you are not moving to join a spouse or relevant family member, your options are even more limited. If you are of working age, the solution will probably involve employment or other work remunerated and taxed in Belgium.
In a nutshell, if you have moved here and registered at the municipality then you are a Belgian tax resident. Belgian individual income tax applies to “inhabitants of the Belgian Kingdom”, defined as “individuals that have established their domicile or the head of their fortune in Belgium”.
This means that all individuals enrolled in the Belgian National Register are considered Belgian residents for tax purposes. This is just a legal presumption. Should the tax authorities be able to prove that a person registered in the National Register actually lives somewhere else, the actual situation prevails.
Of course, it is possible to be physically present in Belgium without being registered as a resident here, but that is not a viable solution for the case study above. UK citizens can still enter Belgium as tourists or for family visits. However, you would then be subject to the rules for short-stay visits which include rolling time limits and restrictions on permitted work activities. If you are caught breaching these rules, you can face major sanctions – including deportation and re-entry bans.
What is more, spouses are either both tax residents of Belgium or they are both tax non-residents of Belgium. For married couples, the status of each partner as tax resident or non-resident of Belgium must be assessed globally and in common. The main case study for this article presumes that you are moving to Belgium with a spouse who is resident in Belgium and employed by a local employer. This spouse would therefore inevitably be a Belgian tax resident, and this means you would also be considered a Belgian tax resident.
If a couple lives in Belgium and one of them has to go abroad frequently for work purposes, they are still both considered Belgian tax residents. The only valid reason for a rupture of the household is a separation of the couple (“separation de fait”). To express the principles in one sentence, the Belgian tax authorities poetically consider that the fiscal domicile is “the place you leave just to come back to, when the reason why you left has ended; it is the place where you are fixed in a way that you are considered as absent when you are not there.”
Once someone is considered a Belgian tax resident, they are essentially subject to Belgian taxation on their worldwide income. Belgium can tax the non-Belgian income of a Belgian tax resident, in addition to their Belgian income and assets. As soon as you are considered a Belgian resident for tax purposes (as of registration with the municipality), you are taxable in Belgium on your worldwide income and you must file a personal income tax return. For example, Belgium can tax the UK salary of a UK citizen who is a Belgian tax resident, meaning that the UK citizen in our case study would pay Belgian income tax on any UK salary.
Working remotely in Belgium for a UK employer does not change this situation, because professional income is taxable in the state where the work is done. In this example, the work is done in the state of residence, Belgium, and this income is therefore undeniably taxable in Belgium. The fact that the work is performed remotely for a UK employer is in itself irrelevant to determine the tax levying power. The situation may be different if you spend significant amounts of time physically in the UK for work (see below).
Of course, there is a potential risk of double taxation if forms of income taxed in Belgium are also taxed in the UK. To avoid this problem, countries sign double taxation treaties (DTTs). Belgium has concluded such a treaty with the UK: the Convention d.d. 27.09.1989 between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains.
One key article of the DTT between Belgium and the UK concerns income tax on salaries for people who spend time working in both countries throughout the year. If a Belgian resident works in the UK for UK employers for more than 183 days on an annual basis, their remuneration for those days will be taxable in the UK. In that case, you still have to declare this income in Belgium but Belgium must exempt this income from Belgian income tax if you explicitly request it.
Note that Belgium will still apply the progression method. This means that the exempt UK income must still be declared in Belgium in order to determine the tax band applied to the other income which is taxable in Belgium, such as the salary for days worked in Belgium for a UK or Belgian employer. Belgium can then apply the tax rate that would apply if that income were not exempt, but only on the part of the income taxed in Belgium. To put it simply, a worker taxed on €40k in the UK and €20k in Belgium will be assed for tax in Belgium as if they earned €60k but only pay the applicable tax on the €20k taxed here.
The DTT between the UK and Belgium also sets out specific arrangements for some forms of income other than salaries:
Our initial case study ask about the income tax situation of a UK citizen moving to Belgium to live with their spouse, who will reside here and work for a local employer. Even though the UK citizen in question intends to keep working for their UK employer, they will almost certainly become a Belgian tax resident and be subject to Belgian income tax on their whole salary. Remote work for a UK employer is still taxed here, while the 183-day rule means they would have to spend around half the year physically working in the UK in order to avoid Belgian income tax on a portion of their income.
However, there are various possible aspects of the situation which this article does not cover:
Welcome to the Brexit Brief! In this newsletter for UK citizens living in Brussels or thinking of moving here, we explore some of the more complicated aspects of life after Brexit. Each edition starts from a puzzling everyday question, using it as a chance to present the rules that UK citizens should know about. Some newsletters are relevant for M-Card holders, some for those arriving after Brexit, and some for all UK citizens. This newsletter is part of a project funded by the EU’s Brexit Adjustment Reserve, in which we are also developing a series of webinars and an online Brexit Helpdesk. To receive this monthly newsletter straight to your inbox, sign up today!
These pages, webinars and newsletters have been developed in a project funded by the EU’s Brexit Adjustment Reserve.
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