New rules concerning the taxation of non-residents - A travel exclusion of more than 25% can become detrimental!

The transfer of competence for fiscal matters to the Regions has led to two measures which could have a major impact on Belgian non-residents. Firstly, the category "non-residents with accommodation" is abolished and, secondly, the so-called "localisation rules" become important.

From now on there will be three categories of non-residents:

1. Non-residents who meet the "75%-rule". This concerns non-residents who have received taxable professional income in Belgium during the taxable period amounting to at least 75% of the total of their worldwide professional household income. They will enjoy tax-free allowances (for dependent children), the marital quotient and tax discounts.
2. (Privileged) non-residents, namely residents of the Netherlands, France and Luxembourg can enjoy, based on a non-discrimination clause in a double-tax treaty, a pro rata entitlement to tax-free allowances, the marital quotient, deductions and tax discounts.
3. Non-residents who don't belong to category 1 or 2: they won't be entitled to the application of the marital quotient, the common tax-free allowance and other tax-free allowances for children and other dependent persons, even if they kept an accommodation in Belgium during the whole taxable period.

This implies that foreign expatriates who benefit from the special tax status of the Circular of 8 August 1983, risk being categorised in the third category if their "travel exclusion" (the percentage of the working days abroad) exceeds more than 25%. In that case, their taxable income in Belgium could be, in function of the household income, less than 75% of the total taxable income, which is a condition to enjoy the tax deductions and diminutions.

This regulation applies from the tax assessment year 2015, consequently already for the income year 2014!

The localisation rules:

As from tax year 2014 (income year 2013!) it is important for non-residents of the Belgian country to know in which Region they are localised (Flemish, Walloon or Brussels). The law foresees from now on some localisation rules for non-residents of Belgium. These localisation rules are mainly based on the place/the Region where the professional income is derived.

> Action point

To follow up: In files concerning foreign expatriates, the "payroll prognoses" needs to be reviewed, were appropriate, to take in to account the loss of tax diminutions and deductions.