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The Belgian income tax return in detail
Let's have a closer look at the boxes on the tax return.
I. – Bank account and contact details
This is the easy part. If you expect a tax reimbursement, make sure the taxman has your bank account number. If it is printed on the tax return, you don't have to give it again, unless you want to change the number.
This is also where you can give your telephone number and email addresses. The taxman still prefers to send letters to keep things official, but more and more they agree to correspond by email.
II. – Your family situation
This is one box where people make a lot of mistakes.
Check box 1001 if you are single or living with your partner and you haven't formalised your partnership.
Spouses and partners
It is only if you are married or in a registered partnership that you file your tax return together but only for the following year. If you are currently married or registered partners, check box 1002 or 1006 respectively on your separate returns. You file only jointly if you married or registered your partnership before 2017. If you did so in 2017, you file separately this year and you check the relevant box (1003 or 1007).
If your spouse or partner died, you check code 1010 as a widow(er). If you lost your partner or spouse in 2017, you will have to file on paper. You need to check code 1011 and then opt for joint or separate filing. If you need to report your deceased partner's income, you have to use the codes 1022 to 1027.
Check other codes if your registered partnership has ended or if you are divorced (1014) or took up separate residences (1018). However, if that happened in 2017, you also need to tick the following box because you still file jointly for the year of the separation or divorce; you can ask to file separately but you cannot do that online.
Officials of international organisations
and their spouses or partners file separately unless the official's income was €10,490 or less.
The official of one of the European Institutions or an international organisation ticks 1062, or if she is a woman filing jointly 2062. In same sex couples 1062 is for the older partner or spouse. By checking 1020, you confirm that your income as an official was over €10,490 so that you don't get the benefit of the "marital deduction".
The spouse or registered partner of the official files a separate tax return and checks 1021. They must mention that their spouse or partner is an international official so that the taxman doesn't give them this marital deduction.
Dependants are all the people who live with you and are financially dependent on you. A spouse or a registered partner cannot be a dependent.
Your direct dependents are all the children you had on 1 January 2018 (code 1030). To be dependent they must live with you and not have any personal financial resources or child support over €3,200. For single parents, the threshold is €4,620.
A child born on 30 December 2017 is as much a dependent as a child born on 2 January 2017.
For each child, the highest earner gets an additional allowance on top of his personal allowance. The allowance is €1,550 for one child
- €3,980 for two children
- €8,920 for three children
- €14,420 for four children
- + €5,510 for every additional child.
When the parents co-parent, they each get half of this allowance, if they do not pay maintenance.
Children who are at university during the week are still considered to be living with you if they keep their registration with the commune. And if they were working to get some pocket money, they can earn €2,660 and that will be disregarded as personal financial resources.
The cut-off date is 1 January 2018. This means that your daughter who was financially dependent for most of 2017, will not be a dependent for tax purposes if she started working in September.
If the children are under joint custody and living alternately with each parent, the parent with whom the children are officially domiciled gets the tax allowance for the children. Nevertheless, the parents can agree to share the tax allowance by giving the tax man a copy of the court decision or agreement between parents. The parent with whom the children are domiciled fills out code 1034; the other 1036.
All dependents give you a higher tax allowance that is tax free. If you don't claim a tax deduction for child care, you get an additional personal allowance of €580 if you fill out code 1038). That allowance can be shared as well.
Some family members can be dependent as well: your parents, grandparents, brothers and sisters if they are over 65 (code 1043). Your foster parents can also be a dependent. Dependents cannot have more than €3,200 in income (other than €25,750 in pensions).
III. – Real property
In box III, you declare the income from any properties you may own, that can be actual rental income you receive or the theoretical income from a second or third residence.
If you only own the house you live in, you don’t need to declare anything at all, unless you rent out part of your house.
If you have a second residence, you need to declare the cadastral revenue. That figure can be found on the real property tax bill (the précompte immobilier/roerende voorheffing). If you own it together, you each declare your share (normally 50/50) in your column (code 1106/2106). That cadastral revenue will be multiplied with 1.4 and corrected for inflation. Roughly speaking you will pay tax on 2.45 times the cadastral revenue.
I have a buy-to-let
If you own a rental property, you normally don't declare the actual rent, just the cadastral revenue, also in code 1106/2106.
If the tenant is a company or someone who uses the property for his profession (e.g. a physician or an accountant), you must declare the rent you receive under code 1109/2109. You pay tax on the rental income minus a deduction of 40% (however, that deduction is limited to 2.87 times the cadastral revenue).
And property abroad?
If you own property abroad, you need to declare that as well (normally in codes 1130/2130) as Belgium will normally have a double tax treaty (list) with the other country. If there is no treaty, the codes are 1123/2123.
If you receive rent, you need to declare the rent, but if you don’t (eg: because it is a second residence), you need to declare the rental value. That is the rent you would receive from a tenant if it was let out. In general, the best thing to do is ask an estate agent to give you a rental value, but the European Court of Justice has recently condemned this rule. Nevertheless, the tax authorities will accept a fixed value, such as the French "valeur locative", 2% of the Spanish "valor cadastral" or 4% of the valuation of real property in the Netherlands.
You cannot take any deductions for expenses, but the tax authorities automatically deduct 40% to cover maintenance and repairs. You can, however, deduct the income tax you paid on the property abroad.
Although you have to declare the rental income or the rental value, that doesn't mean that you will actually pay tax on that income. The double tax treaty doesn't let Belgium tax rental income. This means that rental income is not taxed but pushes up the tax on other income that is taxable in Belgium.
IV. – Salary
Box IV is relevant for most people. It relates to remuneration paid to an employee (A), unemployment benefit (B), allowances paid during illness or invalidity (C) etc.
You have received a salary statement (281.10), or a statement confirming other benefits paid during 2017, and next to each figure, you will find a code that corresponds to the codes in the tax return. E.g. your salary statement shows code 250 to the left of your salary and 286 next to the tax withheld at source. The numbers must then be copied under codes 1250 and 1286 (for the husband) and 2250 and 2286 (for the wife).
If you have received a specific form of salary, e.g. an indemnity in lieu of notice (262 or 308), or stock options (249), these have different codes because they are taxed in a different way.
A "non-recurring profit based bonus" is tax exempt up to €2,830 if you complete the bonus under code 1418 and the exempt part under 1420.
An allowance for using public transport is tax exempt if you declare it in code 1255/2255 (A.9). An allowance for using your own car is tax exempt but only up to €390.
If you were working as a freelancer, if you were a self-employed professional or contractor or a company director, you will have to download part 2 (Dutch/French) of the draft tax return. The information you put there goes in the same pink tax return
Work outside Belgium
If you have received remuneration for work outside Belgium and if that income is taxable in the other country under the relevant article of the double tax treaty (usually article 14 or 15, see the list), you must still include that income in your tax return. You must mention that you claim the exemption at the end of box IV under letter O. If you file on paper, you will have to copy that information in the corresponding box on p. 3 of the pink tax return.
It is advisable to attach a note to your tax return to explain for what reason the income is taxable in the country where you worked, e.g. mention the article of the double tax treaty.
In Belgium you pay tax on net remuneration, after social security contributions and after expenses of employment.
You do not have to prove your expenses; you are entitled to an allowance calculated as a percentage of your earnings. If you earn more than €35,113, the maximum is €4,320. If you think you can prove higher expenses, you can do so but it will take a bit of work.
- Only expenses that are necessary to carry out your job are allowable.
- For the commute to and from work by car, you can deduct €0.15 per km (€0.23 if you cycle to work).
- If you use your own laptop or table, or other office equipment, you can deduct part of these if you use them for work. Larger equipment and office furniture must be depreciated. This means that every year you deduct a percentage (e.g. 10% for furniture over ten years, 33.33% for a laptops over three years). And then you have to determine how much is work related.
- Costs that aren't exclusively professional (e.g. you use your laptop to check your private emails) are only partially allowable depending on the use (e.g. 80/20 for the use of your laptop). Only the part that relates to your job is allowable.
- If you use a room at home as your office, you can deduct a percentage of the purchase cost of your house and the interest on the mortgage, of the electricity, etc. The percentage depends on the size of the room.
If you are renting, check if the rental contract allows this, the landlady has probably forbidden this because she will pay more tax if you deduct part of the rent.
The cost of clothing isn't allowable unless it is very specific for your job, like overalls or a lab coat. Suits and handbags aren't allowable.
If you want to deduct expenses, detail them in a spreadsheet and the total goes in code 1258/2258. If you leave it blank, the taxman will deduct the allowance of 3,200.
If you deduct your expenses, you must assume that the tax man will ask you to prove them and will want to see the invoices and receipts. Try not to be too creative.
If your employer reimburses you for expenses you paid for him, that reimbursement isn't taxable income, but these expenses aren't allowable either.
If you are unemployed, you can also deduct some expenses, but there is no allowance. Allowable expenses would be your union contribution, the cost of traveling for training, postage stamps for job applications, …
There is, however, no specific code for expenses; you deduct the expenses from your unemployment benefit and you declare the net income in code 1260/2260.
V – Pensions
Box V is for pensions and other similar income. The Belgian state pension goes in code 1228/2228 and a survivor's pension goes in 1229/2229. The tax that has been deducted goes in code 1225/2225.
Other pensions such as the complementary pension paid by a pension fund or other pension scheme are to be reported usually under code 1211/2211. Pensions paid by the European Institutions are not liable to tax while pensions paid by other international organisations usually are.
In Belgium, employer funded pensions are geared to be paid out in the form of a pension capital. There is a 5.55% social security contribution and a fixed tax rate of 10% if you take your pension at the legal retirement age of 65. The code will normally be 1215/2215.
If there are special forms of pension, the pay slip issued by a Belgian organisation will clarify the code. If it is an overseas pension, you have to work out in which code the pension goes.
Please note that if you receive an overseas state pension that may be liable to tax in the other country. If you receive a government pension from another country, that will definitely be taxable there. Private pensions paid by an overseas pension fund or scheme are usually taxable in Belgium but that depends on the double tax treaty (check the list), e.g. a pension from the U.K. is normally taxable there, unless you first took out your pension before 2013.
If the double tax treaty states that the pension is taxable in the other country and that Belgium must exempt it, you must report the pension but you must mention that it is exempt at the end of box V under letter C. Do not forget to copy that at the bottom of p. 3 of the tax return.
Savings and investments
VII. – Investment income
Box VII is for the income of your investments, i.e. dividends and interest.
These are normally taxed at source; the (Belgian) bank or the company that pays the dividend deducts 30% tax when they pay out. If that is the case, you don't have to declare the interest or dividends in your tax return, but foreign banks do not withhold Belgian tax
If you received interest on a regulated savings account, that is tax exempt up to €1,880 per spouse or per partner. Any interest over €1,880 is taxed at 15% and must be reported in code 1151/2151. The same applies to comparable savings accounts within the European Economic Area. If the bank pays you more than €1,880, it will deduct 15%, but the bank doesn't know if you had interest on other savings accounts. If the total interest on all your savings accounts, in Belgium and abroad, is more than €1,880, you have to complete code 1151/2151. Non regulated savings accounts are taxed at 30%.
It is only when the bank has not deducted the 30% tax - mostly because it is a foreign bank - that you have to report the income under the correct codes, usually 1444/2444.
30% on interest and dividends is quite high as a tax, compared to 15% just a few years ago. If you have little taxable income, you may opt to have your dividends and interest taxed with your other (taxable) income. The first €7,230 (or €7,570 if you have little income) is exempt as a personal allowance, and then the tax rates start at 25%. If the average tax rate is less than the 30% withheld at source, the difference is reimbursed. Taxpayers with investment income under the higher personal allowance of €7,570 can even recover all tax withheld on their savings.
Overseas bank accounts
Interest on overseas bank accounts has to be reported, usually in code 1444/2444.
The other country will also want to tax the dividends or interest. Under the double tax treaty (see the list), that will be a maximum of 10 or 15%; usually you will have to provide a certificate of residence in Belgium. If tax has been deducted, you report the net income after tax and 30% tax is due on the net.
XIV. – Overseas bank accounts and insurance
In box XIV you have to confirm whether you have bank accounts outside Belgium, even if you didn't have any income on these accounts.
Do I have to report the money on my bank account?
No, you tick the box with code 1075, list the countries where you have bank accounts with the name of the account holders. You also tick the box to confirm that you have reported these accounts. In fact, you don't report your accounts to the taxman but to the National Bank.
Why is that?
Belgium has banking secrecy rules; the taxman cannot look at your bank accounts. However, in some circumstances he can investigate your bank accounts. To keep up the appearances, the banking secrecy is maintained by storing the information with the National Bank. The National Bank has the list of your Belgian bank accounts, but you have to report your overseas bank accounts yourself. You can do that online (with your electronic identity card or on a paper form. When you close an account, you must report that as well.
How much do they know about my bank accounts?
There isn't much information in National Bank’s database, just a list of your bank accounts. That list helps the taxman when he wants to investigate your bank accounts, but he can only get that list if he has indications of tax fraud or if he has indications that your spending is higher than the income you declared. What is more, he has to give you a chance to give that information.
There is no information about the money on your accounts, but that is just a matter of time.
You must also report that you have overseas life insurance (check the box at code 1076). However, no further information must be given about the name of the insurance company, just the names of the policy holders and the country. You also don't give the value of the insurance policies.
Please note that life insurance is normally not taxable in Belgium. "Branch 21" policies are an alternative for savings accounts and they are tax free if taken out for more than 8 years. "Branch 23" policies ("insurance wrappers") are linked to investment funds and they can go up and down. The gains are tax free.
Moreover, you have to confirm whether you have set up a legal arrangement (a “construction juridique”) or whether you are the beneficiary of such a legal arrangement. This is a difficult word for a trust, a foundation or a foreign company in which you accumulate income tax free.
If you have such a legal arrangement, you must also declare the interest and dividends that accumulated in it . This is called the "Cayman tax". It is advisable to get some legal help if you have to pay the Cayman tax.
VI. – Alimony and child support
If you receive alimony, you must declare it in Box VI under code 1192 and you will be taxed on 80% of the maintenance.
There are separate codes for maintenance that is paid retroactively following a court decision (1193) and for maintenance that is paid in a lump sum. In that case you have to declare ever year a percentage of that capital.
If you receive child support, you don't declare that in your own tax return. You need to file a separate tax return for each child, and you declare the child support in code 1192. As long as the child support is less than €9,462.50 per child, or €788.54 per month, they will not pay tax. Only 80% is taxed and 80% of €9,462.50 is €7,570, which is wiped out by the personal allowance of €7,570.
Even if they do not pay tax, children who receive more than €4,000 in maintenance are not dependent any more. The threshold is €3,200, and that is 80% of €4,000.
In any case you need to identify the person who pays the maintenance, even if they aren't Belgian residents, and if you file on paper on the relevant box at the bottom of page 3.
VIII. – Maintenance paid
If you pay alimony and/or child support to your ex, you can deduct 80% from your income.
Maintenance paid can be deducted up to 80% if
- you have a legal obligation under the civil code (or an analogous rule abroad) or under a court order to pay maintenance to an ex, (grand)children, (grand)parents, parents-in-law or children-in-law;
- the beneficiary is destitute;
- they don't live with you;
- you pay regularly and the sums aren't excessive.
You need to identify the person who receives the maintenance on p. 3 of your paper tax return. The tax authorities have warned they are going to pay particular attention to payments made to beneficiaries in other countries.
Some planning opportunities
When one parent pays maintenance, she can take an 80% deduction for her payments if the children are domiciled with the other parent. However, she gets no allowance for dependents; the other parent will be entitled to the full allowance. They both pay less taxes, €100 paid in maintenance gives a tax reduction of about €40.
IX. - Mortgages
In box IX you mostly report interest and mortgage payments to buy your main residence (under I) or another property (under II).
The tax incentives to buy your main residence are a regional matter and you will see that the codes relating to your main residence start with a 3 (for him, on the left) or a 4 (for her). The rules depend on whether you live. In Flanders, it is called "woonbonus" and in Wallonia "chèque habitat". Brussels Capital region has kept the old federal rules for mortgages taken out until 2016, but replaced these deductions with a reduction on the purchase tax of 12.5%.
If you buy a second property, you are entitled to federal tax benefits (under II). That is mostly a deduction of the interest.
If you file online, a wizard helps you complete your tax return for most mortgages taken out after 2004. The taxman knows, from the bank, how much you paid in capital reimbursements and interest and the wizard helps you claiming the correct tax deductions. It does not, however, optimise the deductions for you.
X. - Other tax reductions
Box X is for all sorts of payments or expenses that you have made and for which you can claim a tax reduction. That goes from
- donations to charities (1394): the minimum is €40 per charity, if you have a tax certificate of the donation, you can recover up to 45% of the donation;
- childcare (1384): you can deduct €11.2 per day of childcare in a crèche or other after school care centre for children up to 12. If you have children under 3, you may be better off with the additional allowance of €580 for dependents.
- pension saving (1361/1362),
- titres services/dienstencheques (3364/4364) and PWA-chèques / cheques ALE allow you to pay for certain personal services, like cleaning. If you pay with the cheques, you can recover 30%, so that you only pay €6.3 for a cheque of €9 in in Flanders and 15% in Brussels, the maximum is €1,440 per spouse or partner. In Wallonia the tax reduction is 10% with a maximum of 150 titres.
- investments to make your house energy efficient
XII. – Paying your tax in advance
If you have paid your tax in advance, e.g. because you don't have an employer who deducts the tax from your salary, you report that under 1570/2570 in Box XII.
Paying the tax in advance is highly recommended, in particular for self-employed. Not doing so results in a tax increase of 2.25% of the tax. If you don’t have to pay the tax in advance (e.g. the tax on dividends you receive abroad, you are entitled to a tax reduction of 1.125%.
As a matter of principle, Belgium doesn't tax capital gains if they are made by way of "normal management of private wealth". Private wealth is anything that you don't use for your job or for professional purposes. And the normal management of your private wealth is what you do to keep your wealth growing safely, without speculating. Speculation would be e.g. borrowing to get leverage to make more profit.
In general, gains on the sale of shares or property are tax exempt, with a few exceptions:
- the capital gain on the sale of your main residence is always tax exempt,
- capital gains on a second residence or other property in Belgium are only tax exempt after five years. If you sell within five years, the capital gain is tax at 16.5 %.
- capital gains outside the normal management of private wealth are taxed at 33%, plus local tax (between 6 and 9 % of 33%). These include speculative capital gains.
- capital gains on the sale of an important participation in a company are liable to tax at 16.5% (plus local tax); if you are in this situation, check with your accountant.
- if you are a day trader, that may well become a professional activity and then your gains may be liable to tax, and possibly social security, as a professional investor.
Stock exchange tax
Belgium has always charged a tax on stock exchange transactions, such as the purchase and sale of some financial instruments (bonds and stocks) on a secondary market, and the sale of mutual funds (UCITS), through a Belgium-based professional intermediary, a bank or broker.
The tax is also due when you buy or sell through a foreign bank or on an online account. And you have to declare and pay the stock exchange tax yourself, unless the overseas bank appoints a representative to do that.
The rate varies depending on the nature of the instrument, and the tax is payable by each party to the transaction. The stock exchange tax is charged at :
- 0.35% on the sale or purchase of shares (maximum €1,600 per transaction);
- 0.12% for bonds and mutual funds (max. €1,300);
- 1.32% on the sale of accumulation mutual funds (capped at €4,000);
When a distribution fund redeems its units, no tax is due, but the sale or purchase of such units on the secondary market is taxed at 0.09% (max. €1,300).
Belgian residents who must pay the stock exchange tax must file a tax return and pay the tax before the end of the second month following the taxable transaction.
Tax on securities
Since 2018, Belgium has a wealth tax! If you own one or more securities or brokerage account on which you hold stocks and bonds, units in mutual funds or warrants, you may have to pay the tax on securities accounts.
If all your securities accounts together are worth more than €500,000, the tax is 0.15% of the average value of the account, not just on every euro over €500,000. The value is the average of the values at the end of each quarter (31 December, 31 March, 30 June, and 30 September). For 2018, the tax is calculated on the last three dates. If you have a securities account with a Belgian bank, the bank will charge the tax to your account, report and pay the tax by 20 December 2018.
If your account is in another country or online, assuming the bank does not report and pay the tax for you, you will have to calculate and declare the tax yourself. You will have to report the value of their securities online, together with your annual income tax return, and pay the tax by 31 August 2019.
Penalties range from 10 to 200 percent.
More from our 2018 income tax guide
- When do I need to file my Belgian income tax return?
- Online or on paper?
- Filing online
- Understanding the paper tax return
- Checklist: What documents do you need?
- The return in detail
- Belgian income tax: There's nowhere to hide
- A guide to cross-border taxation
- Belgian income tax returns for families
- Help! Where to get assistance with your tax return
- Understanding your Belgian income tax bill
- How do I appeal?
- This guide was written by Marc Quaghebeur, lawyer and partner at De Broeck, Van Laere & Partners (www.taxation.be). It is a general introduction based on current understanding of the law. It is not to be taken as a suitable alternative for individual advice.