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Belgian income tax: There's nowhere to hide
For years, many people thought they could safely "forget" the income they had outside Belgium; the taxman would never find out. The EU Savings Directive was a rude wake-up call as the Belgian tax authorities started receiving information about overseas bank accounts and enquiring about overseas bank accounts.
And when Belgian banks started reporting to the tax authorities abroad, they thought "Surely, Luxembourg and Switzerland would never do that… ". Even that is a thing of the past.
Common Reporting Standard
The Common Reporting Standard is the world's answer to FATCA, the American law obliging banks all over the world to report the bank accounts of American citizens' to the IRS. The Common Reporting Standard goes further; it is a Global FATCA.
This year, banks, brokers and certain insurance companies and collective investment vehicles in 109 countries will be reporting about your financial situation and income in 2020 to the Belgian tax authorities.
What information will they receive?
- the numbers of all your bank accounts,
- the investment income before tax: interest, dividends, income from certain insurance policies, …);
- the proceeds from the sale of financial assets (stocks, bonds, mutual funds, …);
- the balance or the value of the account or insurance policy.
This is why your bank keeps asking for a copy of your identity card: they need your contact details and your taxpayer identification number (TIN) so that the information ends up in your tax file. And if you have a company or a trust, the bank has to look through it to find the ultimate beneficiary.
Kenya and Morocco will follow suit in 2022 and Georgia, Jordan, Montenegro, Thailand and Uganda in 2023, and this Global FATCA network will only expand. All offshore financial centres (like Liechtenstein or Panama) are already participating, except for Palau (where is that?). You cannot hide your wealth anymore unless you open a bank account in Afghanistan or Zimbabwe.
The EU Member States have agreed to go even further. Since 2014 they are exchanging other information that they have, e.g. through the tax returns you file there, or employers’ or pension office statements. Your taxman knows that you have:
- income from employment;
- director’s fees;
- life insurance products;
- real estate and rental income.
All this must ensure that you don't forget to report any income.
More from our 2021 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, an international tax lawyer and partner at Cabinet DAVID. 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.