Taxing times 2016: Belgian income tax, joint filing and overseas accounts (part 4)

You have finally made your choice between filing online and filing on paper, but still, not everything makes sense. Far from it. In this fourth part of our guide, we see when you file jointly or separately. And what is that about reporting bank accounts?

Do we file jointly or separately?

In Belgium, spouses and legal cohabitants don’t get to choose whether they file jointly or separately. If you ‘only’ live together, you file separate returns. It is only if you register your partnership at the commune, or if you marry, that you file your tax return together, and then only for the income of the following year.

The income of the year in which you married or registered your partnership must still be filed on a separate tax return. For example, if you married on 14 February 2016, the tax return you receive in May 2016 will be for your 2015 income and that must be filed separately. The tax return for your 2016 income must also be declared separately. It is only in 2017 that you will start to file jointly.

Conversely, when you separate and take up separate residences, you will file separate tax returns again, but only for the income of the year following your separation. If you separated last year, your 2015 income still has to be declared on a joint tax return. Yes, that means that you should meet with your ex to complete the tax return together. The tax authorities understand that this may be awkward, and they will not object if you file a separate tax return.

When you file jointly, you complete the “document préparatoire” together - the husband puts his information in the left column, the wife on the right; the codes are the same, starting with 1 for the husband and 2 for the wife or partner.

What is the difference?

When you file separately, you receive separate tax assessments. When you file jointly, you receive one joint assessment.

Filing jointly should not make much of a change; the tax is calculated for each spouse separately on their earnings and on their unearned income (rent, interest, dividend etc). That is why the guide to the tax return has a different column and different codes for each spouse or partner’s income.

Income from investment income that is owned by both spouses must be split in two, that is the case for the cadastral revenue of property that is let out, for interest on joint bank accounts, etc.

The tax bill (the tax assessment) also has two columns, one for each spouse or partner; the income is added up for each, and each has his own personal allowance of €7,090 (for 2015), which results in a tax reduction of €1,772.50.

Do we pay more tax when we file jointly?

Marriage or a registered partnership does not make the tax go up. However, getting married or registering your partnership can be interesting when one spouse or partner is not working. In that case 30% of the other’s income is deducted, and taxed with the stay-at-home partner/spouse. That part is then taxed at a lower tax rate. This is called the marital deduction, and it is limited with a maximum of €10,230 in 2015.

Taxpayers who are married to an official of one of the European Institutions or an international organisation file separate tax returns. However, they must mention that their spouse or partner is an international official (the taxman does not want them to get this marital deduction).

Even if the tax is calculated separately, the tax assessment shows one figure as the tax due or the tax to be reimbursed. The reimbursement will go on the bank account mentioned in the tax return, and usually that is a joint account.

However, if tax is due, who has to pay that tax? You should be able to work out who has to pay how much tax because the tax is calculated in two separate columns. In case of doubt, you can ask the taxman to tell you exactly how much tax each of you owes him. That makes it easier to settle accounts later with your ex.

Do I have to report the money on my bank account?

No, but you will see that your tax return asks you to state in which countries you have bank accounts and to confirm that you have reported your overseas bank accounts. In fact, you do not report your accounts to the taxman but to the National Bank.

Why is that?

In Belgium, the taxman cannot look at your bank accounts because of the banking secrecy rules. Recently, the legislator has given the taxman more powers to investigate your bank accounts in some circumstances. However, to keep up the appearances, the banking secrecy is maintained by storing the information about the accounts with the National Bank of Belgium. The National Bank already has the list of your Belgian bank accounts, last year you had to report your overseas bank accounts yourself. You can do that online or on paper with the standard form.

How much do they know about my bank accounts?

There is not much information in the National Bank’s database, all that they have is a list of all your bank accounts; they do not know how much money you have on your accounts. However, 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 you spend more that the income you have declared, and if he has given you a chance to give that information.

Marc Quaghebeur is a lawyer and partner at De Broeck, Van Laere & Partners
More information at www.taxation.be