Belgium Global Payroll & Tax Information Guide
Last Updated March 2023
Payslip Global Payroll Control Platform automates pre-payroll through to post-payroll delivering local flexibility within global standardization.
Belgium, officially the Kingdom of Belgium, is a federal constitutional monarchy with a parliamentary system. It is divided into three highly autonomous regions: Flanders in the north, Wallonia in the south, and the Brussels-Capital Region. Brussels is the smallest and most densely populated region, as well as the richest region in terms of GDP per capita.
Payroll in Belgium – 2023 Updates
Starting 1 January 2023, new corporate income tax rules will enter into force for Belgian companies or Belgian branches.
With the intention to strengthen the fight against international and complex tax fraud, the statutes of limitations for both income tax and value-added tax (VAT) were recently reformed and aligned with international standards.
As part of the recently approved federal budget for 2023, Belgium will impose restrictions to the existing foreign tax credit (FTC) regime for royalty income and the limitation rule for certain tax attributes. Furthermore, the notional interest deduction will be eliminated.
From 1st of January 2023, the salaries of all their Belgian white-collar employees have been increased by 11.08% and changes were applied in the payroll of January 2023.
Effective 1st of January 2023, the minimum immigration salary threshold for foreign employees increased in Belgium. This increase impact new and pending applications, as well as valid permits.
Belgium Payroll – Basic Facts
A foreign company is not required to have a legal entity in Belgium in order to process a Belgian payroll, but those who choose to set up an entity in Belgium can establish one of four common company types:
Companies are not required to set up an in-country bank account in place to make global payroll payments to employees and tax authorities.
Taxation in Belgium is one of the highest in Europe. Belgian tax rates amount to an effective rate of more than 50% for the highest earners (including social security), compared to an average 45% in Europe. Belgian income tax and company tax are collected at state level, but the municipal authorities also collect property tax and municipal tax. However, there is a special tax status for some expats whereby resident foreigners are treated as non-residents for tax purposes and enjoy generous tax allowances. Double taxation treaties exist to help relieve a Belgian tax resident from having to pay additional income tax to another country. The Belgian government also offers a range of tax deductions which can help reduce your Belgian tax burden.
The tax year is the same as the calendar year – it runs from 1st January to 31st December.
Tax and Social Security Considerations
Belgian income tax rates 2023
Belgian income tax bands Belgian tax rate
Up to €13,870 25%
Compensation and Benefits
- Annual leave:
- The length of paid holiday will depend on the number of months during which an employee was paid in Belgium in the previous year. The legal minimum amount of holiday entitlement in Belgium for people working full-time is 20 days.
- Sick leave: Workers are entitled to take up to 30 days of sick leave.
- Maternity/ Paternity Leave: Parents are entitled to take parental leave of up to four months per child before that child turns 12. The employee receives a monthly allowance.
Foreign Workers in Belgium
Employing foreign workers in Belgium is subject to a set of very strict rules. Until recently, employing foreign workers in Belgium was subject to a dual procedure: the foreign worker concerned required both a residence permit and a work permit. In accordance with EU Directive no 2011/98/EU, it has become mandatory to issue a single permit which covers both the right of residence and the right to work and requires a single application. This Directive has been implemented in Belgian law with the entry into force on 24 December 2018.
Visas:Visa requirements vary based on individual travel intentions and the duration of the visit. There are short stay and long stay visa. For business travelers visiting Belgium for less than 90 days EU/EEA nationals are not required to possess a visa and may move freely through the region. For most non-EU/EEA nationals, visas are required to enter Belgium for less than 90 days—although travelers may move freely across the Schengen Area after arrival.
With a valid US passport, US citizens can stay up to 90 days for tourism or business during any 180-day period. They must wait an additional 90 days before applying to re-enter the Schengen area. To stay longer than 90 days, US citizens must have a visa. They should apply for a visa through the embassy of the country where they will spend most of their time.
Non-residents with Belgium-sourced income are liable to taxation only on that income and the same rates as residents apply—between 25% and 50%.
Non-resident taxpayers (including those benefiting from the expatriate tax concession) are not entitled to any personal exemptions unless if at least 75% of the individual’s earned income is subject to income tax in Belgium. Some taxpayers may be able to claim partial or full personal exemptions based on the tax treaty signed between Belgium and their home countries/jurisdictions.
Belgium has concluded a double tax treaty with more than 150 countries, including an income tax treaty with the United States. Belgium has a totalization agreement with the United States for social tax coverage purposes.
Belgium generally uses the exemption-with-progression method for avoiding double taxation in its treaties.
For more information about how our Global Payroll Control Platform integrates with local payroll solutions in Belgium, contact our global team today.