A couple of Belgium questions...

[thebestwife]

Hello all,

We are currently in Belgium on an expat contract. DH has been approached about a new job (still based in Belgium) which he could be tempted by, but we are wondering what the implications would be wrt taxes etc.

It's my understanding that by changing employer he would lose his expat tax status. Is that correct? I also have no idea on how we would be affected financially by the change so if anyone could shed any light it would really be appreciated...

Thanks,
Thebestwife

I know virtually nothing about expat status but I'm sure I have read on www.expatica.com ask the expert section that you can change jobs and keep expat tax status, dependent upon the job and your status. I think you'd need to find a financial adviser able to give you a more definitive answer. Ordinary tax payers have their tax calculated on family status among other factors, so if you are a non working spouse and have a large family, you will find your tax burden is nowhere near 50%.

Taxes are very high here as are social security costs. Before you accept, make sure you find out exactly what the salary your dh is being offered would end up being after tax and social security.

epp.eurostat.ec.europa.eu/statistics_explained/images/thumb/5/5e/Figure_5_Tax_rate_on_low_wage_earners%2C_2010.png/350px-Figure_5_Tax_rate_on_low_wage_earners%2C_2010.png

www.staffingindustry.com/eng/Research-Publications/Daily-News/EU-Labour-costs-highest-in-Belgium

natation, around half of my dh's salary goes in tax and social security despite the fact that I am a non working spouse and we have three dependent children. He is not earning a small amount of money but not a huge amount either. Actually, the big earners end up paying much less than half as there is a cap on social security payments. Of course, if you add in 21% VAT then he is losing more than 60% of his salary to the government.

The employer contribution to the employee's social security costs is 32.5% (I think) which is about 20% more than it is in the UK which makes it stiflingly expensive to employ anyone in this country.

Ok should have stated if your income is not high and you have a large family, then your tax burden won't be so high. 4 dependent children is around 20k tax free, not social security free though. I've never earned over 20k in a year.

Gregory Goossens answers the "ask the expert" questions on the expatica.com website. This is where he works for money. His company deals with setting up expat status and I'm sure would be able to tell you the difference between income taxed at ordinary levels and expat levels if you can't continue with expat status.
www.taxpatria.be/pages/services.php

Here is some of the advice and information which Gregory Goossens has written for free on the expatica.com website on working out tax and social security implications. Don't forget Belgian salaries are usually quoted gross per month, after working a whole year under a Belgian contract, you usually get 13.92 months, an extra 1 month before Christmas and .92 in the Summer.

On a Belgian tax return, you can claw back tax paid on child care for under 12s, mortgage payments (including properties mortgaged abroad), house maintenance costs, all sorts of things.

www.expatica.com/be/finance_business/tax/Calculating-your-tax-burden-in-Belgium_15334.html

Here's a summary of the tax exemptions you get AT SOURCE, so long as you tell HR your family status, before you fill in your annual tax return, after which you can claim back the extras like child care and hopefully get a bit of a refund, NB if you've underpaid the tax, instead you'll get a bill!

You get first ?6070 or ?6800 tax free (if earning over 25,400)
You get ?1200 tax free for 1st child
You get ?2280 tax free for 2nd child
You get ?4610 tax free for 3rd child
You get ?5150 tax free for 4th and further child
Not sure what a non working spouse is, think it's ?6800 tax free

You add all these together to get your basic tax free salary.
For me it's 6070+1200+2280+4610+5150 = ?19310 tax free per year

You still pay social security, no idea at which point it kicks in, but you get an allowance where you pay no social security.

Here's another useful link.
www.capitaltaxconsulting.com/international-tax/belgium/belgian-income-tax/

Here is a basic tax calculator.
If there is a non working partner, untick the Conjoint/cohabitant légal avec revenu box.
Go to the Enfants non handicapés à charge box and choose the number of children you have.
In the Salaire mensuel box, put in quoted monthly gross salary.
Click on brut -> net and you'll get the basic monthly net salary, before you do your tax return.... some people claim back several KKKs on the annual tax return, others like people who have other income have several KKKs to pay after their annual tax return.
payroll.partena.be/web-simul.html

Using that salary calculator, looks like a non working spouse gives a further tax allowance of around ?4500 per year, that's if the salary calculator is working correctly!

?Maximum Value of Allowance: The total deductible fiscal allowance (excluding non-recurring expenses and recurring expenses listed below) is fixed at a maximum amount. The maximum fiscal allowance is:

◦EUR11,250: If the employee works for a commercial or industrial company
◦EUR29,750: If the employee works for a co-ordination center or research laboratory.

By my calculation - allowing for the 13.85 months salary, that works out about 800 euros per month.

I don't think he necessarily has to lose his status though - you just need to reapply and demonstrate that you have substantial interests in your home country - ie a house, pension, investments etc.

Hiya Porto, so does that mean that you add on a tax free allowance of 11,250 or 29,750 on to the normal tax free allowances, when you have expat status?

I think it IS correct you loose your expat status if you take another job in Belgium. I had expat tax status in my last job and would not have retained it if I had moved to another employee role in Belgium from my employed status nor would I have had it if I took another job from not working, and I'm not currently working. The general rule is you actually need to be recruited from overseas to benefit from the ruling and a move within Belgium will kill it. A colleague of mine had even had Belgian expat status, been to live in UK for around 6 years then came back and claimed it again having been once more recruited overseas and her second application was rejected.

Always seek Belgian tax advice on this stuff but my hunch is that you are right, ex pat status lost in an employee to employee role move.

Why don't you make use of the "ask the expert" option on expatica.com and give as much information as possible? That way you might get an initial indication from Gregory Goossens who owns Taxpatria, the company which specialises in tax issues for expats.

www.expatica.com/be/ask_expert.html

natation - yes, I think so. DH gets it. I don't.

So if it's the case you get a further 11,250 or 29,750, then if you're taxed at 50% (I know it's not as simple as that but a nice round figure), then you'd pay 50% more tax on those amounts. I guess if a new job offered more salary, even if you no longer qualified for expat status, you might end up with more in your pocket.

In my experience it all depended on how much people travelled. Every full day spent outside Belgium was not taxed. So if you travelled 20 per cent that 20% was not taxable. If you travel a lot on a contract that has ex pat status and you move and still have to travel and lose it, you will be hit by a lot. If you didn't travel and just benefited from tax free allowances the differences are less but still there. In the company I worked for it was ridiculous the trips people invented for taxes. My boss used to look at her travel half way through every month and if she hadn't "done enough" she'd be flying around like crazy to hastily arranged meetings. It was ridiculous.

Good thought from Natation to ask GG on the forum for some free advice. Much depends on the specifics eg the travel percentage your DH claims.

I am thinking of working in Belgium, but really struggling with the tax system and need support. Can anyone recommend a good and affordable tax adviser/accountant?