A welcome change in the tax regime for expat researchers in Belgium

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12 oktober 2023
Author
Miro Honty

Context

In the world of fast growing technologies and scientific advancements, the hunt for highly qualified and talented people on the global labor market is in high gear. Belgium with high concentration of high-tech companies and developed industries is no exception in this respect. Belgium has had, like many other countries, beneficial tax regime aimed at attracting skilled and talented people from abroad since 1983 (hereafter referred to as “old regime”). However, the old regime was applicable only to individuals who were i) recruited abroad by a Belgian for-profit enterprise that is part of a multinational group or (ii) transferred from abroad to such enterprise within the multinational group. The job must have entailed a leading function requiring specific knowledge and responsibilities. The Belgian citizens were not eligible to enjoy such beneficial tax regime.

As of January 1st 2022, a new and substantially different regime, so called BBIO (Bijzonder belastingstelsel voor ingekomen belastingplichtigen en ingekomen onderzoekers), and hereafter referred as a new regime, entered into force for people starting their employment in Belgium as from that date. A new regime is based on the fundamentally different approach, in which the essential condition for beneficiaries is that they have had no link with Belgium during the sixty months prior to the start of their employment in Belgium.  Maybe the most important change from our perspective is that both Belgian and foreign researchers employed by non-profit organization such as SCK•CEN may apply for beneficial tax regime, as long as they meet the conditions.

The conditions for the incoming researcher and his/her employment are as follows:

(i) The incoming researcher must, for 60 months prior to the Belgian employment, not have been subject to Belgian personal income tax/non-resident professional income tax; and not have lived within 150 km from the Belgian border.

(ii) The individual holds a doctorate or a master’s degree in one of the exhaustively listed scientific fields, or has at least 10 years of relevant professional experience.

(c) The researcher spends at least 80% of his/her working time on research activities. He/she will be employed within a laboratory or company leading one or more research and development programs.

(d) The researcher is recruited outside Belgium by a Belgian company. This Belgian company, permanent establishment or non-profit organization does not necessarily have to be part of a multinational group.

Benefits

An allowance of up to 30% of annual gross remuneration can be granted in the form of reimbursement for expenses own to the employer, but with an absolute maximum of EUR 90,000 per year. No justification documents are required to account for this amount.

In addition, the employer can, within certain limits, also intervene in the costs caused by the expat researcher’s relocation (travel expenses), the costs associated with furnishing the home in Belgium during the first 6 months (max. 1,500 €) and school expenses (kindergarten, primary school, secondary school) for the children of the expat or the partner.

The system is also applicable to personal income tax; to avoid double taxation, the expat researcher concerned can invoke double taxation treaties if necessary.

The new regime does not stipulate anything about social security law treatment. The finance minister, in the explanatory memorandum to the program act, indicates that “social security is not within his competence and he cannot take a position on it”. Thus, the position of the National Social Security Office is not established yet.

Implementation

Within SCK CEN, it has been agreed to provide the part between the minimum remuneration according to CAO (which means degree of graduation + equal number of steps to the number of years of experience) and the current reference salary (current degree and step) as an expense allowance. The expense allowance is between 5 and 30 per cent (in 5 per cent increments). The expense allowance will be recalculated every year in July, when the grade is determined, and percentage of the expense allowance revised accordingly.

A new regime is applicable 5 years after the start of the employment contract and extendable up to 8 years. In principle, the new regime can be implemented with retroactive force, thus regularization should be possible back to 2015 (now 2023). Nevertheless, due to complexity and still ambiguities in the interpretation of the new regime, the employees are advised to contact ACV-BIE representative and/or HR to discuss possibilities of the new regime applicable to his/her specific case.

Though extra cash maybe an attractive option for young employees, lowered taxable gross salary has, among others, a certain impact on the group insurance – 2nd pillar of the pension scheme. In any case, decision to benefit or not from the new tax regime for expats is fully optional and left at discretion of each individual.