Withholding tax calculation changes from 1 January 2023

Since 1 January 2023, the withholding tax on the monthly salaries of employees and company managers and unemployment benefits with company supplement is no longer calculated per income bracket of 15€, but on the basis of the actual taxable amount received.

Withholding tax

Withholding tax on professional income is calculated on gross salaries after deduction of personal social security contributions (a flat-rate reduction is applied to company managers covered by the social status of self-employed persons). In this way, the amount of the taxable remuneration is determined.

Depending on the family situation and status of the taxpayer, the withholding tax is then determined in accordance with one of the following scales:

• Scale I: the income recipient is a single person or the spouse of the income recipient also has a professional income;
• Scale II: the spouse of the income recipient has no professional income;
• Scale III non-residents.

Further reductions may have to be applied to the withholding tax determined according to the applicable scale depending on the taxpayer's family situation, his health, the nature of certain benefits or income and the amount of his professional income.

Calculation up to and including 31 December 2022

The scales of withholding tax on the monthly salaries of employees and company managers and unemployment benefits with company supplement, were determined by income bracket of 15.00€.

If the taxable remuneration was between two amounts, the withholding tax corresponding to the lower amount had to be taken into account.

The scales of withholding tax I, II and III were published annually in the Belgian Official Gazette.

Example:

An employee receives a gross NSSO salary of 3,500€. His wife also receives a professional income. The employee has one dependent child.

*The withholding tax according to scale I is determined per income bracket of 15€. It is 794.96€ for a taxable amount between ≥ 3,030€ and < 3,045€ (income brackets 3,030€ and 3,045€ are multiples of 15€). To this amount is applied the reduction of withholding tax for one dependent child of 39€ (amount income year 2022). The final withholding tax is 755.96€.

Calculation as of 1 January 2023

The calculation of withholding tax by income bracket of 15€ is abolished. The withholding tax is determined based on the actual taxable amount received.

As a result, the scales of withholding taxes per 15€ bracket are no longer published in the Belgian Official Gazette. A calculation based on the so-called key formula is used to determine the withholding tax.

Example:

Let’s go back the above example.

The withholding tax according to scale I is determined on the actual taxable amount received. It amounts to 718.39€ based on the actual taxable amount received of 3,042.55€. To this amount is applied the reduction of withholding tax for one dependent child of 45€ (amount income year 2023).

By comparison, if the withholding tax were still calculated by income bracket of 15€ in 2023, the withholding tax under scale I would have been 712.35€ (before application of the reduction for one dependent child).

Comparing the old and new methods of calculating withholding tax, the difference in withholding tax remains limited to a few euros for the same taxable amount (712.35€ compared to 718.39€) .

Indexation tax scales

For the same taxable amount, we find a large difference in the amount of withholding tax for 2022 and 2023 (in our example, 755.96€ (2022) and 673.39€ (2023) for a taxable amount of 3,042.55€). This is largely due to the indexation of the tax scales on 1 January 2023. This indexation takes place annually but due to high inflation, this year it is leading to larger differences in the withholding tax compared to previous years.

Source: Royal Decree of 19 December 2022 amending the Royal Decree for the implementation of the 'Code des impôts sur les revenus 1992' with regard to the section of the withholding tax, Official Belgian Gazette of 30 December 2022.