Withholding tax on the income of non-residents: changes as from 1 July 2014

The Belgian withholding tax system consists of three scales. Depending on the case, scale I, II or III will be applied on the income of non-residents. The rules that must be applied to determine the proper scale have been changed by Royal Decree. For instance, the notion of 'non-resident having an abode in Belgium' has been abolished.

As a consequence a distinction must be made between the determination of the applicable scale for an income earned until 30 June 2014 and the determination of the applicable scale for an income earned after 1 July 2014. 

Scales I and II apply to the income of non-residents who:

• have maintained an abode in Belgium during the entire tax period;
• have not maintained an abode in Belgium during the entire tax period but have obtained remunerations:
  • for work performed in Belgium;
  • under one or more employment contracts covering the entire calendar year;
  • and provided that these work performances amount to at least 75 % of the legal working time per contract.

Scale III applies to the income of non-residents who do not come under the field of application of scale I or II.

Scale III withholding tax rates are considerably higher than the rates of scale I and II. As a matter of fact, these non-residents do not enjoy benefits such as personal reductions, compensations and tax reductions awarded by the Belgian state to its residents by reason of their civil status or family situation. 

The notion of 'non-resident having an abode in Belgium' is abolished. Consequently, the applicable scale for remunerations paid or granted as from 1 July 2014 must be determined as follows.

Scales I and II apply to the income of non-residents who obtain remunerations:

• for work performed in Belgium;
• under one or more employment contracts covering the entire calendar year;
• and provided that these work performances amount to at least 75 % of the legal working time per contract.

Scale III applies to the income of non-residents who do not come under the field of application of scale I or II.

Source: Royal Decree of 18 June 2014 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, M.B. 23 June 2014.

Author: Peggy Criel

20/08/2015