Expats: new reporting obligation for employers

On 1 January 2024, the old tax regime for foreign executives finally came to an end. From now on, expats will fall under the favourable tax regimes for ‘incoming taxpayers and incoming researchers’. 

TAX-FREE ALLOWANCE 

Under this new expat regime, employers can grant, on top of the remuneration, a lump-sum tax-free expense allowance of up to 30% of the gross annual salary (with a maximum of 90.000 EUR per year). 

In addition, certain expenses, such as moving and school expenses, can also be reimbursed free of taxes and social security contributions. For more information on the conditions and benefits of these new tax systems, please refer to our previous newsletters of 23 November 2021 and 13 March 2023. 

With these new tax systems, the legislator aims to support Belgian companies in attracting qualified staff from abroad by offering an advantageous (net) salary package with reduced employer costs. 

NOMINATIVE LIST GIVES WAY TO ADDITIONAL ENTRY ON TAX FORMS 

A condition of the tax system for incoming taxpayers is that the expat receives a minimum annual gross salary of 75,000 EUR. The tax-free allowance on top of that must, as mentioned, comply with the 30% limit and cannot exceed 90,000 EUR. 

In order for the tax authorities to verify these amounts, the employer must submit a list of all employees and company directors who benefited from this expat system in the previous year by 31 January of each calendar year. A model document for this annual list was to be made available, but unfortunately never materialised. 

The tax administration therefore confirmed that you do not have to submit a nominative list for income year 2023 either. To simplify matters, it is now determined by law to replace this list with an additional entry on the annual tax forms 281.10 or 281.20. This additional entry on the tax forms applies to salaries paid or granted from 1 January 2023 (assessment year 2024). 

Specifically, you must include the following additional items on the tax form: 

• The amount of gross remuneration paid or allocated to the incoming taxpayer or researcher (before deduction of social security contributions);  
• The amount considered as a lump-sum expense allowance for the expenses arising from the posting or employment in Belgium (i.e. the “30% rule);  
• The amount considered as reimbursement of the costs specific to the employer based on actual supporting documents (e.g. moving expenses). 

This new reporting obligation follows the trend of the Belgian tax authorities collecting more information via the tax forms as a basis for future inspections. 

WHAT DOES THIS MEAN FOR YOU?

Companies that applied the new expat system in the last calendar year will have to report the above-mentioned amounts on the (adjusted) tax forms 281.10 and 281.20. In principle, you must file these tax forms for income year 2023 by 29 February 2024 at the latest. 

Failure to properly account for these expenses on the required tax form may result in a rejection of these expenses as professional expenses. 

The new regulations once again demonstrate the growing importance of correct, accurate and timely filed tax forms 281.10 and 281.20. We will therefore be happy to assist you in meeting your tax form obligation. 

If you have any questions about this new reporting obligation or the expat system in general, be sure to contact us for more information.