【From CFTInet, Beijing 08/28/2000】 INDIVIDUAL TAXES
SIGNIFICANT DEVELOPMETNS
The information in this entry relates to tax year 1999(calendar year 1998), and where applicable to tax year 2000(calendar year 1999).
As from January 1,1999, new legislation concerning stock options applies.
As from February 1,1999, professional withholding tax is due under certain circumstances where remuneration is paid or attributed by Belgian residents.
TERRITORIALITY AND RESIDENCE
Belgium taxes its residents on their worldwide income irrespective of their nationality. Residents of Belgium are those who have established their domicile or their economic base in Belgium. Persons deemed to have done this are those who have registered in the population register of a commune in Belgium. The fiscal residence of married couples is determined
by the place where the family is located. Nonresidents of Belgium are subject to income tax only on their income earned or collected in Belgium.
Within Belgium, nonresident status is granted to non-Belgian executives or specialists who "temporarily" work in Belgium for an international group. Those persons deemed to be nonresident are allowed tax concessions on the payment of certain allowances, which are not taxable on the employee and are tax deductible for the employer.
GROSS INCOME
Employee gross income/Foreign executives or specialists working
temporarily in Belgium and qualifying for nonresident tax status do not have to include in their gross taxable income reimbursements for additional expenses incurred from their transfer to or employment in Belgium. The additional expenses listed below may be reimbursed on the basis of actual amounts or by means of lump-sum allowance.
1. One-time moving expenses and the costs of setting up a house in Belgium.
2. Ongoing expenses, e.g., cost-of-living, housing allowances, school fees, home leave allowance, travel expenses of children studying outside Belgium, exchange losses, and tax equalization.
Such additional expenses will be, within certain limits, exempt from tax to the extent that the total annual amount (excluding school fees and one-time expenses) does not exceed BEF450,000(BEF1,200,000in the case of executives working at a control and coordination office, research center or scientific laboratory). Duties performed outside Belgium are proportionately exempted, but declaration must be made for total worldwide income earned within the employer's group.
Capital gains and investment income/Capital gains and foreign-source investment income cashed outside the country are not taxable for nonresidents working in Belgium. Residents and nonresidents are, under certain conditions, taxed on capital gains realized on the sale of land as well as on the sale of buildings located in Belgium. Depending on the situation, this tax is levied either by means of a special levy(33%/16.5%) or through the application of professional withholding tax. As from January 1,1999 new legislation concerning stock options
applies. Stock options are taxable at the time they are granted. The value of a stock option listed on a stock exchange is determined as the closing market price of the day preceding the offer of the option.
The value of a stock option not listed on a stock exchange is determined on a lump-sum basis and amounts to a certain percentage of the fair market value. This basic percentage is set at 15%, to be increased by 1% per year of option period exceeding five years.
Under certain conditions, the above percentages are reduced by 50%.
DEDUCTIONS
Business deductions/Social security taxes are deductible.
Employment-related expenses are deductible, provided they are
substantiated; alternatively, standard deductions may be claimed up to a maximum of BEF110,000.
Non-business expenses/The following non-business expenses are deductible.
1. 80% of the support payments to near relatives or a separated spouse (nonresidents can deduct only payments made to residents of Belgium; however, there are some tax treaty exceptions).
2. Interest resulting from mortgage loans for real estate situated in Belgium.
3. Charitable contributions to certain institutions to the extent of 10% of taxable income, with a maximum of BEF10,998,000 for tax year 1998.
4. 50% of the remuneration costs of domestic personnel.
5. 80% of children's custody expenses, up to a maximum of BEF345 per day.
The following non-business expenses give rise to a tax reduction, which is calculated on the basis of the average tax rate on the jointly taxable income, with a minimum of 30% and a maximum of 40%.(In some cases, it is calculated on the basis of the marginal tax rates.)
1. Life insurance premiums, with a maximum of BEF66,000.
2. Capital repayments of a mortgage loan, with a maximum of
BEF66,000(applicable together
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