New clarifications for the tax regimes for inbound tax payers and researchers

First anniversary of the new tax regime for inbound tax payers and researchers brings around additional clarifications published via a circular letter and via the Law of December 21, 2022.

For more than a year, the new tax regime for inbound tax payers and researchers came into force in Belgium. A challenging first year associated with unclarity and questions regarding the scope and the implementation of this new regime. Nonetheless the Belgian authorities try to address those practical difficulties by publishing from time to time clarifications and additional guidelines (we also refer to our previous updates: alert 1, alert 2). With the law of December 21, 2022 and a brand new circular letter (2023/C/6 dd. 03/01/2023), the authorities now continue to publish additional clarifications and make (small) adjustments to the legislation entering into force retro-actively.
 

Law of December 21, 2022 - Broadened scope of the regime and clarifications regarding minimum salary threshold

Employer condition

Expats living abroad had to be either recruited from abroad or being assigned from abroad to a Belgian company. Included in the scope of employers are Belgian non-profit organizations as well as Belgian local companies without a multinational footprint. However excluded by the initial text of the law are public service institutions and Foundations. After an appeal of annulment towards the Belgian Constitutional Court, the legislator now retro-actively enlarged the scope of eligible employers. As from January 1, 2022, companies or branches registered in the Belgian Crossroads Bank for Enterprises are all eligible employers. As stated in the explanatory notes to the law and to give qualified expats, working for public service institutions or foundations, the opportunity to apply retro-actively for the new regimes, a new application deadline has been set out (solely for them) at 3 months following the 10th day of the publication of this law. As the law was published in the Belgian Gazette on December 29, 2022, the deadline that should be respected is April 8, 2023.
 

Employee condition

Not only the scope of qualifying employers has been discussed in this new law. Also the definition of the minimum salary threshold was amended with the aim to remove some ambiguities.

As a refresher, the initial text stated that the remuneration received by inbound tax payers (employees and company directors) for performances in Belgium, should exceed EUR 75.000 per calendar year. The authorities now clarified that for the determination of the threshold, the place where the activity is performed is irrelevant, as long as it concerns income that is considered taxable in Belgium.
 

Circular letter of January 4, 2023 - Procedural aspects, technical adjustments and restrictive interpretation of a researcher

The circular letter of May 6, 2022 (2022/C/47) provided clarifications on the ground rules of the new special tax regimes by using a number of examples. Although a useful document, some practical issues remained unsolved. This new circular letter of January 4, 2023 now tackles some of those open questions.  The most important changes mentioned in this circular letter can be summarized as follows:

Strict filing deadline

In order to benefit from the new tax regime, the employee/director and employer have to file a joint application within 3 months after the start of the Belgian employment. The authorities have to revert back within 3 months with their decision on the electronic application. It remained however unclear if there was still an opportunity to apply in a later stage for this regime in case the initial deadline was missed. The legislator now clearly states that, ‘under penalty of forfeiture’, there is no possibility left to benefit from the regime as soon as the filing deadline passed.

Extension deadline

Contrary to the old regime, the new tax regime for inbound tax payers and researchers is limited in time. The new concession and its benefits will be available for a fixed period of 5 years as of the start of the employment in Belgium. A possibility is foreseen to apply for a 3 year extension through the filing of a new request. The deadline to file the extension request was however unclear. The administrative guideline (2023/C/6) states that as from the moment the 5 year period is over, the application for the prolongation needs to be done within 3 months following the end of the 5 years period. For the sake of completeness, the 5 years period starts as from the first working day in Belgium.

Researchers

Finally the circular letter adapts the definition of a researcher. As a reminder, the 75.000 euro remuneration threshold will not apply to researchers, but at least 80% of a researchers’ professional time should be directly related to research and development activities. On top of this, they have to be in the possession of a master degree in specified expertise areas or prove at least 10 years of relevant experience in specific knowledge fields. Before the publication of the circular letter, the expertise areas were natural sciences, applied sciences, medical sciences, agricultural sciences and engineering. Authorities now added the word ‘technical’ between applied and sciences to avoid a broad interpretation of it. Human sciences (such as economical and legal sciences) are therefore not part of the qualifying knowledge fields as the authorities are targeting rare job profiles which are not easily available on the Belgian labor market.

The EY specialist team remain at your disposal for assisting you with these tax related questions. Further updates regarding the new expatriate regimes will, as always, be posted on our website.