On 18 July 2026, the Belgian Council of Ministers approved a preliminary draft bill introducing corrective remedial measures to align Belgium’s municipal surcharge rules with EU law. The action follows the March decision of the Court of Justice of the European Union (CJEU), which found that the current regime, in some cases, unjustifiably discriminates against nonresident taxpayers (for prior coverage, see the article in the April 2026 issue of Global Employer Services News).
The CJEU determined that Belgium’s general 7% municipal surcharge for nonresidents may, in certain cases, violate the free movement of workers principle under Article 45 of the Treaty on the Functioning of the European Union. The CJEU emphasised that the surcharge itself is not inherently incompatible with EU law; the issue arises when nonresidents face a higher tax burden than comparable Belgian residents without objective justification. The CJEU also made it clear that legislative action would be needed to remedy the inconsistency, leaving the choice of corrective measures to the Belgian legislator.
The government’s approval of the preliminary draft bill marks the first concrete step towards implementing the CJEU decision.
Under the draft, nonresident taxpayers would be able to prove a connection to a Belgian municipality that applies a lower municipal surcharge than the standard 7% rate. If sufficient evidence is provided, the taxpayer would be subject to the lower rate rather than the automatic 7% rate. The draft does not yet specify what evidence would be needed or whether any other conditions would apply.
In addition, the preliminary draft bill proposes to abolish the tax exemption for rented real property with a taxable value below EUR 2,500 (based on the indexed notional rental value). This change would expand the pool of nonresidents subject to taxation in Belgium and increase the number required to file Belgian non-resident income tax returns.
The draft bill has been submitted to the Council of State for review and will then move through the parliamentary approval process. The final legislative text and practical implementation details remain uncertain. However, the proposed changes could have meaningful implications for cross-border workers, nonresident taxpayers with Belgian-source income and employers managing internationally mobile employees.
Affected taxpayers should monitor the legislative process and begin reviewing whether they may be able to support a connection to a Belgian municipality applying a lower surcharge than the standard 7% rate. Nonresidents should preserve relevant documentation, and employers with internationally mobile employees should consider whether the proposed changes could affect payroll or assignment tax costs.
Charlotte Lemahieu
Paul Matadi
BDO in Belgium
Background
The CJEU determined that Belgium’s general 7% municipal surcharge for nonresidents may, in certain cases, violate the free movement of workers principle under Article 45 of the Treaty on the Functioning of the European Union. The CJEU emphasised that the surcharge itself is not inherently incompatible with EU law; the issue arises when nonresidents face a higher tax burden than comparable Belgian residents without objective justification. The CJEU also made it clear that legislative action would be needed to remedy the inconsistency, leaving the choice of corrective measures to the Belgian legislator.The government’s approval of the preliminary draft bill marks the first concrete step towards implementing the CJEU decision.
Under the draft, nonresident taxpayers would be able to prove a connection to a Belgian municipality that applies a lower municipal surcharge than the standard 7% rate. If sufficient evidence is provided, the taxpayer would be subject to the lower rate rather than the automatic 7% rate. The draft does not yet specify what evidence would be needed or whether any other conditions would apply.
In addition, the preliminary draft bill proposes to abolish the tax exemption for rented real property with a taxable value below EUR 2,500 (based on the indexed notional rental value). This change would expand the pool of nonresidents subject to taxation in Belgium and increase the number required to file Belgian non-resident income tax returns.
Next Steps and Potential Impact
The draft bill has been submitted to the Council of State for review and will then move through the parliamentary approval process. The final legislative text and practical implementation details remain uncertain. However, the proposed changes could have meaningful implications for cross-border workers, nonresident taxpayers with Belgian-source income and employers managing internationally mobile employees.Affected taxpayers should monitor the legislative process and begin reviewing whether they may be able to support a connection to a Belgian municipality applying a lower surcharge than the standard 7% rate. Nonresidents should preserve relevant documentation, and employers with internationally mobile employees should consider whether the proposed changes could affect payroll or assignment tax costs.
Charlotte Lemahieu
Paul Matadi
BDO in Belgium