Belgium - Minister of Finance launches tax reform plan

Belgium’s Finance Minister Vincent Van Peteghem recently launched the first phase of a tax reform plan. The main objective of the tax reform is to encourage the Belgian population to work by reducing the tax burden on income from labour and shifting that burden to wealth and consumption taxes. The government also intends to simplify the personal income tax return by eliminating certain tax reductions and deductions over a 20-year period, and to make the Belgian tax system more equitable and neutral.

At this first phase of the reform, it appears that most measures would be applicable as of January,1, 2024.

No draft legislation reflecting this first phase of the planned tax reform  has been introduced in Parliament; thus, the proposals are still subject to debate and may change significantly as they make their way through the legislative process.

The discussion below focuses on the topics that may be part of the tax reform and that may be important for individual taxpayers.

Increase in net salary for working taxpayers

Lowering the tax burden on professional income and increasing the purchasing power of the Belgian population are two of the main goals of the tax reform project. To accomplish these goals, the following measures are proposed:

  • The tax-free (lump sum) amount that is not subject to personal income tax would increase from EUR 10,160 to EUR 13,500 for income year 2024/tax year 2025. Given that the government’s intent is to benefit working taxpayers, the existing tax reduction linked to unemployment or pension payments would be reduced by an amount equal to the benefit derived from the increase in the tax-free amount.
  • Labour income would still be subject to progressive personal tax rates; however, the income range that is subject to 45% taxation would be raised to a net taxable income of EUR 60,000 (for income year 2024) compared to the current limit of EUR 46,440.
  • The current work bonus -- an incentive for taxpayers with lower incomes -- would be expanded.

Modern and less complicated tax system

The reform also aims to ensure that the personal income tax system is neutral for any form of cohabitation and to modernise the current tax system. To achieve these goals, the following measures have been proposed:

  • Eliminate the difference in the tax positions of married couples and single individuals by repealing the marital quotient gradually over a period of 20 years.
  • The tax regime of alimony payments (that is, a tax reduction on behalf of the payer and taxable to the recipient) would be cancelled, with a 20-year transition period.
  • The additional tax-free allowance for single persons would be reassessed to ensure that only truly single persons can benefit from this extra tax-free allowance.
  • Children are at charge of their parents in case certain conditions are fulfilled. One of these conditions is that the parent’s net income may not exceed a specific amount. This maximum net amount currently differs depending on the family situation, but the tax reform would eliminate these differences and increase the ceiling amount.
  • The rules for fiscal coparenting will be streamlined and judges should, when ruling on coparenting cases, include the application of the fiscal coparenting in their decision.
  • To support the active population in the day-to-day care of their children, the tax benefit linked to childcare costs would be increased.
  • The number of codes (sections?) in the personal income tax return would be reduced dramatically, as a number of tax benefits that apply only to a few taxpayers would be repealed.

Fairer taxation

The tax reform proposal also aims to restore neutrality in the tax system. To achieve this goal, the following measures were announced:

  • The tax treatment of non-cash benefits would be aligned with the social security treatment, so that certain benefits in kind (such as housing, electricity and heating) which currently are valued on a lump-sum basis for tax purposes, would be taxed on their actual value. However, this measure would not affect the existing lump-sum taxation of company cars (including fuel cards).
  • Specific rules regarding financial instruments of remuneration, such as shares and stock options, would be included in the Belgian income tax code and the current regime would be amended on specific points. The current regime of upfront taxation of stock options would be maintained but reduced in scope.
  • A new specific tax regime for the free or discounted grant of shares/profit rights would be implemented. This new regime is based on two main principles:
    • If the value of the shares increased after the stock option was granted, taxation as professional income would be limited to the value of the shares at the time of grant.
    • Any excess over the initial value would be treated as miscellaneous income taxable at 15%.
    • If the value of the share decreased, the taxable benefit in kind would be limited to the actual value of the shares upon disposal.
    • The minister’s intent to tax the increase in value at a fixed rate of 15% is seen by some as an indication that a broader capital gain tax of 15% could on the table a later stage.
  • To encourage more employees to participate in a second pillar pension plan, the existing 80% limit would be repealed and replaced by a new system whereby the maximum contribution is determined as a percentage of an employee’s salary.
  • To cover the costs of the budgetary measures, the tax on securities accounts would be increased. Note that enactment of a wealth tax is currently not included in the tax reform plans; however, some observers expect that such a tax would be introduced in the second phase of the tax reform.

A sustainable and healthy society

As expected, a VAT rate of 0% would be introduced for certain healthy and necessary products, such as public transport, fruit, vegetables, medical care and hygiene products. The 6% rate will remain applicable to electricity, natural gas and tap water. However, a harmonized VAT rate of 9% would be introduced for all other products that are currently subject to a 6% or 12% rate.

Excise duties on tobacco would go up, and excise duties would become due on alternative and new tobacco products.

The temporary reduced rate for the demolition and reconstruction of a family home would become permanent; however, due to the harmonisation of the VAT rates, a 9% rate would become applicable.


The above overview is primarily focused on employment tax and personal income tax measures, but the tax reform plan also includes measures that would impact companies and businesses.

If you have any questions regarding the above, please reach out to your usual BDO tax consultant or the authors of this article.

Peter Wuyts
Charlotte Lemahieu
BDO in Belgium