All residents who earn an income in Belgium must pay personal tax (NL: personenbelasting FR: impôt des personnes physiques). Residents are individuals whose domicile (NL: domicilie FR: domicile) is registered in Belgium.
The municipality also charges an additional tax and this is calculated according to the address where the individual is registered on January 1 of the tax year.
Tax needs to be paid on all income that an individual has made in Belgium and abroad. This will be the total net income, minus deductions.
The total net income is the sum of these incomes:
Real estate is taxed to the owner or divided between spouses when it’s communal property.
The cadastral income (NL: kadastraal inkomen FR: revenu cadastral) is an estimate of the value of a property and is used when determining the income on real estate.
The taxable amount is calculated according to the function that the property has. If the building is meant as residence for the owner, then the taxable income is the same as the indexed cadastral income or if the building is rented out to an individual then the taxable income is the cadastral income plus 40%, etc.
Interest on loans can only be deducted if the loan was granted to pay debts related to real estate. Under certain circumstances, the interest of mortgages can be deducted if the mortgage runs for more than 10 years and it was granted to build, buy a new house or renovate one.
Properties in Belgium that are used for education, religion, hospitals, retirement homes and other similar institutions are exempted from paying tax on real estate if the business does not seek to make a profit.
Reduction of cadastral income
In some cases there can be a reduction of the cadastral income when a property has been empty and unfurnished for more than 90 days or when part of the property has been destroyed.
You are only obliged to declare certain non-physical assets, which include: dividends, bonds, money deposits and debentures. What can be declared, but is not necessary: income from abroad, income from savings accounts, etc.
Income from non-physical assets abroad are subjected to normal tax regulations. This means that they are taxed twice; once abroad and once in Belgium. To compensate for this double taxation, individuals are entitled to a special system. This means that the foreign taxes are deducted from the taxes that are payable in Belgium. In normal cases this is a pre-payment of 15%.
There is a special tax system for students who wish to have a student job. They are exempted from paying taxes as long as they meet these 3 conditions: