Taxation in Belgium

In Belgium, taxes are collected on both state and local level. The most important taxes are collected on federal level, these taxes include an income tax, social security, corporate taxes and value added tax. At the local level, property taxes as well as various fees are collected. Tax revenue stood at 48% GDP in 2012.[1]

The effective taxation rate in Belgium is commonly cited as among the highest in the world; see list of countries by tax rates.

Income tax is calculated by applying a progressive tax rate schedule to taxable income, with rates that go from 25% to a maximum rate 50%. The rates, as of 2015, are as follows:[2]

Annual income Tax rate
In between 0 and €10,860 25%
In between €10,860 and €12,470 30%
In between €12,470 and €20,780 40%
In between €20,780 and €38,080 45%
In excess of €38,080 50%

Furthermore, a long list of tax allowances can be deducted from both the employer and the employee, including a general deduction, benefits deduction, and a deduction for dependents. Tax deductions are granted according to the following table:[2]

  • Child benefits:
    • Employer - 7%
    • Employee - 0%
  • Unemployment:
    • Employer - 1.46%
    • Employee - 0.87%
  • Medical care in the case of sickness:
    • Employer - 2.35%
    • Employee - 1.15%
  • Occupational illnesses:
    • Employer - 1%
    • Employee - 0%
  • Industrial accidents:
    • Employer - 0.30%
    • Employee - 0%

Employment income is also subject to social security contributions. Employee contributions are 13.07% and are deducted by the employer. In addition, the employer contributes about 35% of employees wage.[3] No ceiling for contributions apply on contributions for either employee and employer.[4]

Value-Added Tax (VAT) applies to most sales of goods and services. The standard rate of value-added tax is 21%.[5] A lower rate of 12% applies to social housing, meals and margarine. Another reduced rate of 6%[6] applies to foods, drinks, hotels and medicine. Certain goods and services are exempted from VAT by law, this includes exports, and financial services. The Belgian VAT is part of the European Union value added tax system. Smaller businesses with a turnover lower than €25000 are exempt as of 01/01/2016.

Corporate tax applies at a standard rate of 33.99%.[7]

References


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