Belgian income tax: There's nowhere to hide

For years, many people thought they could safely "forget" the income they had outside Belgium; the taxman would never find out. The EU Savings Directive was a rude wake-up call as the Belgian tax authorities started receiving information about overseas bank accounts and enquiring about overseas bank accounts. 

And when Belgian banks started reporting to the tax authorities abroad, they thought "surely, Luxembourg and Switzerland would never do that… ". Even that is a thing of the past. 

Common Reporting Standard

The Common Reporting Standard is the world's answer to FATCA, the American law obliging banks all over the world to report the bank accounts of American citizens' to the IRS. The Common Reporting Standard goes further; it is a Global FATCA. 

This year, banks, brokers and certain insurance companies and collective investment vehicles in 112 countries will be reporting about your financial situation and income in 2021 to the Belgian tax authorities.

What information will they receive? 

• Your complete identity with your Belgian TIN (social security number).

• the numbers of all your bank accounts and the names of the banks.

• the investment income before tax: interest, dividends, income from certain insurance policies, …);

• the proceeds from the sale of financial assets (stocks, bonds, mutual funds, …);

• the balance or the value of the account or insurance policy.

The Common Reporting Standard is the reason why every couple of years your bank keeps asking for a copy of your identity card: they need your contact details and your taxpayer identification number (tax identification number) so that the information ends up in your tax file. And if you have a company or a trust, the bank has to look through it to find the ultimate beneficiary.

Georgia, Jordan, Montenegro, Thailand and Uganda will follow suit in 2023, and this Global FATCA network will only expand. All offshore financial centres (like Liechtenstein or Panama) are already participating, except for Palau (if you wonder where that is, you may well wonder why you would hide your money there). You cannot hide your wealth any more unless you open a bank account in Afghanistan or Zimbabwe. 

The EU member states have agreed to go even further. Since 2014 they are exchanging other information that they have, e.g. through the tax returns you file there, or employers’ or pension office statements. Your taxman knows that you have:

• income from employment;

• director’s fees;

• pensions;

• life insurance products; 

• real estate and rental income. 

All this automatic exchange of information must ensure that you don't forget to report any income.

More from our 2023 income tax guide

1. When do I need to file my Belgian income tax return?
2. Online or on paper?
3. Filing online
4. Understanding the paper tax return
5. Checklist: What documents do you need?
6. The return in detail
7. Belgian income tax: There's nowhere to hide
8. A guide to cross-border taxation
9. Belgian income tax returns for families
10. Help! Where to get assistance with your tax return
11. Understanding your Belgian income tax bill
12. How do I appeal?

• This guide was written by Marc Quaghebeur, an international tax lawyer at Cabinet DAVID. It is a general introduction based on current understanding of the law. It is not to be taken as a suitable alternative for individual advice. If you have a question, you can contact him by clicking on his name.