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Tax Status
My wife is employed here in Belgium under a 'special non-resident tax status'. We have been resident for 8 years in Belgium, our children were born and raised here and we have no significant links (i.e. financially) to our home country other than our extended family.
My wife's employer demanded her to take on this status when she commenced employment as we now know that it clearly has significant benefits to her employer. Our tax returns are then done yearly by a financial institution of her company's choice!
Unfortunately in our yearly tax returns, the company receives half the tax back from our returns.
My question is to anyone in the know on 'special non-resident status', would we be much better off through not having this status attached?
Thanking you in advance for any information.
Sounds dodgy as hell.
However, googling "special non-resident tax status" throws up a few things which you ought to maybe read. Like:
http://www.expatica.com/be/finance/Tax-rulings-which-benefit-expats-in-B...
This used to be really common but the Belgium government are now beginning to watch these type of contracts, last year they came into my husbands company which is a big multi national had many of these contracts looked at by the tax man, cause a big issue because the company wouldn't say what they would do if people got hit with a big bill. I think in the end only a couple of people were affected but stressful otherwise I'm not clear what rights your wife has to ask for her status to be changed
Nothing remotely dodgy about being non resident for tax here, also known as expat tax status! It simply means you only pay tax in Belgium on Belgium sourced income. Your wife should pay income tax at roughly the same rate as her Belgian colleagues but should receive an annual allowance as a foreign manager. That rate varies depending on what she does for a living and seniority! Basic allowance is about 11,500€ a year but it can go up to almost 30,000€ I think! There are also other things an employer can offer certain employees that may have some tax advantages.
It's also normal for a third party to complete your tax returns and for your wife's employers to be responsible for them.
I am not sure what you mean about her employer getting half the tax back each year. Do you want to elaborate?
I would say however that you only having extended family ties back home does make your status a wee bit tenuous. Something to think about should government attitude change towards expats.
It is advantageous for companies to bring people here and obtain this tax status, and it's something the government have been encouraging for years. Remember it costs a huge amount of money to employ people here. It's at least double the employees gross package once they start earning enough to also receive nice perks like cars etc.
If your wife works for a decent company she should be given a free annual consultation with the company that prepares the tax returns so you can get advice. Is this not the case?
Only a Belgian tax expert can tell you if you would be better off being resident here for all tax. I know there are some benefits that "expats" are excluded from but you should maybe consider how her employer would react to the extra costs of employing her as well.
Until 2013 employees with special tax status were much better off.
There were few changes made to this exp tax status.
https://news.pwc.be/6th-state-reform-belgian-expatriate-tax/
You will be much better off, when your wife travels (outside BE) less than 25% of her working days in a year.
You can ask for a consultation with your tax consultant- normally this is free when you work for large multinationals.
You can also do a standard BE tax calculation with your wife's income and compare the difference to see whether you are better off with exp tax status.
Overall you will be slightly better off than standard BE employee contract. You get a tax free allowance of 11,500 minimum to a max of 29K (if you work in R&D centre).
