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taxes for US/Italian citizen working remotely in the US living in Belgium
As the title suggests, I am an Italian Citizen, interested in moving to Belgium, working for an American Company remotely. I am a dual national of Italy/USA.
We would like to relocate when our lease is up this summer. I can convert to a contract position which would pay more while shedding unusable benefits. I did some quick calculations using this site:
https://www.belgiumtaxcalculator.com/
It would seem I'd be liable to pay 52% of my income in taxes (not including any employment my wife finds). However, I'd technically be working as a US 1099 independent contractor. So I did some reading and it appears I would need to be taxed first as a corporation in Belgium at a rate of 33%??!? And then after that my personal tax rate applied?
That's something like 66% effective tax rate on my income for a country that doesn't even have single payer healthcare. But on top of that, I also read that the Social Security rate could actually go as high as 22% instead of 14%. This could push me well over 70% effective tax rate.
Am I overlooking something big here, or is this more or less accurate? I'm willing to pay a lot more in taxes to live where I want to live, but that would be crippling to the point where it would make no sense for me to take the much higher paying job and I would do better (or the same) to take a much lower paying local job.
Jon
Yes, you're overlooking a hell of a lot.
Go and talk to an accountant.
As a U.S. citizen abroad and still subject to U.S. taxation and penalties that can be savage with foreign finances (local to you though!) you are walking a tax and penalty minefield and it's one that can easily ruin you if you get it wrong.
You need expensive specialist advice and you can only hope that they get it right, and we know that they frequently don't. However, generally taxes paid on wages in Belgium can be offset against U.S. taxes. Note though that the USA taxes more than just wages.
And even if you get it right, the good old USA continues to pass taxation laws without the slightest acknowledgement of U.S. citizens living abroad and with absolutely no regard whatsoever for the tax system they are living with and have planned for. And no regard for the fact they are also the citizens of the countries where they live.
The latest example of this can be found in the link below.
Section 965 transition tax, bye bye pension for those Americans running businesses overseas, even if they're actually also Canadians living in Canada with no intention of ever setting foot in the USA.
There's a reason for the explosion in renunciations of U.S. citizenship.
Again, see a specialist and don't forget your check book. (And maybe a lucky rabbits foot?).
There's also a very good forum on this site, and they can surely point you in the right direction.
http://isaacbrocksociety.ca/2018/03/17/part-iv-sec-965-transition-tax-co...
You don't actually say where you're coming from, but as you are already joint Italian / US citizen, you may be aware of some of the financial issues of being a US citizen abroad.
If you are coming here from the US, there are a number of things you need to do BEFORE you leave the US. Specifically with regards to existing savings / investments / pensions. You should speak to a US based financial advisor who deals with expatriate US citizens.
You should also consult with a good Belgian accountant BEFORE you arrive in Belgium. There are a variety of ways that you can set yourself up, and the correct method could potentially save you thousands in taxes. If you wait until after you arrive here, you will not have anywhere near as much flexibility in how you set up.
Hi Jon maybe speak to your company and see if they can offer any advice on special tax status, but that would require you them to have a branch-office here and that doesn’t sound like what you suggest. Also the goverment are keen on thise long term any more.
Tax is high here even on any income, you mention your spouse working but unless she is fluent in french and or flemish well paid work is hard to find and even very part time work is subject to higher tax rates here. Clearly you can choose to live in europe if you are Italian, but you really do need to understand the cost if living here in addition to your tax and insurance payments. Rental is high in many areas purchase tax on houses is incredibly high as are energy costs etc. Thats before you look at food, furniture, clothing are more expensive than USA.
I’m not saying don’t come inam saying look at all living expenses before you relocate.
Are not keen thar should read
You may well know U.S. citizens who have been abroad 30 years and even their entire lives, but the world changed when FATCA went live in 2014.
Yes, you are overlooking something.
It is no longer possible to live a normal secure life outside the United States and remain a U.S. citizen.
The link I showed you shows exactly why that is the case, and here's another.
http://isaacbrocksociety.ca/2018/02/23/comment-2-on-think-you-can-leave-...
