Belgian Arizona coalition agreement: Employee tax related measures

Compensation and benefits

The following tax and social security measures regarding compensation and benefits are announced:

• Starting in 2027, net wages for everyone working will increase. This will be achieved by increasing the tax-free allowance, lowering the special social security contribution, and strengthening the work bonus.
• The copyright tax regime can once again apply to income from the transfer or licensing of computer programs
• Employer social security contributions will be capped at the prime minister’s salary as the threshold amount (for 2022, this was €275,678.70). Until now, no such cap existed.
• The flex reward system will be regulated as the tax reform aims to make it more attractive to reward employees with monetary compensation rather than benefits in kind. Gross salary exchange will also be limited to a maximum of 20% of the annual gross salary. However, this harmonization should not increase the tax burden for either employers or employees.
• A framework for costs proper to the employer/company will be introduced as soon as possible.
• Existing collective bonus systems (such as CAO 90 and profit premium) will be simplified and harmonized. However, this harmonization should not increase the tax burden for either employers or employees.
• For meal vouchers, the maximum employer contribution will increase by a maximum of two times €2. Other vouchers (eco vouchers, cultural vouchers, etc.) will be phased out.
• Director’s remuneration:
  • The minimum remuneration threshold of 45,000 EUR for company directors (to benefit from 20% corporate tax rate on the first 100,000 EUR of profit) will be raised to 50,000 EUR and will henceforth be indexed.
  • Also, a maximum of 20% of the annual gross pay may consist of benefits in kind.

Wage withholding tax exemption

The current wage withholding tax exemption regimes will remain in place. The government aims to maximize legal certainty and stability, as follows:

• After the temporary shift work regime (so-called “BIS variant”) expires on 1 January 2027, a (potentially alternative) system will be introduced ensuring the continuation of the exemption’s benefit and its foundations.
• As part of possible labor law modernization, night work will apply from midnight instead of 8 p.m., as is currently the case. The government will assess whether this change requires adjustments to the wage withholding tax exemption for night work.
• Clarifications and improvements will be made to reduce legal uncertainty regarding the R&D wage withholding tax exemption, particularly for universities, scientific research funds, etc. A covenant will be established between the relevant federal administrations, outlining clear criteria for cooperation.
• A spending review will be conducted to evaluate the effectiveness of the various wage withholding tax exemption regimes.

Enhancement of the Belgian expat status

The benefits of the Belgian expat status will be enhanced. Key modifications include:

• Increasing the tax-free reimbursement from 30% to 35%.
• Removing the annual €90,000 cap. As long as the tax-free allowance does not exceed 35% of total gross annual remuneration, it can be applied without limitation.

Also, the minimum gross remuneration threshold will be lowered from €75,000 to €70,000.

International mobility of employees

As concerns cross-border mobility of employees, the following measures are relevant:

• The tax authorities and the social security administration are exploring how tax audits on the 183-day rule can be improved by using data available from the social security administration (such as A1 certificates, LIMOSA declarations, etc.).
• The government will take measures to reduce the tax administrative burden of cross-border workers. In addition, in consultation with neighboring countries, it is actively pursuing measures to simplify the tax situation of cross-border workers within a budget-neutral framework.

Supplementary pensions and the 80%-rule

In relation to supplementary pensions, the following measures are announced:

• Harmonization and simplification of the different second pension pillar schemes for self-employed.
• Reform of the 80%-rule.
• Facilitation of rules on pension accrual for the self-employed along with an increase in the contribution rate.

Company cars and mobility budget

Regarding mobility, the agreement provides for the following measures:

• Simplifying the rules on the limitation of car expense deductions.
• Longer transition period of tax deductibility of hybrid cars
  • The 75% maximum deduction rate will be maintained until the end of 2027.
    • From 2028, the maximum deduction rate will be reduced to 65%.
    • From 2029, the maximum deduction rate will be further reduced to 57.5%.
      (For hybrid cars with CO₂ emissions below 50 g/km, a higher deduction rate may apply, in line with the applicable legal formula.)
  • Fuel costs remain 50% deductible until the end of 2027.

• Reform of the mobility budget, expanding it to apply to all.

We will continue to monitor any further developments and will communicate any relevant changes