The Belgian government last night reached agreement on major reforms to the tax system. What does the accord mean for you? The package includes the following measures on tax:
The reforms amount to €4.4 billion in measures to improve spending power for people in work and business by 2029. The government wants to reduce the tax burden on working people with the focus on families and low incomes.
The tax-free allowance, the portion of wages on which no personal income tax is paid, will be increased from 10,910 euros to 15,300 euros by 2029. This will be done in stages, with a first step in 2026. It’s low-to-medium wage earners who will find more in their pay packet after the reforms
By the end of this parliament in 2029, tax cuts should give people in work an extra 100 euros net per month.
For singles, the special social security contribution will be reduced. This measure will give a single person up to 365-euro net extra per year.
For the lowest incomes, the so-called work bonus, a reduction in social security contributions on wages, will be increased. By 2029, the gross amount will equal the net minimum wage.
The tax break awarded on account of a first dependent child will be increased. That will rise from €1,980 to €2,650 in 2029. In the longer term, an identical tax break should be awarded for every child.
Pensioners who continue to work after retirement will only pay a maximum tax rate of 33 per cent instead of progressive tax rates as high as 50 per cent today.
The marriage quotient, a system that allows part of one partner's income to be shifted to the income of the other, will be phased out. The system was advantageous when one of the partners has no or a very low income from work. The marriage quotient reduces the family tax bill but will now disappear.
The self-employed without a company of their own will be able to enjoy a new business tax break worth €650, rising to €900 in 2029.
The tax penalty due on account of insufficient prepayment will be abolished.
For the IT sector, copyrights will become possible once again.
Belgium is introducing a so-called “Vinted exemption” for people who occasionally sell something online. Sellers with total sales no higher than €2,000 will no longer risk a possible 33 per cent tax being slapped on their sales.