Tax hikes and less top-up for better-off wage earners and benefit claimants

There will be no across the board increase in VAT. Instead VAT will be increased on certain products and services, for example airline tickets. The changes to VAT are expected to raise an additional 1.5 billion euro for the federal coffers.

The budget as a whole is expected to raise an additional 9.2 billion euro/per annum (in savings and additional income) for the federal government coffers by 2029.

An increase in the level of duty levied on gas will mean that the price of gas in Belgium will gradually increase. Meanwhile, duty on electricity will gradually be reduced and this will mean that electricity should become cheaper. 

The budget agreement also contains modifications to the so-called “trigger index mechanism” that sees wages increase in line with inflation. These changes will apply in 2026 and 2028. While the majority of people won’t be affected by the measure, those on salaries of 4,000 euro per month and above will only see the first 4,000 euro of their wage increase to match inflation.

The minimum wage will increase by 50 euro per month from next April for someone that is in full time employment. 

The salaries of ministers and MPs will be frozen at their current level for the remainder of the legislature.

It is hoped that measures intended to get those that are on long-term sick leave back to work will generate 1.9 billion euro in savings on benefits and revenue from social security contributions and tax paid by those that return to work.

A doubling in the level of tax on income from bonds, securities, investment funds, shares, etc. for those that have more than 1 million euro invested in these products will raise additional income. Meanwhile, a new banking tax is expect to raise 150 million euro/annum.  

A new parcel tax of 2 euro/parcel will be levied on parcels that are sent to Belgium from outside the European Union.  

Not only gas getting pricier

According to energy expert Ruben Baetens, for an average Flemish household the changes amount to an annual decrease of 34 euros for electricity and an increase of 45 euros for gas.

Excise duties on petrol and diesel will also increase. This increase starts in 2027, and is going up 50 million euros a year.

Households that use fossil fuels for heating and driving face two increases. If you heat your home with electricity and drive an electric car, households will have to pay less.

Belgium taxes "fun"

There may be no across the board increase in sales tax VAT, but certain products and services will become more expensive. A “harmonised” VAT rate of 12 per cent for hotels and campsites, takeaway meals, non-alcoholic beverages in the hospitality industry and “entertainment” is being introduced. For most categories, this means an increase, but non-alcoholic drinks in pubs, for example, will become cheaper because they are currently subject to a rate of 21 per cent. It is not yet clear what falls under the category of “entertainment”, but it is clear that cinema and music festival tickets, among other things, will become more expensive. They are currently taxed at 6 per cent.

2 million Flemish households affected, only 700,000 in Wallonia

The figures had barely been announced when political reactions started coming in. The increase in excise duties on gas is set to hit the Flemish harder than people in Wallonia, it’s argued.

According to figures from the Flemish Utilities Regulator (VNR), there were 2,060,632 private gas connections in Flanders at the end of 2024. In Wallonia, according to Cwape, the Walloon counterpart of the VNR, there were 713,428 at the end of 2023. That is more than 1.3 million fewer connections!