236 days after the federal elections of 9 June 2024, the new Belgian federal government on 31 January 2025 unveiled its coalition agreement, outlining the policy directions for the upcoming legislative period through 2029. None of the proposed measures included in the agreement have been included in a draft bill, and some may not be enacted into law.
The most significant changes concerning taxation and employment legislation are summarised below.
Special Tax Regime for Inbound Taxpayers and Researchers
The new federal government agreement aims to attract and retain international talent by enhancing the Belgian special tax regime for inbound taxpayers and researchers, and to rejuvenate its appeal to both existing and potential new investors.
Under the revised special tax regime, the federal government will make several key adjustments. First, the tax-free allowance for expatriates would increase from 30% to 35%. Moreover, the existing salary cap of EUR 90,000 would be eliminated, and the minimum gross salary threshold of EUR 75,000 would be reduced to EUR 70,000. This last adjustment is designed to make Belgium more accessible to a wider array of skilled professionals and to make it easier for startups and smaller enterprises to attract and retain international expertise.
Increase of Net Employment Remuneration
Starting in 2027, Belgium's new federal government plans to increase the net salaries of all employed individuals as part of a broader effort to make employment more attractive. The strategy involves raising the tax-free allowance on employment income, reducing the special social security contribution, and enhancing the social work bonus, thereby ensuring that the financial gap between employed individuals and the unemployed reaches at least EUR 500 per month. These changes are designed to boost consumer spending, reduce unemployment, and enhance the nation’s overall economic vitality.
In addition, the Belgian federal government is set to streamline collective bonus systems like CAO-90 bonuses and profit premiums, making it more attractive for employers to offer cash rewards rather than benefits in kind. This simplification aims to harmonise the application of various bonus regimes without increasing the tax burden for either employers or employees.
Automatic Wage Indexations and Minimum Wages Increase
The principle of automatic wage indexation will remain intact to protect employee wages, ensuring that workers can maintain their standard of living even as the prices of goods and services rise.
The government has called on social partners to develop a comprehensive advisory report by December 31, 2026, on reforming the wage law and the system of automatic wage indexation. This request emphasises the need to balance the competitiveness of entrepreneurs with employees’ purchasing power.
In anticipation of advice on a fundamental reform of automatic wage indexation and wage norms, measures will be taken to increase minimum wages.
Costs Proper to the Employer
The federal government has announced plans to introduce a framework specifically addressing costs proper to the employer. The reimbursement of these costs proper to the employer is a widespread practice: employers compensate employees on a lump-sum basis for expenses they incur but that are related to their professional activity; for example, the costs related to organizing a home office for telework, the use of personal internet service for professional purposes, and representation costs. This framework should be established as soon as possible with the goal of providing more clarity and uniformity.
Meal Vouchers, Sports and Culture Vouchers, and Eco Vouchers
To enhance employees’ purchasing power, the Belgian government has announced plans to instruct social partners to increase the legally allowed maximum contribution for meal vouchers by EUR 2 twice during the upcoming legislative term, for a maximum value of EUR 12 from the current EUR 8 per meal voucher.. Additionally, the deductibility of the employer's cost will be correspondingly increased, making it more financially attractive for employers to offer these vouchers.
The government has decided to phase out other types of vouchers, such as eco vouchers and culture vouchers, in consultation with social partners.
Broader Transitional Regime for Hybrid Cars
The government plans to simplify the rules on the limitation of car expense deductions to reduce the administrative burden. Recognizing that electric company cars are not a viable option for everyone, the federal government will provide an extended transition period for hybrid vehicles.
The maximum deduction rate for hybrid company cars will remain at 75% until the end of 2027. It will then decrease to 65% in 2028 and 57.5% in 2029. These deduction rates will apply for the entire duration of use of the vehicle by the same owner/lessee. The fuel costs for hybrids will remain 50% deductible until the end of 2027. The costs for electric consumption in hybrids will be deductible at the same rate as those for electric models.
The government also plans to provide an exception to this limited deductibility for hybrid cars emitting a maximum of 50 grams/km of CO2. If the percentage according to the deduction formula is higher than 75%, the higher percentage may be applied until the end of 2027.
These new rules, to a certain extent, reverse the decisions made by the previous government.
Mobility Budget
The existing mobility budget regime will be reformed into a mobility budget accessible to all employees. This reformed mobility budget starts from the provision by the employer of a budget that can be spent on different modes of transportation (car, public transportation, bikes, etc.). The valuation of these alternatives is to be based on their true (economic) value.
The restructured mobility budget will replace the current arrangement whereby employers contribute to employees’ commuting and private travel expenses. This change aims to simplify the complex existing system, making it easier for both employers and employees to manage transportation benefits. To enhance the appeal of the new system, it will be treated favourably under tax and parafiscal regulations. Additionally, the reform includes transition measures to ensure a smooth implementation, accommodating the needs of all stakeholders involved.
Extension of Copyright Tax Regime
The government plans to expand the scope of the tax regime for copyrights to eliminate the current discrimination between digital (IT) professionals (which currently cannot benefit from the regime) and other professionals. The reduced withholding tax rate of 15% will remain applicable under this copyright tax regime. This extension of the current regime also cancels out some of the measures adopted by the previous government.
Capital Gains Tax or “Solidarity Contribution”
The government plans to introduce a capital gains tax or solidarity contribution of 10% on the future realised gains on financial assets. This tax targets profits realised from financial assets, including cryptocurrencies, accumulated from the moment the solidarity contribution is implemented. Gains accumulated before the introduction of this solidarity contribution will be exempt, so that historical gains will not be subjected to the new tax.
Provisions will also be made for the deductibility of losses within the same category of income during the fiscal year, but these may not be carried forward to subsequent years. To protect small investors, the capital gains tax will include a basic exemption of EUR 10,000, ensuring that smaller gains are not subjected to this tax. This exemption threshold will be indexed annually to adjust for inflation and economic conditions.
Carried Interest Regime
In a strategic move to enhance Belgium’s attractiveness for investment fund activities, the government has announced plans to establish a specific and competitive tax regime for carried interest.
The new carried interest regime will feature a tax rate capped at 30%, making it competitive compared to existing regimes in neighbouring countries. This tax structure is designed to attract investment fund managers and investors by offering a favourable fiscal environment for the distribution of profits earned from fund investments.
Frontier Workers
The government will take steps to reduce the fiscal administrative burden faced by frontier workers. In addition, in consultation with neighbouring countries, efforts will be made to implement measures within a budget-neutral framework that simplify the tax situation for these frontier workers. This initiative aims to streamline processes and reduce complexities that often arise from working across national borders, ultimately making it easier for frontier workers to manage their tax obligations efficiently.
Enhancing Tax Audits
The Belgian tax authorities and the National Social Security Office (NSSO) are planning to collaborate to enhance the fiscal controls surrounding the 183-day rule, which relates to the taxation of individuals in a cross-border employment situation. By leveraging data available through the NSSO, the Belgian tax authorities plan to streamline the verification process and ensure more accurate compliance with tax obligations.
The government points out the importance of developing a mechanism for the cross-border collection of social contributions within Europe. This effort involves creating a European framework that facilitates the efficient and effective recovery of social security payments across national borders, thereby ensuring that workers and employers fulfill their financial responsibilities regardless of location.
Next Steps
Some measures in the published coalition agreement were vague and abstractly formulated, and any proposed measures may be subject to further negotiation and amendment. Taxpayers should continue to monitor developments as the measures are implemented in Belgian legislation. However, for questions with respect to the items discussed, please reach out to your usual tax consultant within BDO or the author of this article.
Aaron Mazzier
BDO in Belgium