Federal budget reduces tax benefits for those with expat tax status 

Just hours before the Federal Prime Minister Alexander De Croo (Flemish liberal) is due to present his government budget for the coming year, the 7 parties that make up the federal coalition have reached an agreement. As late as Tuesday morning there was still discord between the socialist and liberal coalition partners on some issues. However, this has now been resolved and at around 9:30 am the news came that an agreement had been reached. 

The two issues that remained bones of contention up until the last minute were the exemption from social security contributions for the first person taken on by an employer. The Francophone liberals had issues with this, while the Francophone socialists had issues with relaxing the rules on evening and night work for those employed in e-commerce. 

The budget provides for savings totalling 2.4 billion euro. The budget deficit will be reduced from 5.4% this year to 3.1% in 2022. This will be possible thanks to savings made within federal government departments, an action plan to combat social and fiscal fraud, a tax on stocks and securities, higher excise duty on tobacco and a plan to get those on long-term sick leave back into work.

 

Incapacity for work

As part of the reform of rules relating to sick leave and incapacity for work, the requirement to provide a medical certificate from a doctor if you have been off work sick for just one day has been scrapped. However, those that are off work sick more than 3 times during a 12-month period will still have to provide a medical certificate.

There will be tougher sanctions for people on long-term sick leave that have not filled in a mandatory questionnaire concerning their medical condition within ten weeks or if they fail to follow through on what they have agreed with an employment coordinator.  

Employers with more than 50 staff will also be sanctioned if an excessive number of their employees are on sick leave. They will be fined 2.5% of their total quarterly wage mass. Health mutuals too face sanctioning if they fail to help enough of their members that are on long term sick leave find suitable employment. If this is found to be the case the level administrative allowance, they receive from the federal authorities will be cut. 

The regions will get extra cash from the Federal Government if they succeed in getting more people that are on sickness benefit back into work. 

Employment

The reform of the labour market is a priority for the Federal Government. In future it should be possible to work a full 38-hour working week spread over 4 days rather than 5. The government will first discuss this with the social partners before the measures takes effect. 

Interregional mobility whereby unemployed people from one region are encouraged to work in another region will be stimulated. The regions will also be given greater autonomy with regard to the labour market. 

The government also has a plan to address the issue of labour shortages in certain sectors. Those in employment will be given the right to 5 days’ training and a portion on an individual’s redundancy pay will be used for training. The issue of evening and night work within the e-commerce sector will be discussed together with the unions and employers’ federations at a later date.  

Tax and social security contributions

Professional sportspeople will have to pay a higher level of social security contributions. This should earn the Exchequer an extra 43 million euro. The “Special Social Security Contribution” that was introduced in the 1990’s to help balance the books sufficiently to allow Belgium to join the euro is to be phased out.

Also, as part of the fiscal measures, foreign executives and those with expat status will be given fewer tax benefits than is currently the case. Those of us with children will be able to deduct a greater amount of the money we spend on childcare against tax.

An embarkation tax will be introduced on flights to destinations that are less than 500 kilometres away. 

Energy

In order to address the issue of rising energy prices, the Federal Government will offer those with the lowest incomes a special reduction on their energy bills this winter. This comes in addition to them getting their energy cheaper than those on average and higher incomes thanks to the social tariff. Federal energy levies are also to be converted into excise duties. This should serve to reduce the price of energy bills.

For those that aren’t entitled to the social tariff and are having difficulty paying their energy bills a fund will be set up. 16 million euro will be put into the fund. This will go to local social services boards (OCMW). There, people that are in difficulty with regard to paying their energy bills will be able to ask for “Energy Assistance”. Meanwhile, energy supply companies with face stricter rules on the amount they can ask us to pay in advance.

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