Belgium has entered into a double taxation agreement with each individual EU Member State. These different agreements stipulate, for each income category, which country (the source country of the pension or the country of residence of the pensioner) has the right to levy tax on that income.

As these agreements may vary from country to country, it is advisable to always consult the convention applicable to your situation. It is also important to consult the correct, most specific article within each convention. The type of pension (accrued as a result of employment either in the public sector or in the private sector) determines which country is entitled to levy tax. All agreements in force concluded by Belgium can be found here.

Belgium levies the tax as the source country

If, on the basis of the agreement with your country of residence, Belgium has the right to levy tax as the source country, the pension will be taxed in Belgium. As a result,

• you must submit a non-resident tax return.
• the body responsible for paying the pension must deduct withholding tax (unless the amount of the pension is too low).

Your country of residence levies tax

If, on the basis of the agreement with your country of residence, that country has the right to levy tax, the income will not be taxed in Belgium and there is no obligation to submit a non-resident tax return.

Please note! Exemption from submitting the non-resident tax return will be granted only if:

• all the conditions are met (see agreement itself) and
• you have the right to invoke the agreement. This is only the case if you are regarded as a tax resident by the tax administration of your country of residence. To this end, you must be able to present a certificate of residence (drawn up by the tax authorities of your country).

Tax exemption in Belgium is therefore always ‘subject to conditions’.

As a resident of Belgium, you must submit an annual personal income tax return. In the return, you must include all the income that you have received worldwide. Therefore, if you receive a pension from another EU Member State, you must also include that pension in your personal income tax return.

If, on the basis of the agreement with the other EU Member State, that country has the right to tax the pension, you can request exemption from taxation in the personal income tax return. You can find more information about this here.

The conventions specify the way in which Belgium, as the country of residence, must avoid double taxation in the article on the method for avoiding double taxation. It relates to exemption with a progression clause. In other words, the pension to be exempted is not subject to income tax, but the income itself is taken into account in determining the rate applicable to other income. Some agreements do, however, allow municipal tax to be charged on the pension to be exempted.

Periodic pension

If your pension (statutory or supplementary pension) is paid out periodically, your pension is jointly taxable at the progressive tax rate for personal income tax purposes.

This means that your pension is added to all other income taxable at the progressive rate. The rate of tax will then increase incrementally the higher your income is.

Personal income tax is calculated on all taxable income, even if some of it was realised or received abroad.

The progressive tax rates for 2021 income are:

	Income bracket Income 2022	Tax rate	Income bracket Income 2023
Bracket 1	From EUR 0.01 to EUR 13 870	25%	From EUR 0.01 to EUR 15 200
Bracket 2	From EUR 13 870 to EUR 24 480	40%	From EUR 15 200 to EUR 26 830
Bracket 3	From EUR 24 480 to EUR 42 370	45%	From EUR 26 830 to EUR 46 440
Bracket 4	More than EUR 42 370	50%	More than EUR 46 440

Example income 2022:
A resident has a taxable income of EUR 26 000.
Calculation of the resident’s basic tax:
25 % of 13.870 = 3.467.50
40 % of (24.480 – 13.870) = 4.244
45 % of (26.000 – 24.480) = 684
Basic tax = 3.467,50 + 4.244 + 684 = EUR 8 395.50

Everyone who is subject to personal income tax is entitled to a ‘tax-free allowance’. This means that a portion of your taxable income is not taxed. The tax-free allowance is EUR 9 270 (for 2022 income). (Income 2023: EUR 10.160). It may be higher depending on your personal situation (e.g. if you have any dependent children).

Your pension (statutory or supplementary pension) may also entitle you to a pension-related tax reduction.

Calculating this tax reduction is technically complex. The reduction consists of two elements: a basic reduction of EUR 1 886.89 and an additional reduction of EUR 388.21 for 2022 income. (Income 2023: EUR 2 067.84 and EUR 428.16). The additional reduction is only granted if your taxable income for 2021 is lower than EUR 24 470 for 2022 income. (Income 2023: EUR 26 820). Both the basic reduction and additional reduction may be lowered further depending on your other income.

Lastly, in certain cases you may also be entitled to a tax reduction if you have a foreign pension: your foreign pension (or a portion thereof) may be exempted or subject to a lower rate of tax in Belgium.

If you meet the conditions to benefit from an exemption on the basis of the double-taxation treaty, your foreign pension will not be taxed. However, this exempted pension will be taken into account to calculate the taxes on your other income.

Pension capital

If your pension is paid out as a lump sum, in principle that pension capital is taxable at a separate rate.

The type of pension, how it was built up (employer’s contributions, personal contributions) and the time when and circumstances under which the pension capital is paid out are considered together to determine the applicable tax rate (8%, 10%, 16.5%, 18%, 20%, 33% or the progressive rate).

In some cases, however, pension capital, or a portion of the capital, is converted into a fictitious annuity. This fictitious annuity is jointly taxable at the progressive tax rate for 10 or 13 successive taxable periods. This applies, for example, to capital in the form of a payment intended to compensate fully or partially for a permanent loss of earned income, or capital paid out at a favourable moment, as referred to in law, under individually concluded life insurance contracts (up to the amount used for the reconstitution or securing of a mortgage loan).