Context

Foreign executives who benefit from the special tax regime for expatriates described by the administrative circular of 8 August 1983, are not taxed on the portion of their remuneration relating to services rendered outside Belgium.

Provided no other information is available to determine the portion of the remuneration relating to services rendered outside Belgium, the exclusion for foreign services is determined by multiplying the annual taxable income with the foreign travel exclusion percentage. The travel exclusion percentage is the result of the following formula:

travel exclusion = the number of working days spent abroad divided by the total working days of the period.

News

A case has been appealed to the Court of Liège / Luik in which a foreign executive assigned to Belgium remained for 35% on the US payroll in order to remunerate him for the activities that he performed from time to time in the US on behalf of the US mother company. The remaining 65% of his remuneration was paid by the Belgian daughter company. The Court of Liège / Luik decided that, since the split-payroll has been based on objective criteria and good faith, the remuneration paid via the US payroll (35%) must be excluded from the taxable remuneration first. The foreign travel exclusion by reason of workdays spent outside Belgium (but not in the US) is then applied on the remaining 65% paid via the Belgian payroll, in order to determine the executive’s taxable remuneration in Belgium.

This decision rejects the position of the tax authorities to exclusively apply the travel exclusion method.