News

The Belgian Council of Ministers of 28 March 2003 has approved a project of Law to enact an Amendment to the Tax Treaty of 11 April 1967 between Belgium and Germany for the avoidance of double taxation, which was signed on 5 November 2002.

The Belgian tax authorities have published information (*) with respect to the Amendment to the Tax Treaty, which they expect to be applicable on remuneration paid as from 1 January 2004. For the Amendment to be applicable as from 1/1/2004 Belgium and Germany must exchange forms of enactment in 2003 (by 30 November 2003 at the latest).

Appreciation

The amendment to the treaty abolishes the frontier worker system. A frontier worker residing in Belgium and working in Germany will no longer be taxed in Belgium but in Germany. Assuming that the Amendment is applicable as from 1/1/2004 the frontier worker should be aware that, in 2004 or 2005 he will have to pay the Belgian income tax liability relating to his income of 2003 to the Belgian State. This obligation will arise in a year when the taxpayer has already been subjected to German withholding taxes. Therefore in order to spread the payment of the Belgian and the German income tax liability, the Belgian tax authorities recommend that the frontier worker pays the estimated Belgian income tax liability for income year 2003 during 2003 itself by means of tax prepayments (versements anticipés/voorafbetalingen). Moreover the frontier worker will benefit from a tax bonification for the tax prepayments made.

In addition, the frontier worker should be aware that, although he will be taxable in Germany, he will still be liable to pay Belgian communal taxes on his income. On the other hand the income taxes payable in Germany on the German source employment income will be decreased by 8 per cent to compensate for the fact that Belgian communal taxes are payable.

(*)FR: http://news.hrservices.be?lk200304161
NL: http://news.hrservices.be?lk200304162