Now that 2005 is drawing to a close, this Headline highlights some personal income tax related changes that will become effective from income year 2006. The HRS Headline team also seizes this opportunity to wish you all the best for 2006.

Non-resident tax returns
The Royal Decree specifying the model for the 2004 income year non-resident tax return is published in the Official Gazette today (http://news.hrservices.be?lk200512231).
The due date is not yet known, but, based on informal contacts we have had with the tax authorities, it will presumably be 24 February 2006.

Innovations incentive
As of 2006, businesses may reward their most inventive staff with a bonus exempted from social security contributions (employer’s and employee’s) and personal income taxes over a period of one year. In order to benefit from this incentive, the company only has to inform the Federal Public Service for Economic Affairs of the criteria and procedure used in selecting eligible projects. Internal communication is also required as well as reporting towards the Belgian social security authorities. The bonus may be equal to up to one month’s gross salary. The number of beneficiaries however is limited to 10% of the staff.

New wage withholding tax scale as from 1 January 2006
Although the new Royal Decree amending the wage withholding tax section of the Royal Decree implementing the Income Tax Code has not yet been published in the official gazette (it will be published in the 28 December issue of the official gazette), the tax authorities have already released their “Key formula for calculating the wage withholding tax on salary and pension payments” applicable to income paid or granted as from 1 January 2006. It can be found on their web site:
FR: http://news.hrservices.be?lk200512232
NL: http://news.hrservices.be?lk200512233

Programme Act
The new Programme Act will introduce several income tax changes. As an example, a new legal regularisation process for unreported income will be available as from 1 January 2006. The Programme Act however still has to be published in the official gazette to enter into force.

EU Savings Directive
It is now confirmed that European withholding tax of 15% has to be levied on Belgian-source interest payments made (as from 1 July 2005) to foreign executives working in Belgium under the special tax status, if their country of origin is within the EU.