Where Belgium is the
home country, the exemption is not complete. The foreign professional
income is not taxed as such, but is added to the taxable basis to
determine the tax rate applicable to income which is taxable in Belgium.
This mechanism is known as the “progression reserve”.
If the professional activity is exercised in a state with which Belgium
(being the residence state) has not concluded a double tax treaty,
double taxation will in general occur. Belgian domestic law somewhat
moderates the double tax burden by reducing Belgian tax on the foreign
professional income by half.
It follows that the existence of a double tax treaty is a condition
sine qua non for a salary split. Furthermore, certain tax treaties
provide for a frontier workers’ regime (Belgium-France and Belgium-Germany).
Employees living in the frontier zone of one state and working in
the frontier zone of the other state remain fully taxable in the residence
state, and cannot benefit from possible tax advantages of a split
employment.
