Tax measures: Personal Income Tax

• VVPR bis regime/liquidation reserve 

  
  

  VVPR bis-regime

  
  Dividends distributed by companies that are 'small' can, under certain conditions, benefit from a reduced withholding tax rate instead of the normal 30% rate. 
  
  The favourable VVPR bis regime only applies to new shares issued as from 1 July 2013, either at the time of incorporation of the company or at the time of a capital increase. The shares must be fully paid and registered. Subject to certain exceptions, the shares may not be transferred after contribution.
  
  Provided that all conditions are met, the VVPR bis regime provides that small companies can pay beneficial dividends as follows:
  - If the distribution takes place after a waiting period of three years at a withholding tax rate of 20%, provided that the contributions were made no later than 31 December 2025 (Act of 18 July 2025, Belgian Gazette, 29 July 2025).    
  - If the dividend is paid only after four years or later, the rate drops further to 15%.
  
  The Program Act of 30 May 2026 provides that the rate will be increased from 15% to 18% for all payments made as from the first day of the month following the month in which the Act is published in the Belgian Official Gazette, regardless of the date of contribution.
  
  
  

  Liquidation reserve
  

  
  Small companies also have the option to transfer part of their taxed profits to a liquidation reserve. At the time of this entry, there is an anticipatory levy of 10%.
   
  Upon subsequent distribution of this liquidation reserve, additional withholding tax is due, the rate of which is determined by the time of distribution, which will be established as follows:
  - If the reserve is distributed as a dividend after at least 5 years, a reduced rate of 5% applies.
  - For reserves established no later than 30 December 2025, the rate is 20%, 6.5%, or 5% if the distribution occurs, respectively, before the expiration of a 3-year period, between 3 and 5 years, or after 5 years; 
  - For reserves formed on or after 31 December 2025, the rate is 30% or 9.8% if the distribution occurs before or after the expiration of a three-year period, respectively. 
  
  The latest amendments made by the Program Act of 18 July 2025 ensure greater harmonization between the two regimes.
  
  
  

• Carried interest

  A specific and competitive carried interest regime has been introduced to stimulate funds activity in Belgium. This regime will provide a maximum tax rate of 25% on income from movable assets and will not impact existing plans.  
  
  For more information we refer to our detailed article. 
  
  
  

• Securities tax

  
  The budget agreement provides an increase in the securities tax rate. It would rise to 0.30% for securities accounts with an average value exceeding €1,000,000. In addition the tax authorities will gain access to the CAP for the application and monitoring of the securities tax, effective 1 December 2026.  
  
  
  

• Copyright

  
  Income from copyrights is taxed at a favorable withholding tax rate of 15% up to an amount of 77,220 euros (indexed amount for the 2026 tax year). In addition, a lump-sum cost deduction currently applies, calculated on a tiered basis: 
  - 50% on the first bracket up to 20,950 euros
  - 25% on the next bracket from 20,590 euros to 41,180 euros
  - No deduction on the portion above 41,180 euros
  
  The Program Act of 30 May 2026 amends this tax regime retroactively as of January 1, 2026. From that date, the lump-sum cost deduction will only apply to taxpayers who hold an “ordinary” or “plus” artwork certificate. In addition, the cost deduction will only be applicable to the activities covered by the certificate. If the taxpayer also receives copyright income relating to a non-recognized activity, the lump cost deduction cannot be applied to the non-recognized activity. Holders of a “starter” artwork certificate or taxpayers who do not hold an artwork certificate will no longer be able to apply for the lump-sum expense deduction. However, they may still choose to prove their actual expenses. 
  
  

  The above changes take effect as of January 1, 2026, and apply to all income paid or awarded from that date. 

  For the purposes of withholding tax, however, a transitional arrangement applies, whereby the new restrictions will only take effect on the tenth day following the publication of the Program Law in the Belgian Official Gazette.
  
  Until then, the current method of calculating withholding tax remains in effect.
  
  Finally, the copyright tax regime will be extended to software developers, which will once again be eligible for this regime. However, they will not be able to apply the lump-sum cost deduction since they will probably not have an artwork certificate.
  
  Note that the extension to the IT sector takes effect from 1 January 2026 and applies to income earned or awarded from 1 January onwards.

• Abolition of federal interest deduction for both future and existing loans for a property other than the own proper dwelling as January 1, 2025
  
  
• Abolishment of the following tax benefits linked to real estate:
  • Federal reduction for additional interest linked to a property other than the own proper dwelling 
  • Federal housing bonus (for a property other than the own proper dwelling)
  • Increased reduction federal savings building
  • Additional reduction that can apply in the case of a joint assessment for loans dating from before 1 January 1989
  • Reduction for interest on green loans 
  • Reduction for an energy-efficient home

To ensure that working taxpayers have more disposable income, the following changes are being implemented: 

• Meal vouchers  

  • To increase the net purchasing power of employees, the maximum contribution by employer to the meal voucher will be increased from EUR 6.91 to EUR 8.91.  
  • Only if an employer chooses to increase the contribution to EUR 8.91 the tax-deductible amount will be doubled to EUR 4 per meal voucher.  
  • These new amounts will apply to meal vouchers granted from 1 January 2026 
    
    
    

• Tax work bonus  

  • Employees with a low wage receive a reduction in their social security contributions through the work bonus. The work bonus indirectly increases the taxable professional income, however, this is compensated by a tax reduction through the fiscal work bonus.
  • Employees with a low reference monthly wage (gross wage between 2.880,32  EUR and  3.336.88 EUR, wage brackets valid since 1 April 2026) currently enjoy a reduction of their withholding taxes amounting to 33,14% calculated on the social work bonus. The reduction will be increased to 35% from assessment year 2029.   
  • Employees with a very low reference monthly wage (gross wage lower than 2.880,32 EUR, wage bracket valid from 1 April 2026) currently enjoy a reduction of their withholding taxes amounting to 52,54% calculated on the social work bonus. The reduction will be increased to 72% from assessment year 2030. 
        
    
    

• Reform Special contribution social security

  • The special contribution social security is currently calculated on the joint taxable income and is financed partly via the social security (pre-financing via deduction via payroll) and partly via the personal income tax return (final settlement)
  • Calculation will be per taxpayer and no longer based on the joint taxable income 
  • Maximum contribution will be halved 
  • Lower income limit will be increased and the applicable percentage associated with this bracket will be reduced 
  • Planned entry into force: 1 January 2028
  • Amendments will also affect the amount of BBSZ withheld via the payroll  
    
    
    

• Overtime

  • Recovery/ “ Relance” overtime 
    • Number of voluntary overtime hours will be increased to 360 hours on an annual basis from 1 April 2026 
    • 240 of the voluntary overtime hours can be exempted from income tax provided no overtime pay (“overwerktoeslag”)is granted and the remuneration for the exempt voluntary overtime hours is reported on the tax assessment notice. 
  • Tax-friendly overtime with overtime pay 
    • Temporary increase from 130 to 180 hours of overtime with overtime pay becomes permanent and applies to overtime performed as of 1 January 2026 and applies to all sectors 
    • Increase to 280 overtime hours for road and railway works and 360 overtime hours for the hotel sector 
      
      
      

• Tax credit for own resources for self-employed

  • Natural persons doing business (without a company) can get a tax credit in case of an increase in equity. Until recently, the tax benefit was 10% with an absolute maximum of 3.750 EUR. From 1 January 2025, the tax benefit will be increased to 20% with an absolute maximum of EUR 7.500.
    
    
    

• Introduction of a new deduction for the self-employed from tax year 2028

  • A tax deduction will be introduced for the self-employed, both in their main activity and in a secondary activity, allowing them to deduct a first bracket from their profit and income (after deduction of professional expenses and social contributions), the amount of which will be increased from tax year 2030.
    
    
    

• Special tax regime for inbound taxpayers and/or researchers 

  • The regime for foreign taxpayers will be adjusted to attract and retain international talent in Belgium. The following three points will be adjusted:
    • the share of costs proper to the employer will be increased from 30% to 35% calculated on the gross remuneration, 
    • Abolishment of the ceiling of EUR 90,000 for the reimbursement of costs proper to the employer, and  
    • lowering the required minimum gross salary from EUR 75,000 to EUR 70,000 (not applicable for researchers). 
      
      The changes to the current regime take effect from 1 January 2025. Consequently, they can be applied to remuneration paid or granted from 1 January 2025. Anyone who, as a result of that last amendment, now qualifies for the scheme may apply for the status retroactively.  
      
      For more information, please refer to our article on the subject.  
      
      

• Flexi -jobs

  • The tax exemption for non-retired individuals is increased to EUR 18.000 as of income year 2025 (= indexed amount, base amount is EUR 8.955) ,the amount will be indexed on annual basis. 
    
    
    

• Remunerations of young athletes 

  • Already in 2018, the minimum age for professional footballers was lowered from 16 years to 15 years provided that the first two years of secondary education were completed (= end of full-time compulsory education)
  • The minimum age in the ITC for the application of the separate tax rate of 16.5% that applies to the first bracket of income will also be adjusted to 15 years.  
  • Applicable to all remuneration paid or granted from 1 January 2026 
    
    
    

• Separate tax rate applicable to retired tax payers who earn an additional income 

  • Retirees with a full career of 45 years or after reaching the legal retirement age who are still engaged in a professional activity (not via flexi-job status) will be subject to a separate tax rate of 33% on the income received from this activity.
  • Consequence: the income will no longer be taxed at the progressive tax rates unless it would be more beneficial.
  • However, they will be excluded from the overtime system.
  • This rule enters into force on 31 December 2026 and applies to all remuneration granted from 1 January 2027 onwards and to overtime worked from 1 January 2027 onwards.
      
    
    

• Living wage & equivalent living wage 

  • Living wage and equivalent living wage granted from 1 January 2026 will be subject to personal income tax as replacement income so that all income received by a taxpayer is taken into account when granting tax benefits
  • For the purposes of tax relief for replacement income and pensions, the (equivalent) living wage will be considered a separate income category with its own tax relief. The tax relief will also be further phased out (see further on tax-free allowance).  
    
    
    

• Limitation of lump-sum value benefits in kind 

  • The gross salary may consist of benefits in kind that are valued on a lump-sum basis for a maximum of 20% of the annual gross salary. 
  • If exceeded, a distinction should be made between: 
    • Employees + directors of associations taxed as a legal entity  : separate levy of 7.5% for excess benefits due by the employer, which is not tax deductible  
    • Company directors: loss of reduced corporate income tax rate  
  • Calculation should be done by category 
  • Social benefits should not be taken into account for this exercise 
  • Entry into force: effective on 29 July 2026 (i.e., the date of publication in the Belgian Official Gazette) and applicable as from assessment year 2027
    
    

• Deductibility of car expenses, the following changes will be implemented:

  • Cars running on fossil fuel only 
    The following formula applies for all car expenses running on fuel only: : 120% - (0,5% x 1 (diesel) or 0,95 (other cars) x CO2 emission), so with coefficient of 0,95 or 1 
    
    

    Date of purchase, lease or hire	Tax deduction	Limits
    Until 01/07/2023 ("grandfathering")	Gram formula with coefficient, full duration	Max. 100% and min. 50% of 40% if emissions ≥ 200 g or unknown
    Between 01/07/2023 and 31/12/2025 ("phase-out scenario")	Gram formula with coefficient, full duration	Assessment year 2026 (taxable from 01/01/2025): max. 75%, no minimum Assessment year 2027 (taxable from 01/01/2026): max. 50%, no minimum Assessment year 2028 (taxable from 01/01/2027): max. 25%, no minimum Assessment year 2029 (taxable from 01/01/2028): 0%
    From 01/01/2026	0%	Not applicable

    
    
    
    • Purchase, hire or lease before 1 January 2018: at least 75% deductible, but from the 2027 tax year onwards, the 75% will be reduced by 5% per year to reach a new minimum of 50% in the 2031 tax year:
      
      
  • Hybrid cars, costs must be divided into three categories:
    • Fuel costs (diesel –petrol)
      • Hybrid vehicles purchased/leased/rented between 1 July 2023 and 31 December 2025: deduction capped at 50% for tax year 2027, then further limited to 25% in the 2028 tax year, finally being reduced to 0% from the 2029 tax year onwards
      • Hybrid vehicles purchased/leased/rented from 1 January 2026: fuel costs no longer tax deductible
    • Cost of electricity:
      • Vehicles purchased/leased/rented before January 1, 2027: 100% deductible
      • The fixed percentage of 100% but will be reduced over the years. More specifically, this results into a reduction to 95% for cars purchased in 2027; 90% for cars purchased in 2028; 82.5% for cars purchased in 2029; 75% for cars purchased in 2030 and 67.5% for cars purchased from 2031 onwards.
    • Other costs:
      • Deductions are determined using the following formula: 120% – (0.5% * CO2 emission) and may amount to a maximum of 75% in personal income tax for hybrid vehicles purchased, leased or rented until the end of 2027, unless the vehicle emits a maximum CO2 emission of 50 grams.. In this case, a deduction of 100% is possible for the entire useful life of the car if it is purchased, rented or leased in 2026. If this is in 2027, a deduction up to 95% is still possible. The deduction percentage will then be gradually reduced, depending on the year in which the car was purchased. The deduction will then be reduced on a degressive basis depending on the year in which it was purchased, leased or rented, namelyto:65% in 2028, 57.5% in 2029 and 0% from 1 January 2030. 
        
        For the full electric cars no changes have been announced.
        
        

• NOTE: The following measures are also included in the coalition agreement but have not yet been incorporated into law:

  • Simplification and harmonization of existing collective bonus systems (CLA 90, profit bonus, etc.).
  • Mobility budget
    • The existing mobility budget will be reformed into a mobility budget for all and will replace the existing employer support schemes for employees' commuting and private travel. 
  • Costs proper to the employer
    • A framework for employers' own costs would be introduced as soon as possible. 

• Basic allowance  

  • The tax-free allowance will be increased over 4 assessment years (2027 to 2030).
  • The base amount will be increased from  4.785 EUR to 6.230 EUR, this amount still needs to be indexed. 
  • It is the government's intention that the tax free allowance after applying the indexation will amount to 15.300 EUR as of the assessment year 2030.  
    
    
    

• Allowance for dependents 

  • Current regime for dependent children: depending on the number of dependent children, the amount of the tax-free allowance per child increases as well as the rate at which the tax on the allowances is calculated. 
  • Objective: the same allowance for each child 
  • The reform will happen systematically namely ,the tax-free allowance for 1 or 2 dependent children will be increased in 4 steps, so that the amount will be equalized by assessment year 2030.  
  • Temporary freezing of the indexation until assessment year 2030 except those where the taxpayer is disabled 
  • The additional allowance for single parents is currently also granted to cohabiting parents, from assessment year 2030 on this will only be for "real" single parents, being taxpayers whose family on 1 January of the assessment year does not include any person other than their children, ascendants and relatives up to  the second degree, or persons on whom the taxpayer was wholly or mainly dependent as a child. The scope is aligned with that of the additional supplement to the tax-free allowance for "real" single parents with a low activity income. 
  • In case the allowance on the tax-free allowance for dependent children cannot be fully utilised because the taxpayer has little or no tax to pay, it is converted into a refundable tax credit.   
  • From assessment year 2027, taxpayers with income from scholarships under which they accrue social rights but are not subject to income taxes will be excluded from the application of this tax credit.  
  • Taxpayers receiving a (equivalent) living wage whose total net income is at least EUR 7,104 will be entitled to a minimum tax credit for assessment years 2027 to 2029. 
    
    
    

• Calculation of the taxes on the tax-free allowance 

  • From assessment year 2030, the calculation of the taxes on the tax-free allowance will be adjusted to the same rates as the ones applied to calculate the tax due. The separate brackets and rates  that currently apply will be abolished. 

The threshold for means of subsistence used to determine whether a child qualifies as a dependent is increased to €12,000 and is now uniform across all categories (indexed for tax year 2026; base amount €5,265). Doctoral grants will also be considered to determine whether a child can be dependent. 

Children who earn professional income that parents deduct as a business expense cannot be considered as dependent. This is also the case they would earn a living wage.  

The following tax benefits will be abolished from 1 January 2025 (unless otherwise stated): 

• Reduction for remuneration paid to a domestic servant
• Reduction for expenses incurred as part of an adoption procedure
• Reduction for legal expenses insurance premiums
• Exemption of the employer's contribution towards the purchase of a personal computer (abolition for employer's contributions made after 30 September 2025
• Additional flat rate cost for employees with a commuting distance exceeding 75 kilometers
• Exemption of capital gains on company vehicles (abolition for capital gains realized from 1 September 2025)
• Economic exemption for additional staff for export and integral quality assurance will only be maintained if the recruitment took place before 1 September 2025
• Increased cost deduction for internships 
• Economic exemption for additional personnel with a low wage will be abolished 
• Tax relief for capital losses as a result of the entire distribution of the assets of a private privak

The amounts of the following tax reductions or deductions will be frozen from 2025 until tax year 2030:

• The exempted first tranche of:
  • interest income on savings account
  • dividend income
  • interest income received from a company with a social purpose 
  • interest income received from loans through crowdfunding platform
• The maximum amount of federal long-term savings
• The maximum amount linked to the acquisition of employer’s shares
• The maximum amount linked to the gifts.
   
  It was also the intention to freeze the indexation of the tax reduction for pension savings, but this will be postponed to assessment year 2027. Consequently, the following maxima apply for income year 2025: 
  • up to 1.050 EUR resulting in a tax relief of 30%
  • up to 1.350 EUR resulting in a tax relief of 25%
• The maximum amount of the commuting costs (using a means of transport other than common public transport/transport organized by the employer) that can be reimbursed by the employer tax-free will not be indexed 
• Finally, it was decided that the maximum amount of the tax credit for dependent children will no longer be indexed. Consequently the credit remains capped at EUR 550 per child
  
  
  

Gifts

• In addition to the freezing of the maximum amount, the tax benefit will be reduced from 45% to 30% as from assessment year 2026
  
  
  

Alimony Payments

Currently, alimony payments are 80% deductible from the net income of the payer. The deductibility will be gradually reduced  

• to 70% for alimony payments paid as from 1 January 2025
• further to 60% for alimony payments as from 1 January 2026
• and to 50% for alimony payments from 1 January 2027

The taxability of the alimony payment in hand of the recipient will be reduced in the same way. 

In addition, alimony payments paid to a resident taxpayer of a country outside of EEA or Switzerland will no longer be tax deductible for the payer. The recipient will no longer be taxed on the received payments in Belgium.  

For more details on this, please refer to our article on the subject.

Tax relief for pensions 

• As a result of the increase in tax-free allowances, the tax relief for the highest pensions will be reduced as from assessment year 2027 
• The general tax reduction for pensions, where the level of joint taxable income will determine whether a reduction will still apply namely: 
  • Joint taxable income ≤ EUR 14,800 (basic amount): no change to the phasing-out scheme
  • Joint taxable income > EUR 36,535 (basic amount): no tax reduction
  • If joint taxable income is between the above limits: linear reduction of the reduction to EUR 0.
    
    
    

Tax reduction unemployment income  

• Basic reduction will be reduced to a quarter, while additional and supplementary reductions will be eliminated entirely 
• Will be implemented from assessment year 2027 through assessment year 2029 
• Reduced basic reduction also disappears from assessment year 2030 
• Exception for "real" single parents, basic reduction will be only reduced to half 
• Unemployment benefits with company supplement will continue to be treated as "other replacement income" which does allow for the reduction. 
• The exception for unemployment benefits with company allowance will be abolished as of tax year 2027 onwards
  
  
  

Marital quotient  

Married couples and legal cohabitants filing a joint return can apply the marital quotient. The marital quotient allows that for tax calculation purposes, maximum 30% of the professional income of one partner is transferred to the other partner with an absolute maximum of EUR 13,460 for assessment year 2026 in case one of the partners has no or only very limited professional income. 

This favourable regime will be gradually phased out however a distinction will be made between : 

• Pensioners (both spouses/legal cohabitants partners who have reached the legal retirement age on 1 January of the assessment year ) : phase out over a longer period, with a complete abolition from assessment year 2046. During this entire period, the 30% rate will be maintained, but the maximum amount will be lowered.  
• Other taxpayers: the marital quotient will be halved by assessment year 2030.  

From assessment year 2027, the maximum amounts will no longer be indexed.  

However, note that the personal tax-free allowance that cannot be completely utilized by one of the partners can still be transferred to the other partner. Hence, the impact of the elimination of the marital quotient remains limited.  

• Increases in case of no or insufficient prepayments: 
  • Eliminated from tax year 2027 for self-employment professionals, liberal professionals and for income attributed to their cooperating spouses. 
  • Will still apply to company directors 
    
    
• Entry of a 5th period: 
  • Runs from 21 December of the income year to 20 February of the assessment year 
  • Tax bonus / decrease of 0.5 times the basic rate for self-employment professionals, liberal professionals and their assisting spouses. 
  • Applicable from assessment year 2027, meaning the first 5thperiod runs from 21 December 2026 to 22 February 2027. 
    
    
• Shortening 1stperiod: 
  • Runs from 21 February to 10 April of the income year 
  • Valid from assessment year 2028 onwards 
    
    
• Exclusion of bonification 
  • No application of bonification for tax on profits and gains of independent helpers and allowances of parliamentary and provincial councillors  
  • Applies from assessment year 2027 
    
    
• New regulations do not apply in corporate tax 

• Scope: income within normal management of privately held assets consisting of real estate, portfolio values and movable objects. Financial assets are not included.  
  
  
• An irrefutable presumption is introduced stating that if the gross income does not exceed EUR 972 per taxpayer and per assessment year (= basic amount, indexed for assessment year 2027: 2.000 EUR), the transactions will fall within the scope of “normal management” of private assets 
  
  
• If the income exceeds the upper limit, it is still up to the tax administration to prove the taxable nature of the income in order to levy taxes on the income exceeding 2.000 EUR 
  
  
• Presumption does not apply to transactions within the scope of a professional activity 
  
  
• Applicable from assessment year 2027 

For more information, we refer to our articles regarding:

• Capital gains tax: complete guide
• Capital gains tax: opt-int or opt-out