Belgium – Taxpayers with Foreign Employment Income Could Be Audited

Belgium – Taxpayers with Foreign Employment Incom...

A key area of focus for tax audits in 2014 will be individual taxpayers claiming an exemption for foreign source employment income in their Belgian resident income tax returns.

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Flash Alert 2014-019

Belgium’s tax authorities have announced that a key area of focus for tax audits in 2014 will be individual taxpayers claiming an exemption for foreign source employment income in their Belgian resident income tax returns.1  This typically relates to employees and directors who receive salary and/or director fees that, in accordance with a tax treaty signed by Belgium, is taxable in the other country (and exempt in Belgium). 

WHY THIS MATTERS

Individual taxpayers who have foreign source employment income that is exempt from Belgian tax pursuant to a treaty may face increased scrutiny by the authorities in 2014.  Individual taxpayers and/or their employers should be prepared with appropriate documentation and verifiable proof of taxation in the other state, in the event that the taxpayer becomes the subject of an audit.

In recent years, the Belgian tax authorities have rationalized their tax audits by focusing them on specific issues and using data mining for selecting taxpayers subject to audit.

KPMG NOTE

The experiences of the KPMG International member firm in Belgium with similar audits suggest that the authorities tend to focus on:

  • evidence supporting the physical presence of the taxpayer in the other contracting state for salary income;
  • documentation with respect to the appointment as a director in the other contracting state;
  • proof of taxation in the other contracting state if the tax treaty with this state provides that income should be subject to tax or taxed in the other contracting state as a condition for exemption in Belgium.

The information contained in this newsletter was submitted by the KPMG International member firm in Belgium. 

© 2016 KPMG Tax and Legal Advisers, a Belgian Civil Cooperative Company with Limited Liability (burg. CVBA/SCRL civile) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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