EUROPEAN UNION OFFICIALS AND TAXATION - sidtu.org

1 EUROPEAN UNION OFFICIALS AND TAXATION IMPACT OF THE PROTOCOL ON privileges AND immunities ON THEIR TAX STATUS JACQUES BUEKENHOUDT MEMBER OF THE BRUSSELS BAR June 2008 Page 2 of 31 Tax Status & Protocol Version 27/6/2008 TAX STATUS OF OFFICIALS AND OTHER SERVANTS OF THE EUROPEAN COMMUNITIES IN BELGIUM 1. GENERAL FRAMEWORK - BELGIAN LAW .. 5 TAXPAYERS IN 5 Residents Concept under Belgian 5 "Normal residence" concept under Community 5 6 WHAT INCOME IS TAXABLE IN BELGIUM? .. 7 Earned 7 Income from capital and movable 7 Immovable 7 'Miscellaneous income'.. 8 2. THE OFFICIAL S SITUATION THE PROTOCOL ON privileges AND immunities .. 8 BASIC 8 Article 13 of the Protocol Community emoluments are exempt from national Article 14 of the Protocol Fixing the residence for tax 9 TAX SITUATION OF OFFICIALS AND OTHER SERVANTS - 12 Earned 12 Investment 12 Income from 12 Miscellaneous 12 Deduction in the Member state of the tax domicile of expenditure in respect of a household assistant incurred in another Member 12 Benefit of subsidy for the construction or purchase of owner-occupied dwelling in another Member state than the Member state of the tax 13 3.

2 THE SPOUSE OF AN OFFICIAL .. 14 THE SPOUSE IS NOT IN 14 THE SPOUSE IS IN EMPLOYMENT IN 14 THE QUOTIENT CONJUGAL 15 THE SPOUSE IS IN EMPLOYMENT 16 LIVING TOGETHER AND COHABITATION UNDER 17 TAX RELIEF FOR DEPENDENT CHILD AND CHILD 17 Dependent 17 Child 18 Spouse taxable in Belgium as non-resident tax 19 4. SECONDED NATIONAL 19 5. INHERITANCE 20 20 APPLICATION OF ARTICLE 14 OF THE 20 General 20 The official s spouse dependent 20 Retired 21 Page 3 of 31 Tax Status & Protocol Version 27/6/2008 INHERITANCE TAX IN 21 6. SPECIFIC CASES .. 22 INCOME FROM IMMOVABLE PROPERTY (REVENU CADASTRAL (CADASTRAL INCOME) PRECOMPTE IMMOBILIER (TAX ON IMMOVABLE PROPERTY)) .. 22 Principles of Belgian law pr compte immobilier/onroerende 22 Determining the 'income' from immovable 22 Family residence - pr compte immobilier/onroerende voorheffing - 23 TAXATION on immovable properties held in Belgium by the Member state of the tax 23 PR COMPTE MOBILIER/ROERENDE VOORHEFFING (WITHHOLDING TAX).

3 24 Belgian withholding 24 Directive 2003/48/EC of 3 June 2003 .. 24 LOCAL AND REGIONAL 27 TAX ON MOTOR 27 RADIO AND TELEVISION 28 MAINTENANCE 28 VAT ON THE SALE OF SECOND-HAND 29 VAT ON CAR PARK 29 REGISTRATION DUTY (DROITS D'ENREGISTREMENT) ON 30 REGISTRATION DUTY (DROITS D'ENREGISTREMENT) ON COURT 30 TAX-FREE IMPORTATION AND RE-EXPORTATION OF FURNITURE AND OTHER PERSONAL IMPORTING AND RE-EXPORTING A MOTOR 31 'VLAAMSE ZORGVERZEKERING' .. 31 Page 4 of 31 Tax Status & Protocol Version 27/6/2008 NOTE TO THE READER 1. This document is merely a general source of information aimed at providing an overview of the legal principles governing the tax situation of OFFICIALS and other servants of the EUROPEAN Communities. It does not set out to provide exhaustive information enabling individual situations to be settled.

4 2. The references to Belgian legal provisions applicable as at the date shown on this document are given for information purposes only and do not prejudge any amendments which may be introduced in the short or medium term by the regional or federal authorities. The reader should bear in mind that constitutional reforms have granted the regions autonomous regulatory powers in many areas of TAXATION . The tax situation of OFFICIALS and other servants of the Communities may, therefore, vary according to the region in which they have taken up residence. They should inform themselves about the rules specific to their region. 3. Figures relating to the calculations and amounts of tax applicable in Belgium are given purely as an indication since they may be amended at any time by the national or regional legislator or vary from one tax year to another, particularly as a result of indexing.

5 4. Additional information, all regulatory and legislative tax instruments, national or regional, are accessible on the Federal Public Service of Finances web site 1. Note on the English translation Quotations from Belgian law have been translated ad hoc for the purposes of this document and are not official translations. The translators have made use of "Belgian Income Tax Law - principles and practice" by Pascal Faes, published by John Wiley & Sons, Chichester (UK), 1995, ISBN 0-471-95553-1. 1 Page 5 of 31 Tax Status & Protocol Version 27/6/2008 1. GENERAL FRAMEWORK - BELGIAN LAW Taxpayers in Belgium Residents Concept under Belgian law Inhabitants of Belgium, natural persons who have established their domicile or the seat of their wealth in Belgium, are subject to personal income tax.

6 It is an issue of fact in each case. However, and unless they provide evidence to the contrary, individuals entered in the National Register of Natural Persons are presumed to have established their domicile or the seat of their wealth in Belgium. 2 1. It should be noted that, unless they are Belgian, OFFICIALS and other servants of the EUROPEAN Communities will, "together with their spouses and dependent members of their families, not be subject to immigration restrictions or to formalities for the registration of aliens" (Article 12(b) of the Protocol on privileges and immunities ). They may be exempted from the formalities of being entered in the population register of the municipality in which they reside and may have a special identity card drawn up through the Commission (DG ADMIN/B/3, privileges and immunities ).3 However OFFICIALS and other servants are under the statutory obligation to disclose their personal address to their own institution.

7 4 In addition, under article 16 of the Protocol on privileges and immunities the institution is under the obligation to notify the OFFICIALS and other agents addresses to the authorities of the host Member state. 5 2. It is in the interests of natural persons who do not have Belgian nationality and who work for the institutions without being covered by the Staff Regulations to be entered in the special 'non-residents' register kept by each municipality so that they avoid the presumption that their tax domicile is in Belgium (see rules for non-residents below). "Normal residence" concept under Community law Under Community law, a definition of the concept of "normal residence" can be found in Article 6 of Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals 6 as amended by Council Directive 89/604/EEC of 23 November 1989.

8 7 2 Belgian Income Tax code (CIR/92), article 2, 1 , last paragraph 3 Local authorities may carry out checks to ascertain that persons are physically and actually present before entering them in the national registers. 4 Court of Justice, judgment in Case 22/93, [1994], Campogrande v Commission. 5 Court of Justice, judgment in Case 22/93, cited 6 OJ 1983 L 105, p. 64 7 OJ 1989 L 348, p. 28 Page 6 of 31 Tax Status & Protocol Version 27/6/2008 Article 6 reads: "For the purposes of this Directive, normal residence means the place where a person usually lives, that is for at least 185 days in each calendar year, because of personal and occupational ties or, in the case of a person with no occupational ties, because of personal ties which show close links between that person and the place where he is living.

9 However, the normal residence of a person whose occupational ties are in a different place from his personal ties and who consequently lives in turn in different places situated in two or more Member States shall be regarded as being the place of his personal ties, provided that such person returns there regularly. This last condition need not be met where the person is living in a Member State in order to carry out a task of a definite duration. Attendance at a university or school shall not imply transfer of normal residence." The Court of justice has interpreted Article 6 of the directive in a judgement issued on 26 April 2007. 8 Non-residents Taxpayers whose tax domicile is established outside Belgium are subject to non-resident income tax. They are liable to tax on their Belgian source income, while residents are liable to tax on their worldwide income.

10 In the case of natural persons, there is a rebuttable presumption that persons entered in the National Register of Natural Persons are resident in Belgium. In addition, for married persons who are not deemed to be 'single' from a tax point of view ( spouses of OFFICIALS ), the tax domicile is established at the place where the household is established. The following are taxable: income received by non-residents which is borne by a person officially classified as living in Belgium ('habitant du Royaume'); salaries borne by a non-resident in respect of an activity carried on in Belgium by a person who has resided in Belgium for more than 183 days during the relevant taxable period. ) External staff working for the EU institutions who do not qualify under Article 14 of the Protocol may, if they so wish claim non-resident status. As indicated above, it is in the interests of those concerned to be entered in the special 'non-residents' register kept by each municipality so that they avoid the presumption that they are domiciled for tax purposes.