Salary split: circular letter on exemption for foreign earned income
In its circular of 11 May 2006 the Belgian tax administration issued new guidelines regarding the exemption from income taxes with respect to foreign source income.
These guidelines introduce more formal requirements to obtain the exemption for foreign earned income. Except for income from real estate, the mere reporting of the foreign earned income on the tax return is no longer sufficient. Therefore, according to the circular letter, tax inspectors are now required to tax all foreign earned income, unless the taxpayer specifically requests the exemption and provides the tax inspector with sufficient proof that he or she qualifies for the exemption. The following documents could, amongst others, be annexed to justifie the exemption: the employment contract in which it is mentioned that the activities are carried out outside Belgium, transportation bills that are nominative and dated, hotel invoices, minutes from meetings abroad,…
Finally, if the tax administration already has in its possession elements showing the exemption from Belgian taxes, for instance on the basis of previous income tax returns, a request to apply the exemption again will automatically be followed.
It is clear that the preparation of tax returns with respect to Belgian resident employees, who work in two or more countries and who benefit from a salary split, will be more burdensome.
Circular letter of 11 May 2006 in Dutch: http://www.fisconet.fgov.be/nl/?frame.dll&root=V:/sites/FisconetNldAdo.2/&versie=04&type=cir!INH&
Circular letter of 11 May 2006 in French: http://www.fisconet.fgov.be/fr/?frame.dll&root=v:/sites/FisconetFraAdo.2/&versie=04&type=cir!INH&
