Final instalment of the Belgian saga of tax-free exemptions for dependent children – At last, a circular!

Circular 2017/C/31 of 18 May 2017 specifies the changes to the calculation of personal income tax (“IPP”) when the spouse with the higher income receives income from a foreign source. While awaiting a legal amendment to the Belgian income tax code (“CIR”), the government will amend its tax calculation programme for 2016 income so that if joint taxation is determined, surcharges on the tax-free allowance as stated in article 132, CIR 92, will be allocated to the spouse with the higher income unless allocating these surcharges to the other spouse is more favourable.

The calculation that is most favourable to the taxpayers is used for the rest of the calculation. This dual calculation applies to all taxpayers:

  • subject to joint taxation; and
  • a second calculation whereby the surcharges are allocated to the spouse with the lower income.

Le calcul le plus avantageux pour les contribuables est retenu pour la suite du calcul. Ce double calcul est applicable pour tous les contribuables :

  • faisant l’objet d’une imposition commune et ;
  • for which at least one taxpayer benefits from tax reductions for foreign income as stated in article 155 or 156, CIR 92; and
  • who may benefit from one or more surcharges on the tax-free allowance as stated in article 132, CIR 92

The fact that the (tax or other) benefit may or may not have been granted in the foreign country is irrelevant.

The solution set out above for the 2017 tax year applies to previous years provided that the taxpayers’ circumstances are the same.

As a reminder, taxpayers in this situation benefit – at the administrative stage – from the ordinary claim period of six months as stated in article 371, CIR 92 and the period of five years as stated in article 376(1), CIR 92. However, the application of article 376(1), CIR 92 is subject to the condition that “taxation has not already been the object of a claim resulting in a final decision on the merits of the case”. Decisions to reject claims or applications for automatic relief initiated previously and which relate to the same issue are irrevocable, unless legal proceedings are brought before the court of first instance within the deadline set out in article 1385j of the Belgian judicial code (article 375(1), paragraph 2 and 376b, paragraph 3, CIR 92).

Administrative or legal proceedings still pending should be the object of a directorial decision or conclusions in accordance with the aforementioned directives, it being understood that the burden of proof lies with the liable party.

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