Rules in respect of cross border occupational pensions as of tax year
Date: 20 January 2007
The Belgian Parliament has finally complied with
European Community Law in respect of cross border occupational
pensions (Law of 27 December 2006, Belgian State Gazette 28 December
Indeed, with effect from income tax year 2007
(calendar year 2006) Belgium
has modified the tax rules with respect to the transfer of pension
capital or reserves.
In the first place, the effect of the so-called
‘exit tax’ (article 364bis I.T.C. 1992) is now limited to
taxpayers taking up residence outside the European Economic Area (the
EEA includes the 27 Member States of the European Union as well as Norway, Iceland
This means that Belgium
can continue to consider that a pension capital or reserve is paid
out on the day before his departure, and tax the pension capital, but
only if the taxpayers leaves the EEA unless a double tax treaty
The new legislation also simplified the transfer
of pension capitals or reserves to another pension fund or insurance
company or pension organism. As a matter of principle such transfers
do not qualify as a (taxable payment or attribution (article 364ter,
1ste paragraph I.T.C. 1992) as long as the transfer takes place
within the European Economic Area. The taxation is postponed to the
later payment or attribution. Until last income tax year, the
transfer was limited to transfers within Belgium.
These important modifications will certainly
have consequences for your company, in practical in respect of your
tax withholding obligations. However, they also offer tax planning
possibilities with respect to the tax regime of the pension payments.
Apart from this, Belgium
has also lifted the ban of the tax deduction of the contributions an
employer paid to a pension organism established outside Belgium.
This means that if an employer contributes to a pension institution
established in another EEA Member State, the contributions are tax
deductible within the limits of article 59 I.T.C. 1992 (in particular
the 80 %-rule).