How do I pay less tax in Belgium?

There are three proven and reliable methods – corresponding to three quite separate initial situations – of paying less tax in Belgium. Let us explain.

First situation: you are filling in your tax declaration for your income the previous year. Is it still possible to reduce the amount of tax that will be due in a few months’ time? The answer is commonly yes. Among our new clients, we still often come across previous tax declarations done in a hurry, with numerous omissions, and missing supporting documents or annexes. A revision of your tax situation by an expert, then an effective tax optimisation may mean that you benefit from significant tax reductions: by optimising the deduction of mortgage interest, deductions for maintenance allowances or reductions for energy savings. If you have kept your invoices and other supporting documents, you are perfectly free to abandon the legal flat rate for costs (which is not very favourable) and decide to deduct all your real professional costs: the corresponding reduction in tax may be considerable! Another example: did you know that in some cases, the voluntary declaration of income from personal property on which the withholding tax on personal property has already been levied may mean that you can recover some of it? Generally speaking, a lack of knowledge of the “tricks of the trade” in taxation can sometimes prove very costly for the taxpayer in a hurry, or simply very focused on his own professional activity. A simple piece of tax advice sometimes changes the situation radically.

Second situation: during the year, you wonder: is it still possible to optimise my tax situation and my taxation of the current income year? You’re lucky: the range of possibilities is far wider here than in the first situation described above. One example we have come across more than once: you are self-employed and your income for the current year will be well above your estimates and the advance payments you have made. Have you thought about creating a one-man private limited company during the year, which could help you legally by distributing some of your professional income “as a natural person” to “corporate” income, which is far less heavily taxed? Even in December of the current year, some professional investment decisions – thanks to depreciation authorised for tax purposes – can enable you to control an unexpected increase in tax.

Third situation: you decide, today, to take your tax fate in hand once and for all! This is the most comfortable situation: virtually everything is possible, legally, and imagination really is the order of the day. Today, you will take the time to analyse your tax fate and reduce your future tax as much as possible, in the short and medium term. Here, a great many things can be done and we really can talk of active tax optimisation. For example: you are a salaried employee, and you are increasingly being asked to work at home in the evening and/or at weekends (or even at night – it happens!). Did you know that you are entitled to deduct part of your rent and the related charges, or part of the depreciation and other real-estate costs of your own your home? As well as other costs linked to working at home, of course. Even if you never receive clients or colleagues at home! More generally, you can even change the nature of your income and for instance convert real-estate income into income subject to corporation tax, by placing your property in a “company” structure, a private limited company or a limited company.

Tax is levied for a reason and plays a vital role in our modern societies: everyone has to contribute, but fortunately proper tax optimisation is also one of your basic rights as a citizen: it’s up to you to exercise it!