Further details have become available on the bill on supplementary pension income obtained by non-residents.
Currently, pension income is taxable in Belgium if the debtor of the income is established in Belgium, if a tax advantage has been granted in respect of the contributions to the pension plan, or if the pension income relates to a professional activity exercised in Belgium. Pan-European pension funds, as the debtors of the income, are only exempt from salary withholding tax if the non-resident taxpayer can invoke a treaty exemption, even if there no other connection with Belgium than the location of the fund or insurance company. The related administrative formalities (mainly submitting a certificate of residence) are major obstacles for European insurance companies and pension funds.
In order to improve the attractiveness of Belgium as a location for Pan-European pension funds and insurance companies, the federal government proposes to amend the non-resident income tax.
As of 1 January 2007, supplementary pension income of which the debtor is a pension fund or insurance company established in Belgium are, as a rule, explicitly exempt from taxation in so far as no Belgian tax advantage has been granted or the income does not relate to a professional activity exercised in Belgium. As a consequence, pension funds and insurance companies are not required anymore to obtain a certificate of residence for cases where it is clear that Belgium may not tax the income.
Because Belgium, based on various international instruments, is obliged to exchange information related to pension income with the residence state of the taxpayer, an alternative electronic reporting duty will be introduced. The information to be reported, to be further determined by royal decree, will at least contain information related to the beneficiary, the employer and the amount of pension income which has been exempt.
A certificate of residence remains required in cases where the applicable income tax treaty allocates the competence to tax to the residence state but where part of the income relates to a professional activity exercised in Belgium or for which in the past a tax advantage was granted.