NEW IN 2018: Elimination of tax disadvantages for frontier workers
Households with dependants, in which the parents work and reside exclusively in Belgium, are granted an increased tax exempt quota number that is based on the number of dependants. Until recently, if one of the parents was working in another country, it was possible that neither of the parents obtained such increase.
The core of the problem is situated in the field of the tax reduction for dependent children. In principle, such reduction will be granted to the parent receiving the largest income. However, if that particular parent with the largest income is working abroad, this tax reduction for dependent children is almost nil in practice. That is because the foreign income will be exempt from taxes in Belgium anyhow, and therefore, the reduction for dependent children does not provide in any factual advantage for those households.
De facto cohabitants in that situation do not encounter this problem because they can choose whom of both parents will claim the children as dependants. In other words, if one parent works abroad, the children can become dependent of the other parent working in Belgium in order to obtain the actual tax reduction for dependent children.
Yet, married and legally cohabiting couples have no choice. Their children are always dependent of the parent with the largest income.
It is precisely to rectify this inequality that an amendment to the law* provides in the granting of the tax reduction for dependent children to the parent with the smallest income in cases where that is more advantageous for the household.
Furthermore, the FPS Finance will in all cases make the calculations for the households concerned in order to verify which parent benefits more from claiming the children as dependants. In that respect, the calculation offering most advantages will be selected automatically.
Minister of Finance, Johan Van Overtveldt: “Thanks to his amendment to the law, the battle against tax inequality fought for years by many frontier workers with children, will come to an end. Whether parents are married or legally cohabiting may not affect their tax calculation.”
* Law of 25 December 2017 laying down certain tax provisions III. To be published shortly in the Belgian Official Journal.