Belgian State pension and tax

Mariolanza

I am a UK resident in receipt of a Belgian state pension. Every year, I declare this income to HMRC. Last week, I received a request from the Belgian tax office to let them know of my total income (for me and my husband) for tax purposes.  I thought there was a clause betw3Belgium and the UK where no duplication tax could be brought as I reside in the UK??

[Deleted User]

Here are the tax treaty details - so it does make sense that you pay tax on state pensions in Belgium and deduct it from the UK tax due. (no idea why they want your other income details though)
Subject to the provisions of Article 19,

1. (a)  pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State;

2. (b)  however, where pensions and other similar remuneration under a pension scheme were first credited or paid before 1 January in the calendar year next following that in which the first Protocol to this Convention entered into force, all payments under that scheme shall be taxable only in the other State.

   
   

   And

   1. Belgian tax payable under the laws of Belgium and in accordance with the provisions of this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Belgium (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Belgian tax is computed;

Mariolanza

Thank you for your response.  However, I have spoken with HMRC who told me that because I started receiving this pension before 1st January 2013, tax is solely due in the UK, quoting the dual taxation clause. They told me to notify Fisc in Brussels of this clause.  These say it's a new law.

Annemos

Mariolanza. If you are still monitoring this. You might be interested to know where that question from the Belgian Authorities came from, even though it is not applicable in your case. 

I am just applying for my small Belgian State Pension. I do come under the new tax treaty rules, and so mine will be fully taxable in Belgium. I am also resident in UK.

I looked at the rules and what I think will be happening to me is the following: 

a) No deductions/allowances can be offset against this Belgian taxable pension income in my case.  They only allow them, if your Belgian income is at least 75% of your worldwide income.

So that is why they have a question on what total (worldwide) income is. For me they will have to know what that is, so they can confirm I am not entitled to any deduction/allowance. (My Belgian pension is not 75% of my worldwide income.)

b) I also think I may be taxed at 25% tax rate on it and then also a 7% on top in lieuof commune tax. So I am expecting to have to pay 32% in total. 

What I don't know yet, is whether they will have a withholding tax on it at source? Or whether I shall have to do a Belgian Tax Return each year??

Under the old system in you case, it is much more straightforward!

Mariolanza

Thank you Annemos for your response. The Federation of Belgian pensions wrote to me, saying I should have completed a tax return since receiving my Belgian pension but I was not aware. They sent me a form to complete which is very complicated to understand. I told them of my income and am waiting for  the outcome.  I'm already paying HMRC via self assessment as I declare it yearly. Be sure to ask fir the firm in either Flemish or French. Thanks again. 

Mariolanza

Sorry for typos. Be careful to ask for  the forms...

Annemos

Yes thanks very much for the advice. I shall need to make sure I get the Flemish one.

I had a quick look and there is a Non-resident form. It is rather daunting, even though my Flemish is quite good, because it links into computer code numbers within their tax system. I hope eventually, that once I have sorted it out, I could then do future years on-line. That would be much quicker. 

I would also hope that in your case, you can explain to them that you come under the former treaty rules and therefore your pension is solely taxed in the UK. And that this would then mean you would not have to do a tax return each year.

It would be very annoying if you had to do a tax return each year, just to claim the tax treaty rules which say it is not taxable anyway. 

Annemos

DT3403 - Double Taxation Relief Manual - HMRC internal manual - GOV.UK (www.gov.uk)

Note 7 is our part! 

Annemos

Just a note in case you ever need it.

It looks like all your income would go in part XIII of the Non Resident Belgian Tax Return. (And thus, not in the Pensions part VI.)

That   section XIII   is......

 "total income from foreign sources (e.g. a British pension)"    AND     "total income from Belgian sources which is exempt under a double tax treaty (the Belgian pension)". 

I have been trawling through this..... the form and instructions are at the end of all the questions and answers.... 

Aangifte in de belasting niet-inwoners (België) | FOD Financiën (belgium.be)
Déclaration d'impôt non-résidents (Belgique) | SPF Finances (belgium.be)

By the way, did you feel the same way when you started getting the Belgian pension? For years I had this at the back of my mind. Now I am claiming it, I can hardly believe I am now so old!

I have just sent a form off to HMRC and apparently they will then forward the paperwork to the Belgian Pension Authorities. I hope that goes smoothly. I have 3 months to go before Pension-day! 

Mariolanza

Thank you so much for your information.  Yes, it's called Non Residents income tax. I returned my form just before Christmas and expect that with Covid  and Brexit,  it will be some time before they get back to me. My mother tongue is French. 🙂 The Pension people in the Tour du Midi have already told me my pension  is far too small to warrant paying tax. I've also mentioned the double taxation, so fingers crossed it will be alright. Thanks again. 

Mariolanza

I forgot to say that you can also complete the form online but in order to log in, you need to be affiliated with one if the banks they mention, not my case. 
In addition,  I also mentioned to them that I am in receipt if an English pension. Could they add that to the Belgian one and tax me too?