Belgian Pension and Tax

Mariolanza

Hello

A while back, I had published a post regarding tax paid on my Belgian pension in both England and Belgium. 

Unfortunately I have lost track of it.


I have been receiving my Belgian pension in June 2012 and live in England. 
It appears that there is a Protocol between the UK and Belgium where pensioners receiving a pension before 2013 are not doubled taxed.

Last year, the Belgians sent me several forms asking that I inform them of both my Belgian AND English incomes so that they could tax me.  
I told them I was already paying tax to HMRC via self assessment but they ignored me. I sent the form off and thankfully had nothing to pay.

Yesterday, the same form landed in my letterbox and it's making me quite sick. 

Could someone please tell me what the best course of action would be.  Thank you!! 

molerat

Mariolanza said:

Hello

A while back, I had published a post regarding tax paid on my Belgian pension in both England and Belgium. 

Unfortunately I have lost track of it.

https://forums.moneysavingexpert.com/discussion/6216042/belgian-state-pension-and-tax/p1

https://forums.moneysavingexpert.com/discussion/6215763/foreign-pension#latest

xylophone

https://community.hmrc.gov.uk/customerforums/pt/73278f0f-50df-eb11-ba5e-00155d9c7f52

Hello I worked in Belgium for over 30 years and now am retired. I have been back in UK for 10 years and receive a pension from the Belgian state. I have been paying tax on this solely in the UK under the double taxation agreement between the 2 countries. However, I have just received a tax demand from the Belgian tax office for my 2019 pension. Has the double taxation agreement been affected by Brexit or is this some kind of error on their behalf? Would appreciate any feedback Thanks

Posted 3 months ago by HMRC Admin 9 

Hi, 

If your Belgium pension started before 01/01/2013 then the UK have the right to tax it as per Article 18 (B) of the double-taxation agreement. However, the Belgium tax authority now requires any individual who is not a resident of Belgium, and who is in receipt of any source of income from Belgium, to complete a ‘Non-residents declaration tax form’ for every tax year. This change only effects the 2019 and subsequent tax years.

Foreign tax authorities are completely free to set their own rules as to what paperwork their customers are required to complete, and HMRC has no authority to intervene in this regard.

The Belgium tax authority have confirmed more information on the form, along with instruction on how UK residents should complete it:
 
And see

https://community.hmrc.gov.uk/public/790151c9-7b3c-eb11-a813-0022483edb5f/forum-posts

Annemos

Good afternoon Mariolanza

Good Lord xylophone. What a saga this seems to be. I had no idea that discussion was taking place

Just to say I am not working in tax any more and retired in 2013, so although I do have a feeling for what might be going on, still, I might miss something.

Also I am dealing with the Dutch language which is not my mother tongue, so that means I sometimes have to read things twice with their word order etc. 

Is the first main issue here, why are people being expected to file a Belgian Tax Return, when they have income that is ultimately non-taxable. 



For people after 01/01/2013, it is clear that we are taxable in the first instance in Belgium on the Belgian state pension as non-residents. And we just have to get on with it every year. 


But I also think that for people with the pension BEFORE that date, their first country of taxation should STILL be the UK, per that protocol. 


However, in my former life I worked with US tax, for example, and the fact that non-residents had income that was utlimately NOT going to be taxed in the US, did not mean technically that they did not have to file a tax return. 

So even a dollar of non-resident income would have to be declared on a US non-resident tax return and then the taxpayer would file it and then claim all the treaty relief. And end up with their income being non-taxable with no tax to pay. 

This of course is real pain from an administrative point of view for the taxpayer (and those tax returns and instructions are in English which makes it somewhat easier). 

Once you have done one year, it gets easier to do the following years, as you are just repeating the process. So the knack is to kinow which lines to fill in and what attachments to add. And also to fully understand why you are doing it. Then that feeling of insecurity starts to go away. 



So I suspect this is what is going on here. The Belgians must have a highly automated system in place that knows there was income of Belgian source and so their highly interlinked systems will also demand a tax return. 


(Could it actually be more hassle for them to have to keep a track of worldwide taxpayers who are not taxable and then allow them not to do a tax return? Is it just less hassle for them to get them all to file anyway within their system and then deal with all those non-residents though the actual tax filing system, even though no tax will ultimately be paid??)

If this is the case, the tax returns will have to be submitted. It may be that since 2019, their systems have become more automated and interlinked between the payers of the income and their tax authorities and that is why the returns are now being demanded. 


Does this make sense to those of you like xylophone who have been following this issue. 


What I will try and do is find what I looked at before and see what lines people in your position would have to fill in to declare that income and claim the full treaty protocol relief. 

I will get back you all later on that. Or has sombody already done that? (I have primarily been looking at myself who IS taxable). 

Next question is if we are marred!?  See next posting. 

(Sorry this was a long posting!) 

Mariolanza

Thank you for your post Annemose.  The more I read, the further I go into perplexity. I was born in Brussels and did all my studies there, further working for 19 years. I moved to England in 1986 and claimed both English and Belgian state pensions in 2012, before the 1st January 2013 deadline. The "Tour du Midi' told me my pension is so low, I would not have to pay any tax but I still need to complete the return. 
Most annoyingly is the fact HMRC are taxing me on both income above my personal allowance. It's a nightmare. 

Annemos

I am looking at 2019 income tax return (2020 return)

Do you file a separate tax return? 



Note that I just looked into this: when in Flemish they say "Employment" income, they also mean anything that replaces employment income such as unemployment, invalidity and the pension generated from employment. I also think they include the State Pension in that. 



111-niet-inwoners-deel-1-toelichting-2020.pdf          (There will be a French version) 


ALGEMENE INLICHTINGEN                              ( General Instructions for non-residents )

Gehuwden en wettelijk samenwonende            (Married and legally living together)


Gehuwden en wettelijk samenwonenden moeten in de regel maar één aangifteformulier invullen.  (As a general rule, married people must file together....but.....


In bepaalde gevallen moeten ook gehuwden en wettelijk samenwonenden elk een eigen aangifte indienen, namelijk:

(In CERTAIN circumstances married people MUST each file a separate tax return, NAMELY if the following applies, including.....


h) als maar één van de echtgenoten of wettelijk samenwonenden in de belasting van niet-inwoners belastbare inkomsten verkrijgt / en de andere echtgenoot of wettelijk samenwonende / Belgische beroepsinkomsten die bij overeenkomst zijn vrijgesteld / of buitenlandse beroepsinkomsten heeft van meer dan 10.940 euro /  (1). 

This is one of those I have had to read several times!! See top of this post for what "employment" income means in the Dutch. 

A separate tax return MUST be filed.......If ONLY ONE of the spouses receives (taxable) income as a non-resident..... AND the other spouse has Belgian source "employment" income that is excluded by agreement  (Now what does that mean? Could it be if the other spouse also has Belgian RESIDENT income that is not-taxable under the treaty?)......... OR if that other spouse has NON-BELGIAN "employment" income of more that 10,940 euros. 



This is quite odd. If you have a Belgian state pension. Wife has no Belgian source income at all. But wife has less than 10,940 euros non-Belgian income.....you have to do a joint return then? (so you would just have to show your wifes name at the top of your form!!)

Annemos

What type of entries will you be making. This is what I think.... but please double check this with your French. 


See attached...... see the two red circles I have done....

=================================================

I spotted this in passing..... a tick box for you to check...... I do not have this box because I am taxable. 




Vak III 3. a) Hebt u in 2019 beroepsinkomsten verkregen die bij overeenkomst zijn vrijgesteld? Kruis het passende vakje aan als u in 2019 beroepsinkomsten hebt verkregen die in België van de belasting van niet-inwoners zijn vrijgesteld krachtens: - hetzij een dubbelbelastingverdrag gesloten tussen België en uw land van fiscale woonplaat


Cross this box if you received "employment" income (eg Belgian state pension) that is exempted from non-resident taxation by agreement (the double tax treaty.) 

It is code 1062-05     X        This is in the second big red box of mine  (X instead of an amount)

=============================================================


Vak XIII - INKOMSTEN VAN BUITENLANDSE OORSPRONG EN DE VAN BELGISCHE OORSPRONG VRIJGESTELDE INKOMSTEN


Total of non-Belgian Source Income
And Treaty exempt Belgian income like your Belgian state pension

This is where you show for example UK pension income and treaty exempt Belgian state pension. 

Code 1330-28    

For example show two entries, one for each. They are in the second big red box of mine with the amounts 




And you put two lines UK and Belgium in the small red box of mine higher up. 


Attachments coming in next post ..... my screen has started to flicker with the strain of it all!! 

Annemos

Are we able to attach PDF files??

Mariolanza

Annemos.. do you mean on this site?? I believe so, click on the square picture above the area where you write in order to enclose a file.

Annemos

For some reason it is not accepting them. Will keep trying. 

Annemos

I am going to have to try and take photos of the document areas. I reckon it only take photos of documents of a website link.

I want to send you 2 documents that I annotated. 

Back shortly!!