Number of boxes on the personal income tax return further increases in Belgium
International comparative study of the personal income tax return process
Deloitte's 4th edition of the Global comparative study of the personal income tax return process investigates how the Belgian personal income tax return process relates to 33 other countries. Generally, Belgium scores well and has a slight advantage in the field of computerisation.
Number of boxes determines the level of difficulty of the tax return
The countries with the highest number of boxes remain the same compared to the prior edition: Ireland ranks first with 1,300 boxes, followed by Belgium (885 boxes), Luxembourg (839 boxes) and Spain (610 boxes).
Filling out your tax return is a time-consuming occupation, not in the least because the form is systematically getting longer. This year, the Belgian tax return contains 885 boxes (obviously not all boxes are applicable to each individual taxpayer), which represents 75 extra boxes. Last year the number of codes grew by 38. This record number is a consequence of the regionalisation of the real estate taxation, the speculation tax (which has in the meanwhile been abolished), the increased tax rates on movable property, and the new tax treatment for catering staff and people on SWT (former bridge pension).
The perceived difficulty of a tax return is directly related to, amongst other, the number of boxes to complete. For instance, in our prior survey, the Netherlands indicated that they had between 101 and 200 boxes to complete. This year, this number is reduced to a maximum of 50 boxes. To the question as to whether a Dutch tax return is perceived as difficult to complete, our Dutch neighbours answered in the prior survey “very burdensome” while this year’s answer is “not so burdensome”. Also, the Dutch taxpayers answered that tax return assistance is less required this year.
41% of the surveyed countries, including Belgium, spend on average one to two hours to fill out a tax return while the taxpayers in Austria, Russia and South Korea spend more than five hours completing their tax return.
Regional or federal?
In all countries surveyed, at least one (regional or federal) personal income tax return has to be filled out every year. Each American, Canadian and Swiss taxpayer has to complete both returns.
Currently, Belgian taxpayers only need to complete one federal income tax return per year. Nevertheless, the regionalisation of the personal income tax has resulted in an extensive tax return with many boxes which, depending on where the individual lives, have to be filled. People living in the Brussels region, for example, experience filling out the return as a difficult job as the boxes of other regions are also included in the same return. Footnotes clarify which boxes apply to them. A regional return for real estate taxation would be a considerable simplification for most taxpayers and in line with the sixth state reform.
We can conclude that our obligatory joint tax return for married and co-habiting partners is not in line with most surveyed countries. Moreover, it makes filling out the tax return more difficult and increases the number of boxes every year. The rule in most surveyed countries is that every taxpayer (married or not) has to submit his/her own return regardless of his/her partner.
The electronic return becomes more popular
More countries are switching from a paper tax return to an electronic tax return. 65% of the countries surveyed (including Belgium), allows taxpayers to choose whether they want to file their personal income tax return on paper or through an electronic system.
Outlier Luxembourg does provide the possibility to file income tax returns through an electronic filing system; however, it requires a specific certificate “LuxTrust” which is rather expensive for the taxpayer.
Filling the gaps
The study indicates that more countries are prepopulating data on the tax return. This year, this is already the case in 74% of the countries surveyed, whereas four years ago only a third of the countries prepopulated information on the tax return. The information most countries prepopulate is the taxpayer’s personal data, the salary information and the details regarding local bank accounts.
Belgium remains at the top with respect to prepopulated specific data on the electronic tax return form. Although the data regarding real estate income is still not prepopulated, we noticed that, this year, the taxpayer receives a “warning” if he/she entered a specific field in a previous tax year.
Link between reporting passive income and taxation at source
In Belgium, most dividends and interest are subject to a final withholding tax of 30%, meaning that this income no longer has to be reported in the tax turn. By placing this responsibility with the financial institutions, Belgium avoids an even more complex tax return process. In many countries where they have taxation at source, the dividends, interest and capital gains also need to be included in the tax return.
Immediate payment of your tax or waiting for a tax bill?
Belgium has a dual system as the tax return process is finalised with a tax assessment (or tax bill) on which the refund or tax due is specified. The payments only have to be made after receipt of the tax bill, regardless of whether the taxpayer receives a refund or has to pay taxes. In only 41% of countries surveyed, the payment coincides with the receipt of the tax bill. In the other 59% no formal tax bill is required to finalise the process. This trend was also confirmed in our previous study of 2015.
Worldwide fiscal transparency is the norm
As the fiscal situation of a person increasingly exceeds national boundaries, 97% of the countries surveyed exchanges information with other countries. Belgium has an exemplary role as we are have already been exchanging information with other countries (including the Netherlands, France and the UK) for many years. Switzerland is currently the only country that lags behind; however, as of 2018 they will also exchange information with foreign tax authorities.
Regular tax audits
Tax audits are randomly performed in 73% of the countries surveyed. The principal factors that trigger a tax audit are high tax deductions, requesting an exemption for foreign income, and a huge refund.
About the study
The comparative study of the personal income tax return process was first conducted by Deloitte in Belgium in April 2012 in 22 countries. In the second and third edition, tax consultants in 341 countries were surveyed about similarities and differences in the tax return process. The full results are available here.
1Australia, Belgium, Brazil, Canada, China, Denmark, Germany, Finland, France, Greece, Ireland, India, Italy, Japan, Luxembourg, Malta, Mexico, the Netherlands, Norway, Austria, Poland, Portugal, Russia, Singapore, Slovakia, Spain, Czech Republic, Turkey, United Kingdom, United States, South Africa, South Korea, Sweden, Switzerland.