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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am a UK national living in Belgium. I am ex-military and

Customer Question

I am a UK national living in Belgium. I am ex-military and therefore receive a military pension as well as the normal State pension. I pay tax on these in the UK. I also receive two small private pension from the UK. My accountant here advised me that these pensions are subject to tax in Belgium and not the UK. Is this correct?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question. You are talking to a retired RAPC and AGC(SPS) Major.

Your military pension is certainly subject to UK taxation and you cannot get around that. Your accountant is simply wrong on this matter. All UK public service pensions (ie Government, Quasi-government and many Local Authority) are taxable in the UK. He should know this, but may not. I would advise you to draw his attention to this simple UK taxation principle.. State pensions, although taxable emoluments in the UK, are paid gross as you are probably well aware.

Moving on the Belgian tax Expatica.com has the following dismal news:

'Expatriates and Belgian citizens alike suffer from one of the highest taxation rates in the EU. It amounts to an effective tax rate (including social security) of well over 50 percent for the highest earners. This compares to an average 45 percent in Europe. An expatriate working in Belgium will typically be liable for Belgian income tax. Additionally, property tax, gift and inheritance tax may be relevant. In most circumstances there are no capital gains taxes or wealth tax for individuals in Belgium, thus pushing the tax burden firmly onto the employee.'

There is a special expatriate tax status which apples to income from professional duties carried out in the country, but you may not qualify for this.

The tax you pay on your UK income is, under the Double Taxation Treaty between the UK and Belgium, allowable as a tax credit against any Belgian Tax liability on the same source of income. In view of the very high tax rates, about 50%, I fear your pensions may attract additional tax in Belgium. I see you retain a local taxation professional to assist you in this matter, very wise.

I am so sorry to have to convey such dismal news. Always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes. I fear you have caught a double whammy in this matter.

Small point, in view of the almost certain necessity of paying some Belgian tax on top of your UK you could consider asking HMRC to apply a tax code of 'BR' to all your pensions which will tax everything but your State Pension at 20%. Your UK personal allowance of 10K is of no use to you if it reduces your UK tax merely for the Belgian authorities to collect more. Check your position viz a viz Belgian Income Tax before you do get your codes adjusted.

Customer: replied 2 years ago.

Thank you for your helpful response. Comforting to know that you are ex-Army! I have an excellent tax accountant here in Belgium and I am very much aware of what tax I have to pay. As I am registered in Belgium I declare all income here to be grossed up for tax.

I present all my 4 pensions (2 Government, 2 private) to my UK accountant who claims that I also have to pay tax in the UK on the two private pension even though they are already included in my tax here in Belgium. That means I pay tax twice for these pensions. Despite the fact that these are small amounts can this be right?

Regards

Andrew

Expert:  bigduckontax replied 2 years ago.

No Andrew, it doesn't sound right. Any tax paid in the UK should be being allowed as a tax credit against the Belgian tax liability under the Double Taxation Treaty between the two countries. Are you sure that this is, or is not, happening? Under the Treaty you cannot be taxed in both countries on the same income stream. Because Belgian tax rates are so high you do get caught by a Belgium top up though.

Please be so kind as to rate me before you leave the Just Answer site.

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Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

I started my regular career as RE (Transportation) and so was transferred to RCT on its formation. I did maritime, Operating Superintedent of the Longmoor Military Railway before going on to Landing Craft. After that I transferred to RAPC [subsumed into AGC(SPS)] and spent the last 17 years of my service on the Staff, last four in London District. What does the poem say? Oh yes; 'A soldier's life is terribly hard!' says Alice!
Customer: replied 2 years ago.

Dear Keith,


Snap!


I was also London District - as Comd Logistics. I was later Director Support Services, which included Maritime and Railways among other things.


 


That was all quite sometime ago.


 


Belgium Tax is a nightmare, but so is the UK!


 


Best wishes,


 


Andrew

Expert:  bigduckontax replied 2 years ago.
Hi Andrew.

I planned the combined staffing and responsibilities for the new Log Br at the request of Malcolm McCartney (Comd Tpt & Mov) and the then Comd Sp who was to be the new Comd Log as Malcolm was retiring. As usual I did a brilliant job; I always performed my military duties to my entire satisfaction and went on to be an RO in DASD..

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