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On 12 March 2026, the European Court of Justice (ECJ) ruled in case C-119/24 that Belgium's additional tax on non-resident income tax is contrary to Article 45 TFEU where it can result in a heavier tax burden than that imposed on certain Belgian resident taxpayers.
Although the case concerned earlier tax years, the Court’s reasoning is still very relevant in practice. Belgian non-resident taxpayers remain subject to a fixed 7% surcharge based additional communal taxes. Employers and non-resident individuals with Belgian-source income may therefore want to check whether this affects ongoing or past situations.
AT A GLANCE — KEY TAKEAWAYS
- The ECJ ruled that the 7% surcharge imposed on non-resident taxpayers in Belgium is a hindrance to the free movement of workers.
- The Court accepted that Belgium can require non-residents to contribute to public services but rejected a fixed-rate mechanism that may result in some of them paying more than residents in practice.
- For this type of surcharge, the ECJ considered residents and non-residents of Belgium to be in a comparable position, since the surcharge relates to Belgian-source income rather than to personal of family circumstances.
- The ECJ considered this difference in treatment to be based on residence, and therefore potentially indirectly discriminatory if it places non-residents at a disadvantage.
- The case now goes to the Liège Court of Appeal, but the judgment already sends a clear signal how the current 7% surcharge for non-resident may be viewed.
1. Why this matters
For cross-border workers, executives and other non-resident individuals who are taxable in Belgium, this judgment puts a long-standing element of the Belgian non-resident tax regime into question. It makes clear that, while Belgium can seek to reflect communal taxation, it cannot do so through a simple flat-rate surcharge if that approach ends up imposing a heavier overall tax burden on non-residents than on residents in comparable situations.
In other words, the Court confirms that the system must be assessed based on its actual outcome in practice. If the flat 7% surcharge leads to non-residents effectively paying more than residents with similar Belgian-source income, this difference in treatment is difficult to justify.
2. Background
Under Belgian tax rules, there is a structural difference in how local taxation is applied to residents and non-residents. Belgian residents are subject to a communal tax, the rate of which is set by the municipality where they live. This means the actual burden can vary and, in some cases, be lower than 7%. Non-residents, by contrast, do not pay a communal tax but are instead subject to a fixed federal surcharge, calculated by reference to those communal taxes. In the case at hand, French tax residents earning Belgian-source employment and real estate income were subject to this non-resident surcharge at rates of 6% or 7%, depending on the relevant tax years.
The referring court asked the ECJ whether Article 45 TFEU allows Belgium to apply such a fixed surcharge to non-residents, even where comparable resident taxpayers may effectively face a lower communal tax rate.
- Belgian residents: communal tax depends on the municipality where they live and can be lower than 7%.
- Belgian non-residents: a fixed surcharge applies at national level, regardless of the (potentially lower) municipal rate that would apply in a comparable resident situation.
3. Key reasoning of the Court
The ECJ found that the Belgian rule could disadvantage non-residents compared with residents living in municipalities that levy no communal tax or a lower rate. The Court further considered residents and non-residents to be in a comparable position for this purpose, since both contribute to the financing of Belgian public services through a charge calculated on Belgian-source income.
While requiring non-residents to contribute to public services is, in principle, a legitimate objective, the ECJ held that the current approach goes too far. A fixed surcharge may result in a higher tax burden than that borne by some residents, making the measure disproportionate and unsuitable for achieving its aim. The ECJ also rejected the argument that the rule could be justified by the need to prevent so-called “reverse discrimination” against resident taxpayers.
4. Practical impact
Although the judgment was given in response to a preliminary question and the case now returns to the Belgian court, its message is clear: a fixed non-resident surcharge cannot automatically be maintained where it results in a heavier charge than that borne by comparable Belgian residents.
This is particularly relevant because the current Belgian non-resident regime still operates with a fixed 7% surcharge. Taxpayers with open assessments, ongoing objections or pending litigation should review whether the surcharge remains defensible considering the ECJ’s reasoning. Historical positions may also deserve attention, subject to applicable procedural rules and a case-by-case analysis.
5. Example
Assuming a taxpayer resides in Ukkel (5,6%) and earns a taxable income of EUR 85.000,00, the difference in treatment impacts the total tax burden:
- As a resident taxpayer the communal taxes to be paid are 5,6%:
EUR 30.275,44 x 5,6% = EUR 1.695,42
- As a non-resident taxpayer the surcharges to be paid are fixed 7%:
EUR 30.275,44 x 7% = EUR 2.119,28
The surcharge in this case amounts to an additional tax burden of EUR 423,86.
While the Belgian tax authorities are currently still verifying the impact of this ECJ ruling, the Belgian tax authorities (or Belgian tax courts) can no longer impose the 7% fixed surcharge for non-resident taxpayers. This means that in absence of a legal alternative, it can be argued that the surcharge should be reduced to 0%. In our example, this should create a tax saving of EUR 2.119,28.
6. Actions to be taken
For the non-resident tax payers concerned the following actions can be made now:
- Filing a formal tax claim, which must be done within a period of one year following the issuing date of the tax assessment.
- Or, by applying for an ex-officio tax relief, which can be done to request rectification over the last five years.
7. What employers and individuals can do now
- Review affected files:
- Identify non-resident tax assessments involving Belgian-source income where the fixed surcharge has been applied, especially in ongoing or recently settled cases. - Check open procedures:
- Assess whether objections, appeals or ongoing discussions with the Belgian tax authorities could be updated in light of the judgment. - Revisit historical years:
- Consider whether earlier assessments should be reviewed, taking into account the relevant filing deadlines and the specific facts of each file. A look-back period of up to five years may be applied where relevant. - Align stakeholders:
- Where relevant, inform HR, payroll and global mobility teams so that impacted employees receive consistent communication. - Monitor next steps:
- Keep track of Belgian administrative guidance, case law and any legislative response on how the judgment will be implemented in practice.
HOW RSM CAN ASSIST
- Assessing whether non-resident tax assessments may be impacted by the ECJ judgment
- Reviewing ongoing claims, litigation and potential refund opportunities
- Supporting employers, HR and mobility teams with communication and documentation
- Advising on next-step strategy in discussions with the Belgian tax authorities
- Filing a tax claim or an ex-officio tax relief
Partner with RSM Belgium to assess the practical consequences of this judgment and to determine the most appropriate next steps for affected employees and executives. Our team combines technical tax expertise with a pragmatic view on implementation.
If you have any questions regarding this topic, don't hesitate to contact our RSM Belgium | Global Employer Services team (ges@rsmbelgium.be).
