Taxing Times - Part 3: Single vs. joint filing and reporting bank accounts

You have finally made your choice between filing online and filing on paper, but still, not everything makes sense. Far from it. In this third part of our guide, we see when you file jointly or separately. And what is that about reporting bank accounts?

Filing jointly or separately?

In Belgium, spouses and legal cohabitants don’t get to choose whether they file jointly or separately. If you ‘only’ live together, you file separate returns. It is only if you register your partnership at the commune, or if you marry, that you file your tax return together, and then only for the income of the year following your marriage or registered partnership.

The income of your year in which you married or registered your partnership must still be filed on a separate tax return. If you married on 14 February 2015, the tax return you receive in May 2015 will be for your 2014 income and that must be filed separately. The tax return for your 2015 income must also be declared separately. It is only in 2016 that you will file jointly.

Conversely, when you separate and take up separate residences, you will file separate tax returns again, but only for the income of the year following your separation.  If you separated last year, your 2014 income still has to be declared on a joint tax return. Yes, that means that you should meet with your ex to complete the tax return together. The tax authorities understand that this may be awkward, and they will not object if you file a separate tax return. It is only for the year after your separation, for your 2015 income, that you file separate tax returns.

When you file jointly, you complete the “document préparatoire” together, one partner puts his or her information in the left column, the other on the right; the codes are the same, but start with 1 for one partner and with 2 for the other.

When you file separately, you receive separate tax assessments. When you file jointly, you receive one joint assessment.

Filing jointly should not make much of a difference; the tax is calculated for each spouse separately on their earnings and on their unearned income (rent, interest, dividend etc). That is why the tax return has a column for each spouse or partner’s income. Income from investments that are owned by both spouses must be split in two. This is the case, for example, with cadastral revenue of property that is rented out and for interest on joint bank accounts. 

The tax assessment (in other words the bill) also has two columns, one for each spouse or partner; the income is added up for each, and each has his or her own personal allowance of €7,090 (for 2015), which results in a tax reduction of €1,772.50.

Marriage or a registered partnership does not make the tax go up. However, getting married or registering your partnership gets interesting when one spouse or partner is not working. In that case 30% (with a maximum of €10,230) of the other’s income is deducted and taxed with the stay-at-home partner/spouse. That part is then taxed at a lower tax rate.

Taxpayers who are married to an official of one of the European Institutions or an international organisation file separate tax returns. However, they must mention that their spouse or partner is an international official (the tax authorities do not want them to get this marital deduction).

Even if the tax is calculated separately, the tax assessment shows one figure as the tax due or the tax to be reimbursed. The reimbursement will go on the bank account mentioned in the tax return, and usually that is a joint account.

However, if tax is due, who has to pay that tax? You should be able to work out who has to pay how much tax because the tax is calculated in two separate columns. In case of doubt, you can ask the tax authorities to tell you exactly how much tax each of you owes. That makes it easier to settle accounts later with your ex.

Simplified tax return

Some taxpayers whose situation does not change from one year to another do not have to file a tax return. That is the case for, among others, students, retirees who only have a state pension, the unemployed or people who live on an disability or illness allowance. The tax authorities send them a letter with the information that they have on file and calculate the tax that they will have to pay or that they will receive.

If you receive a proposal of a simplified tax return, you do not need to complete a tax return unless you have other income not mentioned in the letter, such as rental income or income as a self-employed person, company director, etc. Moreover, you have to report whether you have overseas bank accounts and insurance policies outside Belgium or confirm that you have set up or that you dare the potential beneficiary of a “legal arrangement”.

If you agree with the information in the letter, you do not need to do anything. You will receive the tax assessment in the coming months. If the letter shows a reimbursement in your favour, you will receive the amount mentioned in the coming months.

If the information in the letter is not correct, you can complete the answer form and return it by 30 June or you can adapt the information online via Tax-on-web. You will then receive a tax assessment.

Overseas bank accounts

You may have received a letter from the tax authorities asking you to report your overseas bank accounts. That is a new obligation you have to comply with, even if you have not received a demand to comply. In fact, you do not report your accounts to the tax authorities but to the National Bank.

In Belgium, the tax authorities cannot look at your bank accounts because of the banking secrecy rules. Recently, legislators have given the tax authorities more power to investigate your bank accounts in some circumstances. However, to keep up the appearances, the banking secrecy is maintained by storing the information about the accounts with the National Bank. The National Bank already has the list of your Belgian bank accounts, now you have to report your overseas bank accounts yourself. You can do that online or in standard paper form.

There is not much information in National Bank’s database, all they have is a list of all your bank accounts; they do not know how much money you have on your accounts. The list is meant to help the tax authorities when they wants to investigate your bank accounts, but they can only get that list if they have indications of tax fraud or if you spend more that the income you have declared, and if he has given you a chance to give that information.

Marc Quaghebeur is a lawyer and partner at De Broeck, Van Laere & Partners

More information at www.taxation.be