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Belgium's largest tax, levied annually on each individual's total taxable income at a progressive rate.
PIT is the most important tax in Belgium. It applies a progressive rate to each individual's total taxable income — four brackets, with the top marginal rate at 50%. The headline rate is what an extra euro is taxed at; what most people actually pay is closer to the average rate, which is lower because the first segments of income are taxed less or exempt. Tax credits and deductions reduce the final amount.
A consumption tax included in the price of every good and service, with four rates depending on the category.
VAT is Belgium's main consumption tax — paid by the buyer at the point of sale, collected by the seller, remitted to the state. Households spend a larger share of their disposable income on consumption when they earn less, so VAT bears down harder on lower income deciles. Belgium uses four rates: the standard rate (21%) covers most goods and services; reduced rates apply to essentials like food, books, and public transport; some categories are exempt. Adjusting any rate shifts both consumer prices and the distribution of the tax burden across deciles.
A flat-rate withholding tax on income from financial assets — dividends, interest, royalties — separate from the regular income tax.
Investment income — dividends, interest, royalties, capital gains — is taxed separately from labour income in Belgium. The headline rate is 30%. A few categories carry lower rates: interest on ordinary savings deposits is partly exempt and partly taxed at a reduced rate. Adjusting the rate shifts the relative attractiveness of saving versus consuming, and affects wealthier deciles more than poorer ones (capital income is concentrated at the top).
Targeted taxes on alcohol, tobacco, and fuel — motivated by public health, environmental, and fiscal considerations.
Excise duties are indirect taxes on specific goods — primarily alcohol, tobacco, and motor fuels in Belgium. Unlike VAT, the amount depends on the quantity or strength of the product, not its price: a beer is taxed by its alcohol content; cigarettes by the pack; diesel by the litre. Excise rates send strong policy signals — raised to discourage harmful consumption or environmentally damaging activities, and lowered to address economic, social, or competitiveness concerns. Because excise-bearing goods are disproportionately consumed by lower deciles in absolute terms, changes impact lower deciles harder than higher ones.
A regional tax on vehicle ownership, varying by engine size and fuel type.
Belgium's car taxation is regional — Brussels, Flanders, and Wallonia each set their own rates within a federal framework. Vehicle owners generally face two main taxes: a one-off registration tax (Tax on Entry into Service, TES) when a vehicle is first registered in the owner's name, and an annual Circulation Tax (CT). The annual tax is largely based on the vehicle's fiscal power (an administrative proxy for engine size), with rates varying by fuel type (petrol, diesel, electric). A smaller Additional Circulation Tax (ACT) applies to LPG vehicles. Car taxation is an important environmental policy instrument: adjusting registration or annual tax rates according to emissions, engine size, or fuel type changes the relative cost of higher-emission vehicles compared with cleaner alternatives.
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