TEP-Talk: EU Officials : An Introduction to taxes
EU officials have a favourable tax regime. Not only is their remuneration tax exempt, they are not considered Belgian residents.
The tax status of an EU official is governed by the articles 12 and 13 of the Protocol (No 7) on the Privileges and Immunities of the European Union.
Article 12 states that the remuneration they receive from the European Institutions is exempt from national taxes in the Member States. The exemption of the remuneration paid by the international institutions is a standard provision in the Seat Agreements Belgium has signed with all international organisations that have a seat in Belgium.
Article 13 determines where EU officials have their tax residence. The deemed tax residence is specific for the European Union and it is often misunderstood.
When the first EU officials moved to work for the institutions, they realised that they had to give up their tax residence. They would become resident in the country where they lived. One of the basic principles of international tax law is that you are a resident in the country where you live and have the centre of your vital interests (we used to say that you had your residence where you have your dog, your slippers and your newspaper. In that country you are liable to income tax, capital gains tax and inheritance tax on your worldwide assets.
To cause the least disruption for EU officials, article 13 introduces the principle of the deemed tax residence.
In this TEP-talk, we will explain what this means for an EU official.