The Belgian tax system grants tax benefits linked to the personal or family situation of the taxpayer solely for income received in Belgium. Where the taxpayer receives income originating in Belgium and income originating in another State, Belgium applies a rate corresponding to the percentage of the taxpayer's total income that is accounted for by domestic income. An additional tax reduction is granted if the taxpayer's personal or family situation has not been taken into account by the tax authorities of other countries. However, no such additional reduction is granted if the State in which the income originates offers the taxpayer the option of receiving these benefits in that State, even if the taxpayer has not exercised this option.
The Commission considers that the Belgian rules may constitute an obstacle to the free movement of persons and capital. Under EU law, a Belgian taxpayer receiving both income originating in Belgium and income originating in other European States is in the same position as a taxpayer receiving income originating solely in Belgium. However, the Belgian rules referred to above limit the amount of tax benefits available insofar as the income originates outside Belgium.