Personal Income Tax Reform Approved by Parliament

After a long period of standstill, the draft law on personal income tax reform has been approved by Parliament on 10 July 2026. The draft law was submitted on 17 December 2025 and Parliament had approved urgency proceedings on 15 January, yet the procedure still managed to take over 6 months.

In this update, we have highlighted the key measures for reward and global mobility professionals, with specific attention to the updated rules on copyrights for IT-professionals and the introduction of the 20 %-cap on lump sum benefits in kind.

1. Aim of the tax reform

The original ambition behind the personal income tax reform was to simplify the complex web of tax rules and scattered tax benefits. The package that has now been approved only partially delivers on that simplification, but retained its central policy goal: increasing net income for taxpayers who are actively working.

2. Copyrights income: reintroduction for IT-sector

One of the most notable measures is the clarification of the favourable tax regime for copyrights income. For more info, please consult our prior updates in this respect (NL/FR). Essentially it boils down to this:

Computer programs expressly covered
Computer programs now explicitly qualify for the beneficial copyrights regime. This is particularly important for software developers, IT consultants and businesses active in the digital economy.

Tax rate of 15 %
The qualifying copyrights income is taxed at a fixed 15 % tax rate as “movable income”, insofar as all conditions are met (capped amount; qualifying works and documentation). The former lump sum deduction of up to 50 % had already been made subject to an artist certificate, meaning IT-profiles will generally no longer be able to apply the lump sum deduction.
Entry into force
The update applies to income paid as from 1 January 2026.

3. Sanctions for “excessive” use of benefits in kind

The government has introduced two separate sanction mechanisms for overuse of lump sum benefits. The scope is defined as follows:

Benefits in kind valued based on lump sum valuation methods (e.g. company car, phone, qualifying stock options);
Exceeding 20% of the total remuneration (based on the salary forms, i.e. fiches);
Calculated per category (either on all employee income or on all company director income);
Excluding exempted social benefits.

The sanctions depend on the type of tax regime:

For personal income tax purposes and legal entities tax, a 7.5% surcharge applies to the excessive portion of benefits in kind (i.e. the part over 20 %);
For corporate income tax purposes, the 7.5% surcharge equally applies for benefits granted to employees. For benefits granted to company directors, the reduced corporate income tax rate (20 % on the first EUR 100K) is no longer permissible by way of sanction.
The measure applies as from assessment year 2027.

The application of the sanction mechanisms will likely remain quite exceptional for most large employers. However, for management companies there may be more frequent impact. Although the financial impact in itself will not be huge (approx. EUR 5K), the increase comes on top of the previously approved measures increasing the tax burden on VVPRbis dividends and liquidation reserves.

4. Refinements to existing regimes

Aside from the former two measures, several other personal income tax rules will be amended. We have highlighted the most relevant changes:

The general tax‑free allowances will be raised over five years. The tax-free lump sum will increase from EUR 10.910 (income 2025) to EUR 15.600 (income 2030), giving working taxpayers a higher portion of exempt income.

Because the increase of the tax‑free allowances equally benefits non-working taxpayers, the draft law simultaneously reduces the tax benefits applicable to pensions and replacement income, to financially motivate working over not working.

The rules for supplements to the tax‑free allowance for children at charge are being revised to better reflect current social and economic realities. The supplement for the first two children will be increased and aligned from income year 2029.

The supplement for single parents will also be made conditional to exclude factual cohabitants. The supplements are generally indexed annually. The indexation will be frozen for five years as a budgetary measure, but indexation will continue for handicap benefits.

Doctoral candidates are officially paid through scholarships for doctoral research fellows. These are subject to social security contributions but are not subject to personal income tax. Due to this exemption, PhD students and their spouses were previously able to enjoy tax benefits not designed for them, such as a tax credit for children at charge and application of the marital quotient. The legislator has now removed these taxpayers from the scope of both benefits.

The reform also addresses the marital quotient, which allows part of one spouse’s professional income to be taxed in the hands of the other spouse with a low income. The measure currently allows up to EUR 13.460^{^[1]} to be shifted annually, resulting in a potential net benefit of more than EUR 7.000.

For most taxpayers, the annual cap will be halved over a period of four years (income years 2026-2029) and then frozen at that level.

For spouses who are 66 or older on 1 January of the assessment year (67 as from assessment year 2031), a long but full phase‑out applies. The annual maximum will be gradually reduced over twenty years. As from income year 2045 the benefit will be fully eliminated.

For both categories the indexation of the annual caps will be frozen as from income year 2026. The mechanism of transferring tax‑free allowances between spouses remains in place, mitigating the impact of these measures.

The tax reform also implements a permanent exemption for voluntary overtime up to 240 hours, where no overtime premium is paid. Specifically for the hospitality sector, the exemption goes up to 360 hours under conditions.

For overtime with overtime premiums, the maximum number of hours to apply the tax reduction is increased to 180 hours. The withholding tax exemption mechanism is equally adjusted.

For pensioners unable to apply the flexi-job mechanism, a fixed tax rate of 33 % is introduced. There is no limitation on the amount earned, but the separate rate only applies to employment income, not to self-employed income.

The legislator has introduced a de minimis exemption of EUR 2.000 annually per taxpayer for miscellaneous income qualifying as abnormal management of assets (gross amount, assessment year 2027). In other words: all sales below EUR 2.000 will be irrefutably presumed as “normal management” and as such exempt from taxation. By doing so, the government wants to provide legal certainty for taxpayers who occasionally sell items through platforms such as Vinted or Marktplaats.

For gains over EUR 2.000, there is no automatic taxation. Only gains qualifying as “abnormal management of private assets” will be taxable as miscellaneous income, as is already the case today. However, when the sum exceeds EUR 2.000, the entire sum can be taxed in case the transactions are qualified as abnormal management.

A specific “entrepreneur’s deduction” is being introduced for self‑employed taxpayers. It allows them to exempt 10 % of their gains or profits^{^[2]} as from income year 2027, up to approx. EUR 620^{^[3]}. The measure intends to encourage entrepreneurial activity.

The obligation to prepay taxes for self-employed individuals is eliminated as from income year 2026, and at the same time they will continue to benefit from “bonifications” (i.e. tax benefits) if they voluntarily prepay taxes. The timing of the prepayment period is also adjusted; a fifth prepayment period is introduced running from 21 December until 20 February of the following year.

Company directors remain obliged to prepay taxes for the income not subject to withholding taxes.

The reform also increases the minimum remuneration of company directors which is required to benefit from the reduced corporate tax rate on the first EUR 100,000 profits to EUR 50.000 (now also to be indexed annually).

The special social security contribution will no longer be calculated per couple, but instead on an individual level (as from income year 2028).

As the tax reform aims to reduce the personal income tax burden, communal taxes will be equally impacted. Therefore, the government has been given discretionary power to set a correction factor to apply to the total amount of communal taxes, to counteract the expected losses.

Alimony payments paid out as capital are taxed annually through a fictitious annuity. As taxation of alimony payments has already been adjusted (gradually from 80 % to 50 % over three years), the changes have now been implemented for annuity payments as well.

What this means for you

Companies can now finally proceed with ruling requests to (re-)introduce copyrights income into their remuneration policy for IT-profiles.
Companies whose comp & ben packages rely heavily on benefits in kind and qualifying stock options should review their remuneration policies to identify any risk of crossing the 20% threshold and triggering the relevant sanctions, including management companies.
Tax burden for individuals may be significantly impacted by the combination of these amendments, depending on their individual situation.

_{[1] Indexed amount}

_{[2] The amount of gains or profits is corrected to exclude certain income components}

_{[3] This would be the indexed amount based on current indexation figures}