In principle, a European official is a tax resident of the country in which they have established their tax residence. In Belgium, the effective place of residence, which is characterized by a certain level of stability over time, is taken into account. Therefore, the tax residence is the place where the taxpayer has established their family and social life.

However, European officials shall exceptionally maintain their tax residence in the country where they were established last at the date of their entry into service, provided that the following three conditions are cumulatively met:

The official’s initial residence was located in a Member State of the European Union.
The official has established his or her new residence in the territory of another Member State.
For the purpose of performing professional functions in service of the European Union.
This exception, known as the ‘residence exception’, has certain effects: European officials living and working in certain Member States (mainly France, the Grand Duchy of Luxembourg and Belgium) are considered as tax residents of another Member State.

This rule applies to European officials for as long as they are in service. Upon completion of said service, for instance through retirement, the residence exception no longer applies. European officials can then find their tax residence transferred overnight from one State to another without their living habits having changed.

Income taxes

In their tax residence state, European officials must file a tax return. The content of the declaration may vary from one state to another, but the principle remains the same. Furthermore, it should be noted that in Belgium, if a European official is married to or legally cohabits with a person whose tax residence is established in Belgium, they ought to file a distinct tax return.

Exceptionally, European official are not required to report the income deriving from their work for the Union, which is taxed by the Union. however, all other income will have to be reported, regardless of the source.

The same principle applies to multiple other information which ought to be communicated to the tax authorities of the tax residence state, including foreign bank accounts which the European officials may hold.

In Member States other than their tax residence state, European officials may also have further reporting obligations. As it is the case, for instance, in the event of owning real estate property located in that country.

Inheritance tax

In the event of the death of a European official, their heirs are also bound by a series of obligations.

It is therefore important to note that, if the death occurs while the European official is still in service, the residence exception shall apply.

For example, the inheritance of a European official, whose tax residence is established in Spain, but who lives in Belgium, will therefore be subject to the Spanish tax, if he or she dies “while in service”. If he or she continues to live in Belgium after retirement and passes away, the inheritance will be subject to the Belgian tax.