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I'm a Finnish (FI) citizen working with a full-time contract in a company. I'm going to do a 3 months job abroad in Belgium (BE) in a different company. During this time my contract in FI is going to be suspended, and therefore I only have income from BE. I'm confused on whether and where I should pay income tax for that three months time.

From the top of my head this situation looks like this:

  • Finnish tax agency point of view: I have income worth of only 9 months for the whole year, which results in a tax refund since my annual income was less than expected.
  • Belgian tax agency point of view: I have income worth of only 3 months for the whole year, which is significantly less than the calculated annual income and thus I get withheld tax refunded.

This doesn't seem right. To avoid any financial surprises I'd like to know what would be the correct way to deal with this, e.g. which country should the tax money go to and how do I make it go that way? I read that many countries have double tax agreements, which spare taxpayers from double taxation. This of course implies that both countries are aware of the income. Does this happen automatically or do I have to explicitly claim my income from BE as income in FI?

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Every country has its own tax code. Consult a professional in each country regarding income earned in that country.

Anything else is speculation.

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I cannot speak for the specific jurisdictions but you will generally pay income tax in each jurisdiction and be required to declare your foreign income in both. Your annual assessment takes into account both domestic and foreign income so sadly, there is no tax windfall to you.

I would imagine that Finland and Belgium have tax treaties so you will not have to pay tax twice.

You need an accountant in both countries to sort this for you.

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I also don't know the specific details for Finland and/or Belgium, however many countries have tax treaties, which generally prevent double taxation (i.e., paying tax in both countries on the same base income). Being that both Finland and Belgium are EU member states, I'm quite certain there's a provision that covers this, and the same would apply: You pay taxes on what you earn while in Finland to Finland, and to Belgium what you earn while in Belgium. All of this is similar to what you presented, however there's also a section where you'd declare how much taxes were paid in other countries.

One other thing to note, which will be the determining factor in the above, is whether EU law requires you to change residence to BE for the time you're there. If not then you'll be paying taxes in Finland the entire time on the entire amount.

This comes from an Irish governmental site:

"By working in another member state and by transferring your residence there, you are likely to become "resident for tax purposes" there. The definition of fiscal residence varies from one member state to another. You must comply with the laws of the country where you have established your residence. The laws on personal taxation vary considerably from one member state to another and you may be liable for taxation in more than one country. In general, you are subject to income tax in the country where you are living but this may not be the case if you are a “posted worker” – see below. In general, property is taxed in the country in which it is situated but, again, there are variations.

Tax agreements have been concluded between most of the member states of the EU, which are intended to avoid double taxation, if you derive income from different countries.

In general, national fiscal rules must respect the fundamental principle of non-discrimination against nationals of another EU country."

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As I understand it the usual rule is that the country you are "resident" in taxes you on your worldwide income but gives you credit for foreign tax paid. The country you are not normally resident in taxes you only on income from that one country.

Note that residence for tax purposes can have different rules from residence for immigration purposes. At least in the UK being resident in the country for more than half the tax year normally makes you tax resident and there are some other cases too. I expect other countries are similar but the details of the rules and the start/end of the tax years may vary.

I don't know the exact rules for finland and belgium but I expect your Belgian taxes will be based on your Belgian income only and your Finnish taxes will be based on your worldwide income but with a credit for your Belgian taxes.

Engaging accountants from both countries to confirm the exact rules and what exactly you should put on the forms is almost certainly a good idea.

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