Backed up by two parties in the opposition, the ruling coalition today approved the reform.
King Albert II, who turns 79 tomorrow and who enjoys an annual tax-free allowance of 11.5 million euros (USD 15 million), will be exempt however, because the constitution does not allow changing rules for the reigning royal.
Instead, it is the king's children and the widow of king Baudouin, Queen Fabiola, who will be affected by the new rules.
Money earmarked for staff and expenses related to carrying out his job will be taken from the initial stipend and will not be taxed, but those costs will be closely scrutinised.
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His siblings, Princess Astrid and Prince Laurent, will receive gross wages of 90,000 euros.
Queen Fabiola, whose annual allowance was this year slashed from 1.4 million euros to 923,000 euros, recently faced an unprecedented attack from the media, the public and politicians after deciding at the age of 84 to set up a private foundation to provide funds for her nephews and for Catholic charities on her death.
From now on, the surviving spouse of a sovereign will have funds cut to two-thirds of that of an heir for 10 years, and to just half of it beyond that period.
In the future, only the heir of the throne will receive an allowance.