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Contracting in Belgium - A Short Guide to Tax and Social Security

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    Under 3 months, you owe nothing to the locals.

    Greater than 3 months, but under 183 days, you're only taxable on your income earned in the foreign country - ie; just your salary.

    So if you want to avoid paying the foreign country anything, don't pay yourself a salary during that period; just dividends.

    After the 183 days, your world-wide income becomes taxable, and so then that includes those dividends.

    However, realistically you are not going to be challenged on anything up to 6 months (as the authorities have bigger fish to fry, assuming they even know about you), and you can even get away with a year, since no tax returns are even due until the following year by which time you can be long gone.

    Just keep your mouth shut.


    If you go on year after year, you need to register your UK company in the foreign country and start paying local taxes. That's when you must go see a local accountant (who will probably charge you twice as much as a UK accountant, for doing half as much work -- And you still need your UK accountant too so expect your accountancy bill to more than double in the latter years! Hardly fair, but then no-one cares about us).
    Last edited by Sergeant Murphys Cosh; 4 September 2010, 20:26.

    Comment


      Originally posted by wogewwabbit View Post
      Hi,

      No, I haven't been here for longer than 183 days, I've been here only for 15 days yet.

      The 183 days rule only applies to *worldwide* income, as far as I know. If any part of my income is sourced in Belgium (and in my case it is 100% of the income), then that part is still fully taxable in Belgium, no matter how much time I spent in the country (this is why I said that the 183 days rule doesn't apply).

      But I am pleased to be corrected if I am wrong.
      If you are contracting through your Ltd Co. then you are wrong and the 183 day rule does apply to all income earned by YourCo and any earnings paid to you from same.

      Boo

      Comment


        Originally posted by wogewwabbit View Post
        What I would like to find out is that if I spend less than 183 days in Belgium, and I pay ALL my taxes to the UK for this period, is it going to be coveded by the Double Taxation agreement?
        If you work less than 183 days you do not fall under the Belgian tax systems so will pay no tax there so the DTA does not apply.

        Originally posted by wogewwabbit View Post
        If I get an E101, and register with Limosa, I think it will be clear from the beginning, that my income is sourced in Belgium. And Belgium will ask me to pay taxes. Do I just tell them that I paid taxes in the UK already? I really have doubts that they would accept that.
        No, Limosa will have the contract dates and so they will know that the 183 day rule applies and should not send you a tax form. If they do then your accountant will explain that the contract is worked under the 183 days rule (assuming as before you are working through your UK based Ltd Co.).

        Originally posted by wogewwabbit View Post
        What I would like to get is some advice on this, or at least a contact of a good accountant in Belgium
        Google "accountant" + "contract destination town name in Belgium", that's what I did, then phone for an appointment and pop in. They will chat to you for half an hour and send you away with an easy mind.

        Boo

        Comment


          What I would like to get is some advice on this, or at least a contact of a good accountant in Belgium.
          Originally posted by Boo View Post
          Google "accountant" + "contract destination town name in Belgium", that's what I did, then phone for an appointment and pop in. They will chat to you for half an hour and send you away with an easy mind.
          Alternatively, don't get into the system at all, and keep your head down. They charge a disgustingly greedily obscenely high 50% tax in Belgium which you WILL be on.

          Comment


            Originally posted by Sergeant Murphys Cosh View Post
            Alternatively, don't get into the system at all, and keep your head down. They charge a disgustingly greedily obscenely high 50% tax in Belgium which you WILL be on.
            You will most likely find that the agency/client insist on you going through Limosa which kind of puts the kibosh on that. I think I mentioned before that you can restrspectively register on Limosa, so if the OP wants to see if skipping that is a goer then s/he can do so and regularise the position if client or agency kicks up a fuss at a later date...

            Boo

            Comment


              Originally posted by Boo View Post
              You will most likely find that the agency/client insist on you going through Limosa which kind of puts the kibosh on that. I think I mentioned before that you can restrspectively register on Limosa, so if the OP wants to see if skipping that is a goer then s/he can do so and regularise the position if client or agency kicks up a fuss at a later date...
              I wouldn't worry about Limosa though. Just fill it in if you must. All it says is that you are sending someone to work in Belgium. It doesn't mean that you/they are automatically liable for local taxes (since how you are taxed depends on your exact circumstances), but it was designed to prevent exploitation of manual workers from the recent EU joiners (Bulgaria, Romania etc., rather than being for a self-employed IT worker who can't exactly exploit himself !

              Comment


                Thanks a lot for the replies. I think I've had all my questions answered. If I am arriving to Belgium every Sunday, and leave every Friday, then it leaves me with 4 days per week (according to how the 183 days rule is calculated at least in the UK, not counting the days spent with travel). That would leave me with 10.5 months to work in Belgium, which is far enough until the end of this financial year.

                About salary: I am in the very fortunate situation that I have already earned the NMW this year through my previous permanent job, and paid employee taxes and NI after it. Although it reduces the tax-free income I can get, but it also allows me to take £0 salary - this way I will only have dividend income. So I think I can say that I am working fully legally in Belgium, while paying taxes in the UK.

                So far I think I have made the best decisions of my life by moving to contracting on the one hand, and by making myself my own boss by forming an Ltd on the other. The payment I get is the best stress reliever, I couldn't be bothered less with bigheaded permies around in the workplace, and I feel very motivated, as finally my career is not up to my bosses, it is only up to me. Maths have never appeared to me so exciting as they do now.

                Now that I am looking back to being a permie, I had always felt a lot less secure in my job than I do now. You are dependent on your bosses and partly on some of your ill-minded colleagues, and in the current climate redundancy can hit in anytime. The bigbrother is never interested in making you think that you are good, rather they try to motivate you by not giving you enough credit, so that you work harder. At my previous workplace it was impossible to get promoted without doing overtime, or working from home over the weekend, and of course you didn't get paid for the extra work.

                Comment


                  Can anyone here let me know about efficient ways to transfer euro to sterling within the UK? Apparently the exchange rate at my bank is 3.6% higher than the actual trading rate, which is ridiculous. I don't want to throw that much money out of the window.

                  Comment


                    Originally posted by wogewwabbit View Post
                    Can anyone here let me know about efficient ways to transfer euro to sterling within the UK? Apparently the exchange rate at my bank is 3.6% higher than the actual trading rate, which is ridiculous. I don't want to throw that much money out of the window.
                    Open a company Euro account and get paid into that instead. Then you have the control over the exchange rate used to convert back to Sterling.

                    Comment


                      Originally posted by wogewwabbit View Post
                      Thanks a lot for the replies. I think I've had all my questions answered. If I am arriving to Belgium every Sunday, and leave every Friday, then it leaves me with 4 days per week (according to how the 183 days rule is calculated at least in the UK, not counting the days spent with travel). That would leave me with 10.5 months to work in Belgium, which is far enough until the end of this financial year.

                      About salary: I am in the very fortunate situation that I have already earned the NMW this year through my previous permanent job, and paid employee taxes and NI after it. Although it reduces the tax-free income I can get, but it also allows me to take £0 salary - this way I will only have dividend income. So I think I can say that I am working fully legally in Belgium, while paying taxes in the UK.

                      So far I think I have made the best decisions of my life by moving to contracting on the one hand, and by making myself my own boss by forming an Ltd on the other. The payment I get is the best stress reliever, I couldn't be bothered less with bigheaded permies around in the workplace, and I feel very motivated, as finally my career is not up to my bosses, it is only up to me. Maths have never appeared to me so exciting as they do now.

                      Now that I am looking back to being a permie, I had always felt a lot less secure in my job than I do now. You are dependent on your bosses and partly on some of your ill-minded colleagues, and in the current climate redundancy can hit in anytime. The bigbrother is never interested in making you think that you are good, rather they try to motivate you by not giving you enough credit, so that you work harder. At my previous workplace it was impossible to get promoted without doing overtime, or working from home over the weekend, and of course you didn't get paid for the extra work.
                      You need to check that 183 day rule again, that wouldn't work in most places, basically if your contract runs longer than 6 months you'll probably be liable for tax. The only way to be sure is to see a reputable Belgian accountant. The other point to remember is if you leave before 6 months you're probably not liable for tax, but if you stay 6 months and one day you're liable for the full amount, not just the one day. Normally it is just easiest and best to pay local tax, then there are no problems.
                      I'm alright Jack

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