Working in Belgium via Connexion

[fatboyContractor]

Hi,

I am surprised that there appears to be no thread concerning the current situation about working in Belgium via Connexion.

The news I have is nothing short of astonishing.

Just before the end of Jan, on the 29th to be precise I received an email from Connexion stating that the split scheme was a thing of the past and that they had received an 'exclusive agreement' with the BTA(Belgian Tax Authorities) to offer a 75% - 25% split in its place.

They also sent an email with a letter attached supposedly from the BTA signed by two of their goons, where it states that Connexion are the only company to have been awarded this preferential status.

Another email arrives from Connexion states that returns for 2007 and 2008 must be revisited and that an effective penalty of one months salary for each year must be paid to the BTA in order to get into the new scheme.

They also quote threatening comments about doing this will avoid, fines, back taxes and raids etc etc.

They also appoint one Christophe Boerave Tax Specialist and professor of Fiscal studies at the ULB(Free University fo Brussels) to collect and pay the money.

If you do all the above you will arrive on a "Golden List" which will exempt you from further investigation, for example , when the tax people turn up at your company HQ and star comparing names and amounts supposedly earned. Any "Golden Boys" or 3girls 3 for that matter will be given the red carpet treatment.

I have questions, loads of them.

1. So we are supposed to send money to Mr Boerave who will then distribute to the BAT and you will get a Golden certificate in return - fine - but what about my usual accountant, taxman and normal tax return, how will they be affected? Answer from Connexion, it won't they won't know anything about it. All stays dilly squat. Sounds dodgy doo to me.

2. How come Connexion and no other agent have the agreement, they can't give it to one an not the others. Likewise why should I as an independent in Belgium gain a fiscal advantage over all the others, without this agreement being law? Again sounds dodgy. The taxman simply can’t go around offering better deals that the Belgian statute says that it can.

3. The 25% will be paid into some sort of fund somewhere - the contractor gets a debit card - the BTA accept all this so that the contractor can use the money for expenses. Your name will not be anywhere connected with the account, you don't have online access etc etc . Connexion charge 1% to put the money in the account and Cash withdrawals are 2% Again this sounds so dodgy I can hardly believe it.

I have yet to establish the validity or otherwise of the doc from the BTA.

I have arrange a meeting with Boerave and have a few question for him, but get this as well.

I am hearing all sorts of noises about Connexion - they are going down, they are under a three country investigation etc etc, VAT fraud etc etc. certainly the owner Hugo Jankovitz does not answer any mails and his Cape Town based property dealing co's emails are bouncing back.

Someone has suggested to me that if there is a very heavy clamp down in Belgium the like of which has been already reported on this forum for Germany, then a class action suit against Connexion may follow. They earned their money doing the split it was their scheme and they even adjusted monies yearly advising people what they should charge - they controlled the whole thing. Many years back I studied law and it has been suggested that as they earned their money arranging and advising on the split they too could be liable if a class action were forthcoming

Any information which anyone else has would be welcome.

fatboy

[contractor34u]

Working in Belgium via Connexion or not

Hi Fatboy,
Same story as far as I'm concerned.
To come back to your question 2, I agree that the whole story seems dodgy. But quite often, it is more advantageous for the taxman to strike a deal with a taxpayer that failed paying all its taxes (& let him continue his business in a more legal way) than investigating it in details, which will take quite some time, energy & resources, with the risk of not finding real evidence &/or leading the company to bankruptcy & getting nothing back at the end. Plus Connexion is based in Luxembourg & the BTA can not just turn up on Connexion's door step to audit it. It must contact first Luxembourg Tax Administration to do so. How long can it take? Banking secret is still alive (not for many years though I think). The problem is "everybody" is aware of the "system", BTA included.
So Connexion says that this "ruling" is the outcome of a deal agreed with the BTA, at the expense of the contractors.
I would not count too much on a class action against Connexion.
IMO, the best thing to do is to leave Connexion asap (you should be safe if you have not submitted any invoice yet in 2009). I heard that Connexion has to come back to the BTA by 1st March with the list of actual contractors. Being on this Golden list is recognising that one has been fraudulent. Up to the BTA to prove it.
Please let us know the outcome of your meeting with that lawyer.
Cheers

[Pepso]

Hi,

I am in the same situation, as I am working in Belgium via connexion. My current set up is independent + management company. Are you still with them? Send me a private message if you want to share our experiences on this matter.

regards,

[Pepso]

Hi ,
unfortunately, I have already invoiced connexion for January 09.
I agree that the best thing to do is leaving Connexion, but to go where? How do you know that they are going to provide the list of contractors by 1st of March?
Anyway, the BTA has already our names, as they know who was/is on the payroll of the societies controlled by Connexion (see the letter attached to the mail sent us). I have received in the past a letter from the BTA with requests of information about one of these societies.
Regards

[fatboyContractor]

I think things may be more serious than one imagines.

I spoke to the MD at Connexion, I have been with them for some time - he told me that the previous MD had received letters from the BTA asking for appointments etc to discuss things and those letters were binned. This was 24 months ago. Three letters were binned in total then the BTA turned up. he claims other management co's have done likewise. i.e binned them.

Lux - I lived there for ten years - will do anything the BTA ask - poodles - for so long as it doesn't involve any Luxo's - dodgy dealing will be tolerated - to a point. Thsi doesn't involve banking secrecy and even there they will open the books in extreme cases. MD confirmed BTA have been to Lux.

They, Connexion then held their hands up - negotiations have been going on since then. This is a MADOFF style thing as they kept taking people on knowing that the game was up and or the net was closing.

I asked the MD about the new 75% - 25% slpit and how this can be legal, appranetly he has been in meetings where it has been agreed and as a result emails/minutes have gone out to the BTA with REYNDERS in copy (Belgian Finance minister), he knows about the scheme and has ok'ed it.

He also said Reynders knows the market in tax to Belgium is worth Euro 500 million form the contractors and they want some of it or all of it in fact. Currently they claim to get nothing which is tosh - most people pay on at least 40%.

So the upshot is that on the new method I can claim 25% expenses on my gross with Reynders/BTA approval, my neighbour who is also an independant but happens to be a dentist cannot - welcome to Belgium. WTF ! Seems that there are many 'local ' schemes around like this depending on the profession or area of expertise. For all said and done there are 10k European fonctionnaires who pay nothing or as close to nothing as possible - no communal taxes, no basic tax. Some communes like Wezeembeek actually discourage those people from living there because they can't get money out them to finance the upkeep of their ommune. But those guys are untouchable..

As to the future - one pays up via Boerava - on the following scheme.

Take Gross for 2007 remove 25% allowance. then take the % already put through belgium - so say you put through 40% - this means you are still liable on 35% of the money. This is then taxed at 31.5% total - ALL PAID UP and DONE. Boearva splits the moeny via the tax and socilal security dept.

Catch - Boerava takes 2.5% of the amount calculated as owed as his fee.

Do the same for 2008 and then you are clean. For me its 25k

I guess from what I hear the BTA will do the rounds of all management co's it just depends on if you think you will hang around here long enough to get caught.

I hear that people at Euroclear via Connexion are already being investigated and that some who didn't want to play now have Euro 100K plus bills to pay - which can be life ruining depending on your circumstances.

As for the future if you stay with Conenxion the 25% goes to a private trust or MPTA agreed and accepted by the BTA - you can draw on that with issue s or worries. Of course there are the usual silly fees and set up costs these people charge - the whole wold has become a commission salesman.

The rest, the 75% you pay the full whack, again depends on family circumstances but you will lose 50% of that, possibly a little more, possibly less, depending on what you put through.

The total net retention worst case should be 57% after all costs, including the connexion fees.

Hope this helps.

[fatboyContractor]

Hi ,
unfortunately, I have already invoiced connexion for January 09.
I agree that the best thing to do is leaving Connexion, but to go where? How do you know that they are going to provide the list of contractors by 1st of March?
Anyway, the BTA has already our names, as they know who was/is on the payroll of the societies controlled by Connexion (see the letter attached to the mail sent us). I have received in the past a letter from the BTA with requests of information about one of these societies.
Regards

Hi Pepso,

Not sure I am aware of that letter can you post somehow ?

[Pepso]

Hi,
send me a PM with your email address. I received this letter from BTA 1 year ago with a lot of inquiries about connexion.
regards

<mod note>Have upgraded your account to allow use of PM system. New users who want to use the PM system need to contact the administrator using the contact form</mod note>

[soophy]

Pepso, you can opt other Luxemburg management companies to do the same as connexion right.

Or do you think BTA can trace all Management companies in Lux?

[Rantor]

I have yet to establish the validity or otherwise of the doc from the BTA.

Indeed

I used to work through a similar arrangement with another mgmt co. and this type of outcome doesn’t surprise me too much. The ambiguity around this stuff is a classic Belgium compromise but it also carries the risk of it being revisited at some point in the future.

However, I would say that this development sounds well dodgy. You are being asked to sign over swathes of cash that you may or may not owe to the tax authorities, in return for supposed exemption from further investigation. All of this administered by some private tax consultant, who will transfer the cash on your behalf to the tax authorities while charging you a further commission to keep a chunk of what you surely already have? Of course, you don’t need to mention it to your accountant or your local tax office who could still select you for a full control via the usual process.

Anecdotally, I have heard there is something afoot in belgoland relating to mgmt companies, and I’m glad to have moved away from that way of working, but how much of this is based on fact, I’m not so sure.

One thing I've learned, a lot of people here are interconnected and things ain't always what they seem. Take care.

[fatboyContractor]

Hi Rantor,

Agreed 100%, albeit that this guy Boerava is a Professor of Fiscal Studies at the ULB and he will be paid for his services - to sit in between the BTA and the contractor. Seems like he is known in the good cause arena in Belgium, Red Cross and Aids work. He should be OK.

Certainly does concern me about paying monies to him and not directly to the BTA though I will want some proof - apparently he will arrange the necessary split for Social Secutiy and tax.

It also concerns me that supposedlly the 25% has to go through some dodgy trust company. if the BTA are genuinely OK about the 25% you should be able to put it where you like, as in Holland. In this case it will be 100% legit, local agreed arrangement so why the dodgy dealing, funky trust fund ?

Therefore I have one question to the whole lot of them why not simply cut out the managment co`s do the deal which is agreed with the real tax man, get you accounts adjusted and move forward with an agreed 75 -25 split ?

Like you said this is Belgium and they seem to like to behave in this cloak and dagger fashion. Aso could the ministry of finace actually do all the necessary checking and paper work to handle it all? Doubt it. Much better they all go out to an early lunch and get some other idiots to do the work.

Whoever thought up the "Golden List" idea should get a prize for the most crass name ever. Sounds like a joke.

Someone also said to me, if he was going to pay extra via the lawyer then he would also want this reflecting pensions rights etc, according to their message so far this will not happen.

Yes there is something a foot here, they are cleaning them up as explained above. I also agree be careful, make your decisions wisely and carefully.

Lastly the overriding thing that gets me about connection is they are simply commission salesmen, smooth Cape Town accents, but none of them qualified in the tax arena. Most call themselves solution providers for goodness sake, jargoned up a bit after 30 mins on google..

What I am asking myself is given that the last game they sold was duff, why won`t the next be - it has all the hallmarks. If they don`t sell some deal their existence becomes uncessary.