Working in Belgium via Connexion

[xsanch]

Hi Nodric,

thanks a lot for this post. I have been offered a long term (2 years and maybe more) contract in Brussels which I accepted. Now what options do I have:

* to be independent - according to you I will pay 22 percent SS and from the rest 50 percent income tax which is not very convenient.

* set up the BVBA in Belgium (too much expensive don't have the 16k euros now)

* set up Ltd company in my country (Czech Republic) and then create a local branch of this company in Belgium (don't need to show any money on my bank account)


Have a few questions to you:

* how is it with the company Manager, I read somewhere that in case of small company the manager must exam some management skills or have 5-7 years experience. Is this still needed ?

* could you give me some contact ? I need to speak to tax advisor and also lawyer

Thanks,

Jorge


[QUOTE=nodric;874712]

Guys,

If you are intending to operate on a 100% declaration in Belgium there is no need at all for a ManCo of any kind. As Self Employed (Independent) or a Ltd Co (BVBA/SPRL) you will be fully registered for VAT etc so, can invoice the agency directly and keep the extra fees charged by a ManCo. The agency cannot refuse, and most won't, but if they do, set your accountant on them.

However, big red flashing warning light here.

If you operate as an Independent in Belgium 100% legit you will be crucified for taxes and especially social security. On a modestly declared income of 60K Euros a year you will be paying Over 10K a year in SS and could face a tax bill of 30K unless you have significant deductible items (very hard as a single guy living in a bedsit!). Take note that 60K a year is about 250 Euros a day. Imagine if you earn a lot more than that SS rises very sharply as your income does and, it has an impact on what you pay in coming years. i.e. SS is charged in future years based on what you earn now! So even if your income goes down in the future your SS will take years to catch up!!! Take it from someone who feels this pain right now

The reason people form a Ltd Co is that the company profits are taxed at 23% and there is no SS on them. You pay yourself a modest salary (36K a year is legal min) and this limits your SS and personal tax to around 1K a month. Then it is usual that the Ltd Co claims all deductibles against any tax it may be liable for on profits. The range of deductible items are far greater than those of an Independent and, other benefits are possible.

The drawback with creating a company in Belgium is that it should be considered a medium term commitment. There are costs to set it up of around 1500 Euros and, you must have capital in a bank account of 18K Euros. This can be reduced to 12K, or in the case of 2 directors 6K. This is money you must pay into the company to start it up.

The reason ManCos exist is to reduce the earned income in Belgium which, avoids the SS trap! The problem is most of the ManCos are not legit in anyway, despite what they tell you. The only way to avoid paying huge tax and SS bills in Belgium as an Independent is not to earn the money in the first place. If you worked for a foreign company who paid you a salary in Belgium, on which you pay tax and SS then you are legit. The balance of the monies that the 'company' charges for you belong to that company. Some of you with UK Ltd Cos could operate like this as long as you are not the sole director and sole income earner... Think about this...

This foreign company approach is adopted by a few offshore ManCos using pensions and funds for the future benefit of their employees They are legal of course but, risky, as they legally own the cash and, should they wish can vanish and you have no leg to stand on. The other problem is of course if they link you to the money now, or in the future, it can be shown as foreign source income and therefore you can be held liable for taxes on it.

The UK government has done a great deal to stamp out these schemes often known as EBT (Employee Benefit Trusts) hence why most UK contractors are legit nowadays.

Most of these sorts of systems rely on you leaving the country where you are tax resident and, withdrawing the funds at that time, maybe declaring the money into a lower tax regime wherever you move too.

So, if you are here for less than 12 months you can go 100% legit as an Independent, and then leave before your tax return arrives! But, if you intend to remain (who knows how many extensions you may get) then be very very careful about the SS trap. Seriously consider a Ltd Co if you intend to stay or, find a Management Solution that works for you, bearing in mind the issues of whose money it really is and, the penalties for getting at 'additional' funds in the future.

Of course the Belgians could get real and introduce a 30% rule like their Dutch cousins but, that's not going to happen soon

[NoMoreSleeplessNights]

My tax % for 2007

Well I've just received another Belgium tax demand for 2007, this one's the Social Security adjustment for the 2007 income.

In total, adding the SS+tax both prepayments and these adjustments, I am paying just short of 60% tax on my income after allowable expenses.

I have to say I'm in shock, I only just paid my income tax for 2007 and barely managed that! Calculating my bank balance, I had about 20k in the bank when I came here 3 years ago, I've worked continuously, had only 1 holiday, and I calculate I will be in debt by 7k at the end of the year.

I assume there must be some mistake???? I don't see why anyone would work for negative money!

There don't seem to be many allowable expenses either, I can't claim, for example, a part of my rent for the room I setup as an office?

I don't see how I can do this, I've had too many sleepless nights lately (hence the moniker) over these bills, so I'm going to avoid paying the Quarter 4 tax prepayment and instead use the money to leave Belgium before that SS bill becomes due at the end of the year.

I see lots of Belgium people in big cars with designer clothes and I just don't get it? How do they do that? I am by Belgium standards a high earner, I live modestly in a regular apartment, don't eat out much, yet there isn't enough income after tax to fund even that lifestyle?

[Brussels Slumdog]

Why the Belgians are richer than you

Well I've just received another Belgium tax demand for 2007, this one's the Social Security adjustment for the 2007 income.

I see lots of Belgium people in big cars with designer clothes and I just don't get it? How do they do that? I am by Belgium standards a high earner, I live modestly in a regular apartment, don't eat out much, yet there isn't enough income after tax to fund even that lifestyle?

Some of the reasons

1 If you are very rich then its like living in Switzerland . You only pay
25% tax on interest so if you earned €100,000 interest then you would
have a net income of €75,000. If you are an IT worker earning €100,000
you will net between €45,000 and €50,000. You don't pay income tax on
property like in France which attracts a few French tax exiles

2 Belgians receive a salary+ car . I don't think that you pay Social security
on the value of the car.
One of my ex PERM collegues earned about €36,000 and was driving a top of the range Volvo.

3 The Belgians that you notice are most likely 2nd or 3rd generation and have
inherited enough money to finance their house. This means that they
have the disposable income for all the designer clothes.
4 If you can speak French and Dutch plus English like the flemish then you
can earn real serious money from IT.
5 They run a real business where they can claim 4x4s and other gadgets

[NoMoreSleeplessNights]

If you are very rich then its like living in Switzerland . You only pay
25% tax on interest so if you earned €100,000 interest then you would
have a net income of €75,000. If you are an IT worker earning €100,000
you will net between €45,000 and €50,000. You don't pay income tax on
property like in France which attracts a few French tax exiles

Surely they can't ALL be living on investment income? Also I don't see how that IT worker thing works out, €50k?

A €60k programmer, say 20% allowable expense, leaves 48k after expenses, after 60% tax leaves only €19.2k.
A €80k, leaves €25.6k.
A €100k, ...€32k left

I assume I am paying interest on these payments and that contributes somewhat to the %, but look at entry level guy again, there's no way he can be prepaying €28k of taxes out of €19.2 k of money!

If he has say €900 a month for a furnished flat, that leaves him €8400k for food, clothes, fun, holiday and savings.

Suppose he can keep his food/fun/clothes bill down to 400 a month, thats only a surplus of €300 a month. A car loan would wipe him out, jeez, a month off sick would wipe him out!

I don't see how it works. Anyone whose not rich must be fiddling expenses or selling drugs or working for the EU. I don't see how else the self employed system can work!

[wntr]

Hi All,

I'm new to this board so a quick introduction. I've been working in Belgium for 3 years, 2 years though umbrella company in the UK (was a complete nightmare - won't bore you with it here) and 1 year as my own bvba. I was initially put off creating a bvba as you need to go through the process of getting registered here as it took me about 6 months to get a residents card (I actually found a company here ran by an English woman who did everything for me in a couple off weeks if anyone wants the details?).

My situation now is this. I invoice about 8k a month, pay myself 3k (2k in hand, 1k goes to taxes & ss), car, apt, travel rent etc all comes out of business expenses etc and what is left builds up in the company, which means most of my salary just builds up in my account and i transfer it over to the UK.

What is left in the company is just building up, till I can figure out what to invest it in / or i'll use it to continue to pay myself, should I wish to take some time out. I don't think you can hope for a better situation than this, if it's true, i'd love to hear what others are doing.

Thanks

[nikos]

What about corporate tax?

Wntr,

You still have to pay corporate tax on what remains after salary and expenses. Am I missing something?

Nikos

[NoMoreSleeplessNights]

Is BVBA the only option?

So is making a company the only legit option?

The market for my talents is mainly US/Germany/Switzerland, and I don't see how a Belgium BVBA would be useful outside of Belgium, which is a fairly small country.

I also don't see any tax efficient way of extracting the money from the company when I leave to start my next contract somewhere else. Let alone the capital equipment it has paid for, the car, house, computers etc. Also the EUR 12,400 initial blocked capital requirement is a pain to find right now.

I think paying rent from the company, just shifts the burden on that tax to the company. (Can anyone confirm?), so the company ends up paying the tax on that as a benefit.

When I looked at this company approach, it just seemed to stick a load of capital into Belgium and leave it tied up in Belgium, together with creating an expensive administrative nightmare for me. What happens if I only need the company for say, 6 months?

People in this thread have said it will only get my tax bills down to 50%, which seems too small to make it worth the hassle/risk.

All I really expected to do was work, live modestly, pay my taxes and leave with a little profit. Not a 9k a year loss, which is what my shortfall looks like.

Anyway, I meet with the accountants on Monday, so hopefully it will all be a big error and I can get the numbers to balance. I'll post the result on Monday.

[CyranoB]

Surely they can't ALL be living on investment income?

No they (I guess now I should say we...) live on company expenses.
Lots of ppl are also working black, at least partially.

Also I don't see how that IT worker thing works out, €50k?

At 50-60k€ you'd better be employee, no question asked. Again the only legit solution in Belgium is a SPRL.

If he has say €900 a month for a furnished flat, that leaves him €8400k for food, clothes, fun, holiday and savings.

900€ for a flat in Brussels??? This is a total rip off.

[xsanch]

Wntr,

could you please share the name and contact of that English woman?

Also have another question,according to this http://www.investinflanders.com/en/d...ng_a_business/

The local representative should prove his management skills prior to registering in the Crossroads Bank for Enterprises (CBE). Could you just tell me what was the procedure, did CBE required any diploma or proove of experience from you?

Thanks,

Jorge

Hi All,

I'm new to this board so a quick introduction. I've been working in Belgium for 3 years, 2 years though umbrella company in the UK (was a complete nightmare - won't bore you with it here) and 1 year as my own bvba. I was initially put off creating a bvba as you need to go through the process of getting registered here as it took me about 6 months to get a residents card (I actually found a company here ran by an English woman who did everything for me in a couple off weeks if anyone wants the details?).

My situation now is this. I invoice about 8k a month, pay myself 3k (2k in hand, 1k goes to taxes & ss), car, apt, travel rent etc all comes out of business expenses etc and what is left builds up in the company, which means most of my salary just builds up in my account and i transfer it over to the UK.

What is left in the company is just building up, till I can figure out what to invest it in / or i'll use it to continue to pay myself, should I wish to take some time out. I don't think you can hope for a better situation than this, if it's true, i'd love to hear what others are doing.

Thanks

[CyranoB]

Yes you need recognized diploma when you register in BCE. There is an official list of accepted diploma.
Some offices are less inquisitive than others (a paper with BSc or Master on it will be enough) while some other will check the university or school is on the list.