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

[paeses]

Well, MP would have helped in case they have e-mail notifications

Thanks

[nodric]

Well you'll have to wait awaile, the last time he was on this forum was July 2011.

Hi all!

As cojak correct stated I stopped writing on here some years ago, mainly as I left Belgium and have stopped contracting there.

I got a worried PM today and so decided to post here to update my views.

I am not, nor ever have been, an expert or accountant. I just had over a decade of experience working in Belgium, and explored every scheme known to man, and possible variants.

Since I left Belgium I have maintained contact with several freelancers, and monitored the growing tax clamp downs across Europe. Here is my view.

Europe took a huge financial dump, and driven by the campaigns of the UK and Germany in particular, and the US actions against the Swiss and others, there is now a concerted effort by all countries to eradicate tax avoidance, nay evasion!

The simple facts are that all the 'split' schemes are avoidance schemes, and sail very close to being evasion. The latter in most countries is illegal and a criminal offense. Fortunately in Belgium you rarely go to prison for it, but don't quote me on that!

My strong advice is to stop using any schemes now, unless you are working without LIMOSA or an ID Card. i.e. Breaking the rules. If you are registered with the Belgians in anyway shape or form, you are screwed! They know who you are, and where you are, and will eventually catch up with you. If you have been salting it away offshore, then they know, and they will try and prove it.

Pleading the 5th is your best defense (admit nothing, and disclose nothing), as telling them anything will get you a huge tax burden you'll be paying for the rest of your life. They are not going to let you off for spilling the beans on a scheme they have no ability to close down. Pushing your money via Dubai is not illegal, but evasion of tax due is! If you have never declared this to any country, then it's evasion, and of course I know you haven't declared it...

If you fall into the category of years of avoidance, it may be time to consider getting the hell out of Dodge! While ever you are registered there you run the risk of being investigated. Once you are no longer resident/registered and back in your home/another country, the chances of being investigated diminish, and their ability to enforce collection goes away. I was told, but I have no proof of this, that they cannot enforce tax collection outside of their borders, but if you ever pop up again on their radar in Belgium, expect a visit.

The simple fact is that the exchequers in most countries have run dry, and they need tax monies in large quantities, and if you are a well paid contractor earning 500 plus Euros a day, and some earn double that, then you are very attractive. Under Belgium tax rates you are likely to pay 60% of your annual earnings in tax and SS, and you are earning four times what an average worker earns!

The worldwide clampdown on tax heavens is not going away, and in Europe especially they are coming for you. The only way you can get away with this is by being a person of no fixed residence. In other words not registered. Something that is also almost impossible as the agencies are unwilling to work with most people who do meet local laws.

Stop working under split schemes, and/or go work in another country, or back home, unless you're flying under the radar and avoiding LIMOSA, but it's only a matter of time before they catch up to you. Belgian agencies are required to tell the taxman who they have on their books, and any payments they make over 100K a year to overseas payroll companies (read split scheme providers).

If you are working under your UK LTD CO and think this will save you, think again. If you are LIMOSA'd then you are resident for tax. They will come asking one day for their share. Even if you have declared 100% back in the UK, they'll come seeking their share in Belgium. If you rent an apartment in Belgium, you are resident, even if you think you aren't.

The UK agencies are also getting much stricter on who they will work with, and the fact you have to register with the Belgies! The only thing you have in your favour is that the Belgian investigators are a bit slow and have limited resources/people, but that's only buying you some time to STOP AND GET OUT!

I have a number of friends who have quit the split systems, and/or left the country. I'm one of them. I'd suggest you join our group

[cojak]

Thanks nodric (you're welcome elsewhere in CUK you know - you don't have to post solely on this stuff! )

[nodric]

I did some reading back on the debates that are raging about iTecs and Globo and others, and the comments about not having to file tax returns in Belgium etc...

Let me tell you once and for all. You may think you are the brightest and cleverest person on the planet, and know everything. I used to! BUT you are not!!!

All these 'avoidance' providers are constantly closing down and re-opening in another name. Don't believe me, do a company search on directors and formations. Once they have made a ton of cash, or the heat of the fisc grows too warm, they close up and like a Phoenix from the ashes, they are reborn. Often the only clue is you may be asked to sign a new agreement, or you may get an email telling you they have changed their address, often only by a number on the same street LOL

The rules are simple. If you are registered with LIMOSA, and you are supposed to be, you are registered with the tax authorities. LIMOSA Is the Belgian social security department!

If you rent property in Belgium, you are classed as having a permanent residence there, and you are therefore resident. If you live in Belgium for more than 8 days consecutively, you are supposed to register for an ID Card! If you have an ID Card you are resident. FACT!

Yes, double taxation applies, but this does not mean you don't have to tell them about your earnings. If you are resident you will get a tax return to fill in, even if you don't ask for one. This is a fact!

I worked in Belgium under various schemes, both as non resident, resident, self employed, and through my own BVBA. Trust me, you will eventually get a number of bills for tax and social security that grow exponentially in their size if you do it legally as Self employed, or BVBA. Read many of my earlier posts that go into this in detail. I got the bills so I know what I am talking about!!

Working without telling them anything is fine as long as you get away with it. haha

Working via your own non Belgian company structure may keep a foreign agency happy, and as long as you live in a hotel, don't register for LIMOSA, don't use a Belgian bank (which you need an ID card for anyway) then you may escape for a while.

The fisc can approach any company in Belgium, and they do trust me, and ask for a list of all contract staff. This leads back to the agencies, and they are not going to lie for you, and this list eventually has your name on it. The company will tell the fisc how much they pay for you, and so will the agency. Why would they not?

It does not take a genius to then work out that out of your 700 Euros a day the agency is paying your 'payroll provider', you are not only receiving the 200 Euros you claim to be! Duh! Expect a letter asking for you to attend an interview.

If you are being legit and declaring 100% of this back home, then the worst thing that will happen is the Belgies will try and claim you owe them their share by using residency rules such as the 183 day rule. If you have LIMOSA and/or a rental property expect an expensive fight involving accountants and lawyers. They will give you a bill, and it's your problem to fight it!

If you are using a payroll scheme, you are buggered, so bend over and prepare to take it big boy!

[nodric]

Thanks nodric (you're welcome elsewhere in CUK you know - you don't have to post solely on this stuff! )

Thanks cojak

I've been on an extended sabbatical for some time now, but I get the odd panicked PM/email from terrified contractors who've received letters from the fisc/police. It worries me how many contractors think they know better, and can beat the system.

Things have changed, and the days of avoidance are numbered. I prefer living in my own home, rather than government provided accommodation with no key

[cojak]

It worries me how many contractors think they know better, and can beat the system.

Things have changed, and the days of avoidance are numbered. I prefer living in my own home, rather than government provided accommodation with no key

You'd be amazed (or not - we've even had to create a special scheme sub-forum since HMRC started firing out enquiry letters...)

[nodric]

You'd be amazed (or not - we've even had to create a special scheme sub-forum since HMRC started firing out enquiry letters...)

Apathy is the contractors worst enemy. The "I've got away with it for so long I've forgotten about the risks" attitude. This leads to sloppiness, and mistakes, and you do end up leaving a trail of breadcrumbs that the fisc follows

Belgium was the soft touch of Europe once IR35 and worse started to pinch, and for many years it was the tax avoidance capitol of Europe. It's not so easy any longer, and the poor contractor needs to look further afield to avoid European/British taxes.

I'll go have a read of the other forums and catch up on things

[BlasterBates]

Gr8 advice Nordic.

Agree with the clampdown, even the Swiss are getting tougher.

[nodric]

Gr8 advice Nordic.

Agree with the clampdown, even the Swiss are getting tougher.

The reason I decided to post updates today was in response to a PM I received, and the following information is as a result of the ensuing conversation with the person who contacted me.

He/she has received an ''invitation à être entendu'' by the Federal Police in Belgium. They are attending the interview soon enough to make your sphincter twitch! This person has consulted both a fiscal and a criminal lawyer, and both have said there is nothing they can do, and to attend the police interview.

This person has been using w ww.globoconsulting.com and working under their split scheme paying part to their home country, and part to a Swiss bank account. They are not a Belgian resident, and are tax resident in another Euro country.

However, Globo did make them register with LIMOSA, and have even withheld funds towards any LIMOSA liability. haha! iTecs tried this one on some years ago. Withholding is not them going to pay your taxes, it's their way of hanging on to the cash and making investment interest on it. When will contractors learn!

In the invitation, they clearly state the salary split scheme and even talk about money laundering... They want to talk about my ''social'' and ''tax'' situation in BE..

This person is fortunate that they have not yet filed for taxes in 2013 for earnings in 2012, the only year they used this scheme with Globo.

The person will claim naive ignorance, and explain how the scheme works in the hope that they will be treated leniently. As they have not yet filed for taxes they have committed no tax fraud offense, but are likely to face a much larger tax bill than they were promised by Globo!

The situation for those of you working for several years under split schemes may not be as simple to solve

If you are using Globo it's time to head for the hills! Get out now before you are the next name on the list to get an ''invitation à être entendu''.

[sleek]

Yes, double taxation applies, but this does not mean you don't have to tell them about your earnings. If you are resident you will get a tax return to fill in, even if you don't ask for one. This is a fact!

If you stay under 3 months, you don't have to be resident and double taxation rules do apply. So it is possible to work for 3 months without problems (for EU citizen) and no need for tax return (explicitly and personally told me by Belgium tax official). Get E101 certificate and no social security either.

Longer than that, you need to register, you get tax return and everything you said applies. So don't go to Belgium for more than 3 months.