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

[Sergeant Murphys Cosh]

Belgian Tax Return Info.

Would Nodric be so kind as to tell us what information is requested on a Belgian tax return?

Tx.

[nodric]

Would Nodric be so kind as to tell us what information is requested on a Belgian tax return?

Tx.

I smell a troll.

If you want a detailed answer, check out the Belgian tax website, or ask an accountant. Tax returns here are little different to any other major EU country.

In short, you are required to disclose all details of your Belgian, and Worldwide income from all sources, including investments and interest. You are also supposed to disclose if you have any foreign chest of loot as well

You also disclose details of your family situation as there are tax breaks for married men and families. If your wife does not work, you can use her allowance too. Most married couples file a joint tax return.

You also disclose details of all property ownership.

Now, was there something specific you wanted to learn about, or was it just casual interest?

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[Sergeant Murphys Cosh]

Was there something specific you wanted to learn about, or was it just casual interest?

Just casual interest.

[JustMe]

Newspaper !!!!

De Morgen Binnenland - Consultants massaal in het zwart betaald via buitenland (1101305)

[Gregory]

Some more questions

Excellent thread thank you.
This thread is more informative than 3 months of investigation.

I am not sure you can answer that as I am a Belgian Citizen currently residing in Belgium for a contract,
I am also new to contracting and tried to investigate on possible alternatives. I was offered the following:
1. Something very akin to what you suggested in the other thread. A low payment + dividends (However the difference is that you have to be freelance in Belgium). According to what I read so far in this thread it would not be compatible with the Belgian tax authorities as I will not declare the dividends in the place of residence. Did I get it right.
2. Second option I was suggested, was to open a company in the EU, be it Ireland, Cyprus etc. have a nominated director/secretary and either work or freelance for this company. I now understand thanks to this post that this is tax evasion pure and simple, as most of the money earned on Belgian soil will not be declared in Belgium but be hidden behind the company. But I just wonder why it is not more popular than Umbrella companies. Having your own company has much more leverage than using an umbrella, it seems to be a great deal safer (If you have a fiduciary and not registered as director) and it seems very easy to establish using services like Codan.

Also I started this post because I wanted to ask for some recommendations of Brussels based accountants. It seems that a good accountant is hard to come by. Thanks

[romanian_contractor]

Have a look at this: Nouveautés pour les travailleurs indépendants the interesting part is Au1er mai 2010.

I also have a question for nodric since it seems that he is very well informed. Unfortunately I am registered here as an independent and of course as resident. I came here last year in July, so I don't even have one year. Now I want to unregistered, go back to my country and come after some time in Belgium and work with Limosa. Is this an option?

Thanks

[CiderEagle]

I am about to start a contract in Belgium so this information has been invaluable. Thanks Nodric Obviously I'm not going to do anything without contacting experts, but this is a really good introduction to the minefield !

Don't really fancy offshore solutions, not comfortable with the grey areas.

And as for the Belgian Tax System - blimey ! How do Belgians actually afford anything ? No wonder so many of them stream over the border to get stoned on a weekend.

So, I am leaning towards my UK Limited Company invoicing the client and I am taking advice on this from a number of locally-based accountants. If anyone is interested this is the list of people I have contacted so far -please note I am not recommending any of them or otherwise as yet, although Grant Thornton have an excellent ebook you can download for free.


Pay less tax in Belgium ? Consult a tax consultant - TRIBUTUM tax expert and financial services for SMEs and the professions

Doing Business Guide, PricewaterhouseCoopers Belgium : Home

Belgium

Home - Mazars - Belgium

accountants antwerp


Will let you all know what my final decision is.

[Brussels Slumdog]

Berlgian benefit

And as for the Belgian Tax System - blimey ! How do Belgians actually afford anything ? No wonder so many of them stream over the border to get stoned on a weekend.

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For those Born and die in Belgium.

They can retire on a pension of about €1000 a month against about €400 in the UK. The socialists would like this increased to about €1400 nett
There are no hospital waiting lists and you can go to a specialists without first going
You can actually live on the unemployed benifits and are accepted as unemployable afer 55
The list goes on

For late arrivals after 50
Health benefits only

[Magic]

Update on my contract, I spent a long time and quite a bit of money to find out how not to get sucked into 2 tax systems.

At the end of the day I declined the contract.

Client really wanted me so had a meeting and thrashed out a deal which means I work from home and visit Brussels two times a month, so my situation is really simple now.

No.1 advice is to to seek expert advice, it costs lots of money but then imo it is the most sensible thing to do.

[nodric]

Update

Been a while since I last posted (heath reasons), but wanted to give you my current thoughts. I've been contacted by a lot of you to ask advice, and to sound out ideas, and in light of the latest news the BTA publicised in the local media recently,

For those that missed the news, the BTA ran some newspaper stories and TV news spots claiming to have successfully caught some 800 contractors working on ‘split income’ schemes in Belgium. This resulted in 500 gizillion sheckles being recovered for the local coffers. How true the numbers are no one knows. What is true is that they fully understand how such schemes work, and if they catch you, you’d better be using Truecrypt and a good 7 times wiper. Not such a good idea to keep lots of paper records and emails of your wheeling and dealing lying around!

So where does this leave those working here, and those thinking of taking a contract here?

From a personal perspective, and NOT legally sound advice, I would work via your UK LTDs, and say bugger all to the Belgies. The only risk is if you continue to work in Belgium for several years. Eventually you might get dragged into the system by a tightening of the regs with the agencies, especially local ones who may have to fess up about who is working with them, how much they’re being paid, and to where the money is being sent. For now, it’s a wait and see game.

In the end, if no one tells the Belgies, they have little way to find out you’re here unless it's via a local agents who one day hands a list to the BTA of all his contractors. This has happened in the case of a few investigations. Even then you'd have an arguable case that under EU law you were exercising your rights to free trade working through your UK company. Under the double taxation treaties they could claim the difference between what you paid Hector in the UK, and what was due under Belgian tax law. This would be a hideously complex fight, and require stunningly good accountants to sort it out. It would be for the BTA to prove their claim!

If you’d paid some dues and demands in the UK, then they’d probably move on to an easier case. They’d only really hang onto you if you were still in Belgium, and therefore a good source of tax revenue etc.

If you decided to leggit once they started this sort of challenge, they’d have a difficult job in enforcing any action against you in the UK. In fact Belgian Social Security for instance, has no ability to enforce collection outside of Belgium. Even if the BTA tried to, I’d simply close down my UK LTD, and start another. Any claims by the Belgies would then be pointless. Even claims against you individually would be very hard to enforce, especially if I assume you’d be very vague about your UK forwarding address. Any investigation would take a number of years also, such is the pace of progress here!

If you don’t like the idea of doing all this cloak and dagger stuff, or your sphincter muscles aren’t strong enough, then there is an idea I’ve kicked about for a while.

The latest thoughts is you operate two UK LTDs. One has a sole director that is not you! i.e Your wife, dad, brother sister wife mother. You get the idea. This company signs the contract with the agency, and handles all the billing. It is effectively your own personal management company. You are then a director of your usual LTD.

You sign a sub-contract with the company of your wife (or other trusted party). You then fully declare your income from this sub-contract. Of course the income is meager and barely enough to sustain yourself in Belgium, or any other country for that matter. Just sufficient funds to pay your base salary, and to keep a few nuggets in the LTD to meets it’s statutory demands etc.

You then register for LIMOSA as a foreign worker, and file local tax returns based on your personal income from the sub-contracting company. All cost for accountants etc being deductable, as are many other expenses. You register as an expat (Belgian account needs to do this for you) and pay your NI in the UK thereby avoiding the local and very high SS, and you also maintain your UK pension contributions for what it’s worth. You then pay your taxes on personal salary in Belgium as and when due. You continue to file the company returns in the UK.

Even if the BTA one day claim you have moved your sub-contracting companies Centre of Economic Interest to Belgium, it will have little impact, as any corporation tax will be non existent as the income is just enough to pay you. All the profits from the contract are of course safely in the trusted partner company! As you are not a director of this trusted company, you can never move it’s Centre of Economic Interest to Belgium You could very easily shut down the sub-contracting LTD, and start another, restarting the whole cycle!

Of course while ever you continue to sub-contract in Belgium, you should not become a director or shareholder of the trusted company (the one that signed the agency contract), as this would expose additional Worldwide Income! However, the wife (or whoever) can use the funds from the trusted company as normal under the UK tax regime. Once you leave Belgium, you can then receive a payment from the trusted company into your sub-contracting company, or even become a director/shareholder and receive a dividend.

They’re may also be other UK tax breaks arising out of cross charging between these two companies (see a UK accountant).

Apart from using the usual money launderers (and whatever they tell you none are legal! If you do not declare all your income from all Worldwide sources you breach the law), the only other way to be legal is start your own Belgian company.

Many of you will opt to use the ‘split income’ schemes run by the usual outfits in Switzerland, IOM, and other tax friendly jurisdictions, and many of you will avoid any problems for years to come. However, it’s not the best solution long term, and it does keep you awake at nights, and you are always on your toes ducking and diving. Paying bills is a nightmare as you spend your life dragging cash out of ATMs, and after a while, anything more than a few months as a single bloke in town, just becomes tiring.

In addition to a standard BVBA and the newer EBVBA, there is a small company structure known as a COMV (look back through this thread), and this simplifies accountancy and records, but leaves you fully liable for the company should it fail.

The biggest issue is once you setup in Belgium, you will be in the system, even if you leave after 6 months, you’ll have to file Belgian tax, VAT and social security papers for years to come, even after you’ve left, as they work at least 3 years in arrears. Even if you deregister fully, they’ll keep sending you demands for information and audits, and of course these will be in French or Dutch! A friend of mine left a year ago, and has received a demand for a VAT inspection, even though he deregistered for Belgian VAT 12 months ago. Of course he is ignoring it :-)

So my overriding advice is, if you can, avoid becoming part of the Belgian system.

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