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

[globalprogrammer]

Yes, you will be resident in Belgium and will pay Belgian tax and SS on your global income, including that of your UK company. Your UK Ltd Co. will pay UK tax and will need to fill in UK tax returns etc, however you should be able to deduct tax you pay in the UK from tax you owe in Belgium under the joint taxation treaty. This will end up with you paying Belgian levels of tax and SS, since these are way higher than the UK.

Really, the solution you propose is the worst of all worlds and you would be much better off either moving to the UK or else setting up a Belgian company of one type or another - that would give you the best advantage obtainable within the law.


Google for "accountant antwerp site:be" and pick one near enough to visit to discuss things face to face.

Hth,

Boo

Thanks Boo and Brussels Slumdog for the help.

My UK accountant says my business will be trading from the UK and will be liable for UK corporation tax.

I travel back and forth to the UK and also elsewhere but will be at least for the time being spending the greater part of the year in Belgium so I will be paying income tax and social deductions in Belgium.

Brussels Slumdog, you mentioned the point about 180 days and some countries eg Germany simply measuring it from when you arrive and register until when you leave the country and deregister. Do you know how Belgium measures this?

And how are you supposed to prove how long exactly you have been away when you are within the EU the whole (or most) of the time? Seems a bit difficult in practice.

My accountant recommends paying a small salary and the rest in dividends. I understand the salary will be taxable in Belgium. Presumably then the dividends also?

I dont want a belgian bvba as these have higher capital requirements and bureaucratic overhead which uk limiteds arent burdened with.

Another important factor for me is that for my business field it is better to trade being a limited company in London, since London is globally recognized as an international business centre. I don't have any Belgian business connections.

By comparision Belgian company designations arent much known to people outside of Belgium. People will wonder what "bvba" is and will be suspicous.

Whereas most people in the English speaking world - which is where my clients are will have heard of "ltd" or "limited", so no explaining necessary.

Also apart from all that I may well not be living in Belgium long term, in fact I may move next year. So I want to keep all Belgian connections and involvements to a minimum.

Ive googled the term you recommended, it threw up mostly a load of job posts for accountants! But some google pages further on I came across some accountants in the area.

Trouble is trying to judge which ones would be suitable for me as a small IT start up. Most dont give you much of an idea about themselves, they seem to like hiding behind the bland auditor look.

[bobrayner]

Belgium, and eventual residency

Hi all,

I realise that in the longer term it's practically impossible to avoid becoming tax-resident in .be if you're working 9-5 in an office in Belgium. However, is it possible to ... delay that status change?

Consider the strictly hypothetical example of a UK-based contractor with UK ltdco; any revenue from Belgium through this company would normally see a lower tax % than a purely Belgian stance. But eventually the Belgian taxman wuld say "Oi, you're resident here, pay our taxes, plus back taxes, plus a penalty".

With rolling 6 month contracts, would it be feasible to spend the first 180-odd days as an employee of this uk business seconded to a site in Belgium, then when the new contract is up, use a Belgian payroll co and take the Belgian expat tax/allowance regime? (ie. 10% takehome instead of the 5% that the locals suffer )

Long ago, I was a permie in Belgium, but I expect a few details will have changed...

[rrlrrock]

Help

Firstly thanks for the initial posts they where very helpful, I was wondering if some could give us some generic advice.

My wife wants to move back to Belgium after living in the Uk for 6 years. She wants to set up a business and we are wondering what the best type of business to set up is.

The business is likely to bring in around 100k ex BTW euros a year to start until the business starts to grow where it might get to around 200k euros a year within 4 years.

I was thinking that if we set up a company where we where both directors and run the business from your family home, this way we could get away with putting a lot of expenses through like cars, fuels, electricity, rent, broadband, insurance, mobiles etc

We expect that after these costs are taken off we will have around 60k euros left. In an ideal world we want to pay as little tax as possible and also put as much toward pensions as possible.

I probably will also work somewhere else too but I am not sure how much I will earn.

Hopefully you can help.

[Brussels Slumdog]

Wife's nationality

Firstly thanks for the initial posts they where very helpful, I was wondering if some could give us some generic advice.

My wife wants to move back to Belgium after living in the Uk for 6 years. She wants to set up a business and we are wondering what the best type of business to set up is.

I was thinking that if we set up a company where we where both directors and run the business from your family home, this way we could get away with putting a lot of expenses through like cars, fuels, electricity, rent, broadband, insurance, mobiles etc

I probably will also work somewhere else too but I am not sure how much I will earn.

Hopefully you can help.

If your wife is Belgian then that will most likely automatically make you a tax resident as couples file a joint tax declaration in Belgium.
The Amount you earn elsewhere will determin what percentage you will pay on any Belgian salary

The Amount you earn

[BelgianContractor]

UK Limited

I'm a Belgian contractor working in Belgium, so most of the issues addressed in this thread don't apply directory to me, but I found it interesting reading through a lot of the posts nonetheless.

I would like to point out two things that have been mentioned but that are to my knowledge not entirely correct. Note that I'm not a lawyer or an accountant, I'm just a freelance programmer. I learned the things I describe below a few years ago at a seminar for starting enterpreneurs given by UNIZO (An organization that defends the interests of SME's in Flanders)

This is just a technicality, but it is not a requirement to have university degree in order to start a BVBA. What people are referring to when they say that is the requirement to prove you have the knowledge to run a company. This can be proven in several ways:

• By having a degree. All university degrees are ok, and there are a lot of other degrees accepted as well. I'm not sure how foreign degrees are treated though.
• By proving prior experience. I think this is evaluated on a case-by-case basis.
• By taking an exam.
• I think there was also an option to use a 3rd party to prove this, but I don't really remember what the rules for that were

Granted, when you don't have an accepted degree the other options are a bit cumbersome, but it's not impossible.

However, what's more important for a UK contractor is the fact that a UK ltd can simply be registered as a company in Belgium. Like a branch office. In fact there are companies selling this as "packs" for Belgian resident to avoid the drawbacks of a bvba (minimum startup capital, proof of knowledge). This is allowed since a few years due to European Regulations that allow any European company to do business in all member states.

Now, most Belgian accountants don't like limiteds for several reasons:

• They prefer to stay on their own turf, which is Belgian bvba's, and not UK Limiteds. (If you are a Java developer and your customer tells you he's considering switching to .net then you'll also try to convince him that's not a good idea)
• Limiteds are an "eye-catcher" for the tax-administration. The limited-construction is often used by people that have something to hide, so it makes the inspectors extra-attentive.
• For an average Belgian person, the advantages are, euh, limited, and there is the additional cost of running a foreign company, so it's probably not so advisable to take that route.

However, if you're a uk citizen that already has a uk limited then registering that limited in Belgium seems like the most logical thing to in my opinion. It will be a lot cheaper and providing you are not doing anything illegal you should not have any issues with the tax-administration either. You just need to find an accountant that is not scared of limiteds. (I cannot really recommend one because I only know my own accountant and he doesn't like limiteds ).

[brendan_uk]

Have read this thread a few times and haven't seen this mentioned.

If you have minimum income salary or dividends whilst working in Belgium basically living on expenses, your world wide income liable to Belgium tax would be less.

Could a uk contractor biased in Belgium just wait it out whilst contracting and pull down what's accumulated in the company when they become uk tax resident again at a later date?

[BelgianContractor]

Could a uk contractor biased in Belgium just wait it out whilst contracting and pull down what's accumulated in the company when they become uk tax resident again at a later date?

The administration has the right to levy taxes on the income they presume you have if they find that the income you declare does not match your lifestyle. You can then dispute this and demonstrate that you are financing your lifestyle with money you already owned. If you can provide such proof than normally that is fine.
However, in the situation you are describing you are coming here to work but are not making any money, which I assume would be perceived by the administration as implausible. I'm not sure there are many precedents for the situation you're describing, so if you do that it would be sort of an experiment I am however inclined to think that if you keep that up for a couple of years they are at least going to investigate what you are doing. Nowadays they are mainly relying on data-mining to decide whom to investigate and your situation would surely stick out

[brendan_uk]

Thanks for answering

However, in the situation you are describing you are coming here to work but are not making any money, which I assume would be perceived by the administration as implausible.

This i think is where we might differ in opinion. I see that situation as the norm for employees. A company is paying me an average to poor but survivable wage plus legitimate expenses to work.

[BelgianContractor]

If you're paying yourself a wage which is more or less comparable to that of a regular employee than that would certainly be OK. It's by no means required that you pay yourself your entire turnover as wage. I thought you were thinking of making your wage €500/month, which they might find harder to accept.

On a related note, I recently found this website that explains the procedure for starting a Belgian company in English and also lists the different types of companies: Setting up a business - Managing your business - Business.belgium.be

[Boo]

On a related note, I recently found this website that explains the procedure for starting a Belgian company in English and also lists the different types of companies: Setting up a business - Managing your business - Business.belgium.be

Great link !

Boo