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

[BlasterBates]

I know we´ve discussed this many times but the 183 day rule is only one aspect of tax residency. This is usually the point at which you become taxable on your worldwide income, i.e. this is your main tax residency. However it isn´t clear cut. If you travel between two countries your main tax residency may still be deemed to be the UK if that is where your family is. According to the double taxation treaties if there is doubt the two tax authorities will then decide in a consultation where your main tax residency is.

The fact that you haven´t been in Belgium for 183 days does not exempt you from tax in Belgium. This misunderstanding of tax law is common amongst contractors and led to them being in a lot of trouble.

If you set up a Belgian company, or invest in a Belgian company or buy Belgian property, you will be liable for Belgian taxes regardless of whether you´ve been there or not. In other words if you are self-employed in Belgium for 4 months you are liable for tax. No question about that.

Some contractors bill through their UK Ltd and this can be argued that if you do this it isn´t Belgian income and therefore not taxable. This is a moot point. I don´t claim to know at what point the Belgians will decide otherwise, but many tax advisors will tell you it´s a risk. In other words you are subject to the discretion of a Belgian tax inspector and a judge.

[sleek]

If you set up a Belgian company, or invest in a Belgian company or buy Belgian property, you will be liable for Belgian taxes regardless of whether you´ve been there or not. In other words if you are self-employed in Belgium for 4 months you are liable for tax. No question about that.

I think nobody has ever said anything else? There are strict set of rules which needs to be fulfilled until you can claim that you are not repsonsible of paying taxes to Belgium if you stay there under 183 days. One of them being, that company you are working for does not have have office in Belgium etc. Also, after one (1) year your company is considered to have office in Belgium even if there is nothing physical, it is enough that company has had "presence" in Belgium for one year (again YMMV due to different agreements between different countries). There should be NOTHING unclear about this, you can read all this from those double taxation treaties.

Some contractors bill through their UK Ltd and this can be argued that if you do this it isn´t Belgian income and therefore not taxable. This is a moot point. I don´t claim to know at what point the Belgians will decide otherwise, but many tax advisors will tell you it´s a risk. In other words you are subject to the discretion of a Belgian tax inspector and a judge.

Probably you are right about this, it's a risk. But if you work in big company who want's to send you to mission, these rules do apply. Otherwise it would be practically impossible to do international business due to over-complicated tax issues. I personally would not set up private company which only empolyee I would be and send myself mission to Belgium, I am pretty sure that tax inspector would not agree with me.

My point was, that I read from several sources, that travel days are not counted towards 183 days. But they are, confirmed from Belgian tax office, which makes it even more difficult to operate in Belgium for contractors. It was, of course, hard enough to begin with.

[sleek]

Ok, I am thinking about staying in Belgium more than 183 days since I could get very good daily rate and using E101 certificate I can "avoid" social security payments (or rather pay them to my home country which has much lighter social security payments than Belgium). Still tax burden would be huge but AFAIK it would be:

x - 50% (Tax) - 7% (Brussels)

Did I miss something? Of course I need to subtract social security payments for my home country also.

My problem, however, is that due to very favorable situation I was in I was able to make extremely good net income for past 6 months while paying everything to my home country. I cannot afford "losing" that money (I would be screwed and in debt). I would have to work for rest of they year literally for "nothing" if I would lose what I already made. And I would lose it if I would become tax resident in Belgium, unless:

I can prove that my domicile and seat of wealth did not reside in Belgium for first 6 months. I have family, house, mortgage and car in my home country so it should not be any problem...

Has anyone gone this route? Is it worth the pain? I would need accountant and everything. Or is it just better to leave to avoid the pain and hassle and everything and accept risk of not finding anything else? Thank good social security is quite in my home country, so it would not be that bad, but still.

[sleek]

Ah screw it. Even if I would make still enough money if I would stay in Belgium, it is not worth of all thre trouble with their bloated tax system. I still need to visit my family abroad two times per month and it is pretty exhausting to fly around. I will rather return to my home, spend quality time with my family and try to find local job (or job from another country which pays just as well).

[cojak]

Ah screw it. Even if I would make still enough money if I would stay in Belgium, it is not worth of all thre trouble with their bloated tax system. I still need to visit my family abroad two times per month and it is pretty exhausting to fly around. I will rather return to my home, spend quality time with my family and try to find local job (or job from another country which pays just as well).

Good decision.

[Brussels Slumdog]

Belgium tax resident

Belgium is one of the best places in Europe to be tax resident if you avoid working in Belgium. Foreign income is added to Belgian income to calculate the Tax percentage payable on the Belgian income and Rental income is not taxable.

[sleek]

Belgium is one of the best places in Europe to be tax resident if you avoid working in Belgium. Foreign income is added to Belgian income to calculate the Tax percentage payable on the Belgian income and Rental income is not taxable.

That explains why I saw that many Porsches etc. on the street. Too bad my only point staying in Belgium would be working there. Well actually I also started to like the place a bit, but I guess you start to like any place you live in.

[n00b]

Situation

Hi everyone!

I'm having a small problem here... (big actually).

Last year I had a contract in Belgium, that got extended...So I ended up working in Belgium from March to end of the year. During this time I invoiced the Belgian client through my company back home in Spain.

I had rented an appartment from March until end of November. In December I was staying with some friends and only worked the 1st half of the month.

The consultancy company who hired my services was telling me to register with Limosa, so I did, for the initial period of the contract (6 months), but not for the rest of that year. They were also telling me it was fine not to register in Belgium for the first year, and that I should do so on the start of the second year.

This all sounded fishy and I started investigating and came to the conclusion that it was not fine to do and probably was the only way for the consultancy company to keep me here on a rate so low as they gave me (300€/day).

Meanwhile, I didn't know how to solve the problem (and still dont) and I ended up staying in Belgium. At this point I've booked an appointment at one of the BIG4 (audit firms) to see if they can advice me on what to do.

Has anyone been in this situation?
What happened? How did you solve it?

I would like to register as freelancer in Belgium but I'm afraid to catch a huge fine I'll pay for the rest of my life... How big would be such a fine?

Do you think the advice at the BIG4 audit firm will be worth the price?

What happens if I just go back home? Can belgium go after you for the taxes plus a fine?

[helen7]

Hi

My client based in UK has asked my to go to the Belgian office of one of there customers for a few weeks. Do I need to be aware of any tax implications? do not expect it to be more that 5 weeks over the next 3 months

Uk ltd
Uk agency
Uk client (paid in uk pounds)
Staying in hotel
Returning at weekends

[sleek]

What happens if I just go back home? Can belgium go after you for the taxes plus a fine?

Dude, I would hire Belgian accountant right now. You may still have time to save yourself and get away just by paying due taxes and social security payments (unless you had E101 or A1, did you?) since tax return for 2012 needs to be filled before end of June 2013 if I am not wrong? Yes that will be MUCH but you could perhaps actually get away with nothing and you wont need to fear for next n years that you get call from police?

Yes yes you did not register and everything but probably they are not that interested in it if you just give them their money? Especially if you have any proof that you we screwed... But do not trust my word since I do not know by myself how it goes, hire accountant or even lawyer NOW. They should know better.

Of course, you can always run and hope that they won't care. For 300e/d they could not even care. If you didin't register anywhere then they may not be able to find you, but somewhere must be bill which has your name in it, right? One tax inspection and they will find it and start checking if you have paid anything. I would not take that risk...

On a side note... Those consultant companies have no honor at all it seems. When I said to my company that I will leave before I will become tax-resident, they tried to feed some BS to me and introduce n+1 schemes how I could continue and they all were supposed to be 100% legal. Yeah right, none of them were legal, not nearly. Every single one of them was based on faking my location for the rest of the year. And when I pointed it out, they started to act like street merchants in India (no offence Indian people!), acting hurt of my words, me claiming them liars etc. etc. And finally starting to insult me because I am sooooooo honest, nobody else is etc. God I was mad when I left.