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

[Boo]

I just want to expand on the stuff about contractor Ltds and working in Belgium without making it personal in any way :

There are a few people on these forums who persist in spreading misinformation about working in Europe via UK Ltd Companies. The fact is that there are EU-wide treaties that guarantee any company based in the EU the right to send an employee to another EU country for up to 183 days in a year without that employee being caught by the foreign country's tax system.

There are various alternatives to doing this, and if you will work more than 183 days abroad you will have to follow one of them.

The first and most obvious is to register a company abroad in the country in which you will work. This will generally make you tax resident there and mean that you need to fill in tax returns for that country and pay tax on all your income there. Tax rates in other European countries are often much higher than the UK and this alternative is unpalatable.

The second alternative is much promoted by agencies, umbrellas etc and also seems to be recommended by some posters on these forums, for no apparent reason. It is to use a tax management intermediary company of some description.

These companies purport to offer legal schemes whereby they act as an intermediary between either yourself personally or YourCo and the Tax Office in the destination country. The deal offered is to effectively payroll you using a tax efficient scheme (generally a rather dodgy one) and pay you part of YourCo's income and pay what is owed in the destination country to the appropriate tax authority.

The thing to understand about all such schemes is that there can be no financial advantage to you in following one, just because you owe the same amout of tax in the destination country without the intermediary as you do with the intermediary.

I am not saying that all such intermediary companies are dishonest but there is a marked tendency for them to appear in threads on these forums where there are some common attributes :

1. There is no written agreement concerning what is paid to the contractor and what is paid to the taxman.
   
2. The intermediary is wayward about paying the contractor and there are unexplained witholdings form those payments which are paid.
   
3. At some point payments stop being paid to the contractor at all.
   
4. The taxman comes looking for the contractor and , !surprise!, the intermediary no longer exists and all the tax they supposedly collected on behalf of the contractor has not been paid.
   
5. The contractor owes one or more years of tax on the full amount they have earned whilst only having received about half that from the intermediary.
   
6. The contractor works like a slave for the next 10 years to pay the debt.

This thread started off by detailing Nodric's own experiences which are basically as per the above but there are other threads too showing several of these cycles, see the following :

There is a thread on these forums about the company called Connexion and another about a different company called ITECS

In short, if you use an intermediary all that happens is they take a cut of YourCo's gross income without doing anything you could do for yourself cheaper and you will still be liable for any tax they fail to pay in the destination country if they fail to do so.

So there are two ways to proceed that will not get you imprisoned :

1. Use a UK based Ltd Co. and be certain to comply with the terms of the 183 day rule in the destination country.
   
2. Register in the appropriate way in the destination country as would apply to one of its own citizens.

If you don't believe the above then a read of all the pages in this thread will show you I am right. Of course an optimist will just ignore what anyone says to him/her anyway...


That's it on this from me at this time,

Boo

[ajc001]

Sounds to me like I should make sure my contract is for less than 183 days and work under my own uk ltd company - and treat the experience like i do in the uk when contracting.

Last week, I was contemplating doing longer than 183 days in Belgium.
...but having to 'collaborate' with an umbrella, even with reputable accountants like EAFS and SJD, means even then you can legitimately only take back approximately 60-65% of your total gross belgian earnings - which inclines me to think it is not worth staying beyond 183 days.

If I start to like it out there, maybe I will ask for a lot more money as you previously suggested and perform the steps an umbrella would normally do for me myself.

Thanks for the feedback boo!

[stek]

There is no '183 rule', WRT to taxation, search the site and Google in general, it's a common misconception.

[cojak]

Erm... DT1921 - Non-residents: UK income: Employments: short term visitor exemption 183 day rule

For example if a person is a resident of the UK but is hired by an employer in another State, moves to that State where he becomes resident and is subsequently sent to work for a short period in the UK by his employer, we would only include days in the UK after the taxpayer became a resident of the other State for the purposes of computing whether they had exceeded 183 days in the UK. Days in the UK when the taxpayer was a resident of the UK should not be included.

[Fred Bloggs]

Sounds to me like I should make sure my contract is for less than 183 days and work under my own uk ltd company - and treat the experience like i do in the uk when contracting.

Last week, I was contemplating doing longer than 183 days in Belgium.
...but having to 'collaborate' with an umbrella, even with reputable accountants like EAFS and SJD, means even then you can legitimately only take back approximately 60-65% of your total gross belgian earnings - which inclines me to think it is not worth staying beyond 183 days.

If I start to like it out there, maybe I will ask for a lot more money as you previously suggested and perform the steps an umbrella would normally do for me myself.

Thanks for the feedback boo!

I don't think you count traveling days in the 183 day allowance. You need to check, but if they don't count, then your 183 days allowance could well be enough to see the contract through without suffering any Belgian tax.

[stek]

Erm... DT1921 - Non-residents: UK income: Employments: short term visitor exemption 183 day rule

But the EU view is with one-man companies like us is the company moves with the person, which makes sense, person from State A working in State B while Company in State A has no one working there.

[cojak]

Is that EU view written down anywhere? If it isn't I would use the HMRC written view.

[SueEllen]

But the EU view is with one-man companies like us is the company moves with the person, which makes sense, person from State A working in State B while Company in State A has no one working there.

There is no EU view it varies by taxman in each country.

However the easiest thing is to get some other directors who live in the UK. Even then it doesn't mean the individual worker is not liable for tax in the country they are working in from day one.

[Boo]

There is no '183 rule', WRT to taxation, search the site and Google in general, it's a common misconception.

Another apparently intentional misrepresentation of the facts.

Boo

[Boo]

But the EU view is with one-man companies like us is the company moves with the person, which makes sense, person from State A working in State B while Company in State A has no one working there.

Another apparently intentional misrepresentation of the facts.

Boo