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

[stek]

Hi,

I have digested the entire thread and huge thanks to everybody for all the info. Many thanks in advance for looking at following:

1.
I may sound/look totally silly now for asking something I could not figure out - although some parts in the thread seem to suggest below may be correct indeed?

If I start in Belgium on a fixed term contract (12 months) as one-man UK Ltd, but I have house with mortgage, phone and utility bills, car and car insurance, other covers etc. all in UK... it would safely avoid making me Belgian-centred in terms of my economic interest?

Surely my entire life being in UK, and although as a one-man Ltd went to Belgium to work for more than 6 months, I remain "centred" on UK for economic and otherwise all possible other interests?

2.
On the side, the commune registration after 2 weeks reading of all possible websites left me hugely confused. Although it is "mandatory", it CANNOT be done without a "permanent" address and most stated that a B&B on monthly bookings will NOT be possible for commune registration. Therefore... how would one avoid the problem as it is a complete paradox... they do not accept such accommodation, and I am certainly not going to sign 9-year leases with huge penalties for just 1 year working over there?


3. Expat registration - it occurred a few times in thread, but it seems separate from LIMOSA and everything else. Is it a step I must take in addition and how?


Thanks again for your time and attention

1. No. Why would you think you can escape being taxed in a country you more or less live and work in? Defies logic. Imagine if it was Japan not Belgium? Would you expect to have no Japanese tax liabilty? There is zero EU tax harmonisation, freedom of movement does mean freedom to not pay local tax...

2. Do what I do in Copenhagen, rent a room in flat/apartment.

3. Most EU countries and indeed in the World, require some local registration if you are not visiting or a tourist, UK is proably unique in that there is no legal requirement for that.

Forget the thinking that EU freedoms mean picking and choosing which tax regime suits the best, as everywhere the Golden Rule is Tax Is Due Where The Work Is Done. That's it.

[m0n1k3r]

I am the director/sole employee, so it wouldn't work.

Do I really need to register at the commune if I'm at an AirBnb? Or just a hotel?

Depends. Different EU countries have different rules for that. Google for "permanent establishment". It tend to also depend on the length of stay.

[m0n1k3r]

This "freedom of movement of labour" lark is working a treat, isn't it?

It is working perfectly well, but it isn't the same things as "freedom from taxation".

Just imagine the outrage there would be in the UK if foreign contractors would come to the UK and work for 6+ months without paying taxes here.

[m0n1k3r]

There seems to be a lot of commentary about one man businesses, which implies that they are a fraud or somehow not a legitimate business.

The issue was about companies, not businesses. Most freelancers and contractors in other countries are just self employed. That doesn't work in the UK due to a few quirks in the income tax legislation, but it is the norm in other countries. In Germany, for example, setting up a GmbH or a UG is not quite possible for the sole purpose of freelancing in the way most contractors use a limited company in the UK. There has to be a bit more substance to the business than that.

So while a limited company is perfectly acceptable and indeed even preferable for what you do in the UK, that just might not be so in other countries, even if one-man limited companies as such are valid.

However, there are some pointers that are useful to help us, in particular the grey areas of registration and the 183 day rule. As a UK citizen you are deemed to be resident if you have any ties within the UK. If you then go and service a contract in another country which means you are abroad only for the working days, then regardless of the number of days a year you work in that country, you cannot possibly be resident there, as your country of residence remains the UK. Add to that the issue of not having a permanent home, a mobile phone, a car or a bank account and it is pretty clear cut.

One does not exclude the other. It is perfectly possible to be resident in multiple countries at the same time. Even if you don't spend any time at all in the UK, the mere fact that you happen to own a property that is available for yourself to use means that you are still resident in the UK for tax purposes. Likewise, you spend most of your time in Belgium, meaning that Belgium would also like to tax you. Belgium has the first shot, because that's where your earnings comes from. The UK will take the balance between the Belgian taxation and UK taxation, but since the tax rates in Belgium are generally higher, there won't be anything to pay in the UK. You would still have to evidence it through your self assessment though.

The issue of residence and registering at the commune is only for people who are moving completely to live in Belgium indefinitely, not for Mon-Fri workers who stay in an aparthotel. If you don't have a permanent residence then you are not resident.

Yes, but also look up what 'permanent residence' mean in each country.

So the 183 day issue is a moot point. If you are not resident then tax cannot apply from day 1 or day 184. You may be resident in their eyes because you have been there over 183 days, but without an address to issue the tax demand they cannot do much. As someone pointed out in an earlier comment they could arrest you, but that would be illegal. So the only thing left for them to do is refuse you entry back into the country.

No they won't But they can and will come after you in the UK. Look into the Mutual Assistance in the Recovery of Debt (MARD) EU directive, also known as The MARD Regulations 2011 in the UK.

Also, there is a difference between taxing you yourself and the company. Your company might not be deemed resident unless there is a permanent establishment for it, but what constitute "permanent establishment" varies among countries. In many countries, and I believe that is also true for Belgium, it is somebody habitually resident in the country (by means of renting a flat monthly, for example, as opposed to staying in hotels, or by being in the country more than 183 days a year), who have the right to enter into agreements on behalf of the company.

As for you yourself, the basic OECD rules is 183 days, but some countries have other rules. The UK, for example, considers people resident if they spend as little as 90 days a year on average over any 4 year period in the country.

This also makes LIMOSA a pointless exercise for legitimate contractors, regardless of the fact that LIMOSA could still be illegal under EU law, but then the issue of Brexit may come into play, however the fact that they allow citizens of other non-EU European countries to freely enter their borders would be a good indicator against Brexit being an issue, but I would welcome any comments on how Brexit may affect this.

After a Brexit, highly skilled UK workers could apply for an EU Blue Card (an EU initiative that the UK has opted out of) to work in the EU. You would not be able to easily use your UK company, but would either go on payroll or set up a company in some other (proper) EU country.

So that gives rise to a double taxation issue, the UK are not going to back down and allow you to only pay tax in Belgium, indeed they are moving towards a point where all UK ex-pats remain tax resident in the UK regardless of where they are in the world or how many years they have been gone. Believe me this is coming.

That's what double taxation agreements (DTA's) are for. But the UK might well decide to terminate a number of those as well in light of Brexit.

[m0n1k3r]

Hi,

I have digested the entire thread and huge thanks to everybody for all the info. Many thanks in advance for looking at following:

1.
I may sound/look totally silly now for asking something I could not figure out - although some parts in the thread seem to suggest below may be correct indeed?

If I start in Belgium on a fixed term contract (12 months) as one-man UK Ltd, but I have house with mortgage, phone and utility bills, car and car insurance, other covers etc. all in UK... it would safely avoid making me Belgian-centred in terms of my economic interest?

Surely my entire life being in UK, and although as a one-man Ltd went to Belgium to work for more than 6 months, I remain "centred" on UK for economic and otherwise all possible other interests?

The UK view you as taxable in the UK.

By being Belgium on a weekly basis for more than 183 days, they will also you as taxable in Belgium as well.

Since your earnings originate in Belgium, they have the first shot at taxing you, so take as low income as possible until you are outside of their ability to tax you (which, again, vary from country to country).

On the side, the commune registration after 2 weeks reading of all possible websites left me hugely confused. Although it is "mandatory", it CANNOT be done without a "permanent" address and most stated that a B&B on monthly bookings will NOT be possible for commune registration. Therefore... how would one avoid the problem as it is a complete paradox... they do not accept such accommodation, and I am certainly not going to sign 9-year leases with huge penalties for just 1 year working over there?

Staying in a hotel or a B&B is not a permanent address. Renting a flat for any longer period of time is.

[Brussels Slumdog]

The UK view you as taxable in the UK.

By being Belgium on a weekly basis for more than 183 days, they will also you as taxable in Belgium as well.

Since your earnings originate in Belgium, they have the first shot at taxing you, so take as low income as possible until you are outside of their ability to tax you (which, again, vary from country to country).



Staying in a hotel or a B&B is not a permanent address. Renting a flat for any longer period of time is.

You cannot be a tax resident in 2 countries at the same time. According to my tax advisers the two countries will have to come to an agreement on where you are a resident and this could take time. The tax authorities will chase your clientco and agent for the tax, so your address is irrelevant.My end client only deals with Belgian agents as they don't want to end up with my tax bill.

[Brussels Slumdog]

The issue was about companies, not businesses. Most freelancers and contractors in other countries are just self employed. That doesn't work in the UK due to a few quirks in the income tax legislation, but it is the norm in other countries. In Germany, for example, setting up a GmbH or a UG is not quite possible for the sole purpose of freelancing in the way most contractors use a limited company in the UK. There has to be a bit more substance to the business than that.

So while a limited company is perfectly acceptable and indeed even preferable for what you do in the UK, that just might not be so in other countries, even if one-man limited companies as such are valid.



One does not exclude the other. It is perfectly possible to be resident in multiple countries at the same time. Even if you don't spend any time at all in the UK, the mere fact that you happen to own a property that is available for yourself to use means that you are still resident in the UK for tax purposes. Likewise, you spend most of your time in Belgium, meaning that Belgium would also like to tax you. Belgium has the first shot, because that's where your earnings comes from. The UK will take the balance between the Belgian taxation and UK taxation, but since the tax rates in Belgium are generally higher, there won't be anything to pay in the UK. You would still have to evidence it through your self assessment though.



Yes, but also look up what 'permanent residence' mean in each country.



No they won't But they can and will come after you in the UK. Look into the Mutual Assistance in the Recovery of Debt (MARD) EU directive, also known as The MARD Regulations 2011 in the UK.

Also, there is a difference between taxing you yourself and the company. Your company might not be deemed resident unless there is a permanent establishment for it, but what constitute "permanent establishment" varies among countries. In many countries, and I believe that is also true for Belgium, it is somebody habitually resident in the country (by means of renting a flat monthly, for example, as opposed to staying in hotels, or by being in the country more than 183 days a year), who have the right to enter into agreements on behalf of the company.

As for you yourself, the basic OECD rules is 183 days, but some countries have other rules. The UK, for example, considers people resident if they spend as little as 90 days a year on average over any 4 year period in the country.



After a Brexit, highly skilled UK workers could apply for an EU Blue Card (an EU initiative that the UK has opted out of) to work in the EU. You would not be able to easily use your UK company, but would either go on payroll or set up a company in some other (proper) EU country.



That's what double taxation agreements (DTA's) are for. But the UK might well decide to terminate a number of those as well in light of Brexit.

DTA agreements are between individual countries and out of scope for Brexit.

[thorpey]

10 day contract in Belgium, being paid by Airbus, Norway. Tax liability.

Hello everyone

I have the offer of a 10 day contract in Belgium, being paid by Airbus, Norway. How do I address any Tax liability?

[stek]

Hello everyone

I have the offer of a 10 day contract in Belgium, being paid by Airbus, Norway. How do I address any Tax liability?

Not worth it.

[Brussels Slumdog]

Thorpey. Depends where you