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

[nodric]

Yes, they said they will register me as Expat, so that I pay NI in UK.

Yes, they are taking a fixed 12% company taxes and charges bcos they said they will make me a share holder + the service charge EUR 330
(I cant avoid it.... can I )

They said salary will be paid every month on the 15th if they receive it from the client, which if delayed will be credited next 24 hrs. ..But why will I be taxed again in UK..i thought they said double taxation treaty works still ?

They wont refund..I will not even know it, isnt it? They gave me a projected salary figure which they calculated for 14 months instead of 12, which they mentioned as a 'reserve'. Is this what you mean they will retain for future?

They are applying a work permit for me to work in Belgium. Will make me an expat and get a E101 for the SS thing! Will all these now allow me to avoid the tax here 'legally'?

If so, please suggest a good managed co. I still cant find any

Thanks

If iTecs can get you a work permit 'just like that' to quote a famous magician, then I will be amazed. They'd make more money as an immigration service than as a Manco

As for Access Financial, they are just one of a list of split income schemes. They are NOT compliant in Belgium unless they declare 100% of the income. However, if you want to work under the radar short term, and then cut and run with the cash, they’re as good as anyone. Expect to pay 5-8% of your monthly billable to them for the pleasure. You’ll also need a offshore bank account, if you want to hide the ill gotten gains from Hector. Again not such a good idea if you don’t want to get deported

My advice is simple.

1. Ensure you have a work permit valid for Belgium, or the Schengen region. If you start the contract before you have got this, you’ll be in deep doodoo

2. Go see a Belgian accountant. Even if you use a Manco, you will need one to sort out your taxes in Belgium. Even if you work as an employee of some Manco setup, you will get a Belgian tax return to fill in, and will have to be registered for LIMOSA. If you work as self employed you will have to register for VAT. You need an accountant!

Tax in Belgium is assessed annually. iTecs will take an estimated amount from your monthly income as a reserve to pay this tax. This they should pay over in advance to the tax man. However, they don’t legally have to, and will probably hold it in their banks as cash flow, and to gain interest. I’d even suggest they will invest it to make more money.

When your tax return comes along in the post, you fill out what you’ve made, what you’ve already paid, and then you will get a bill for the difference, or if you’ve paid too much, a refund.

The problem is tax is completed in arrears. This means that by the time you declare the income you’ve made in 2010, it will be 2012! You file the return in 2011, and pay/refund in 2012. Efficient the Belgians are not!

So, if iTecs have taken too much from you in 2010, do you think you will still be around in 2012 to get the refund? That assumes they actually pay over the advanced deductions they have made during that time. What is a more likely scenario is that come your tax return they will pay over what is due, and no more. They will spin you some line about admin this, and workload that, and hang on to any difference. You will be left with little way to prove they owe you money.

That’s why you need an accountant, and to follow the advice in point 3.

3. Ask the Manco (iTecs or whoever) to write to you on company letter headed paper explaining exactly how their system works. How you will be paid. Detailing all costs, and most importantly, explaining all your Belgian and UK tax, SS, and other liabilities. If they won’t do this, run rabbit run

.

[Brussels Slumdog]

Man Co Work permits

I find it difficult to imagine that a management company like ITECS can obtain work permits for non EEC workers.
If it was that easy there would be thousands of Asian management companies handing out work permits to the entire 3rd world
ITECS would need to advertise for the vacancy and prove to the Belgians
that a local was not available.
ITECS does not even have an office in Belgium so how can it apply for a work permit for one of its workers

[nodric]

I find it difficult to imagine that a management company like ITECS can obtain work permits for non EEC workers.
If it was that easy there would be thousands of Asian management companies handing out work permits to the entire 3rd world
ITECS would need to advertise for the vacancy and prove to the Belgians
that a local was not available.
ITECS does not even have an office in Belgium so how can it apply for a work permit for one of its workers

I cannot agree more with BSD. Not wishing to cast dispersions, but I wonder if iTecs are just filling this chaps head with BS, just to get his business.

Not only is this setting a dangerous precedent, it also would make my sphincter twitch if I was using iTecs today.
i.e. If they are so desperate for cash that they are taking on such complex cases, or simply lying (over zealous salesmen perhaps), then their liquidity has to be called into question

iTecs are not an employment agency, or a charity, so claiming they will sponsor work permits for non EU/EEC nationals is a cause for concern.

Time will tell…

.

[syh]

Let me see if I got this right.

Hi Nodric and other knowledgeable members,
I am missing out on a couple of details so let me see what I have got right and if you'd be willing to help what I don't understand.

If I want to work in Belgium using my UK LTD Co, right now it is a targeted for a 6 month contract. I understand that if it is longer, then this scenario may need to be changed to avoid a big hit in Belgium taxes
I (the UK ltd) bills UK agency
I pay myself (employee of UK LTD CO)
Uk agency bills Belgium client.

When I bill the agency for the work in Belgium, do I charge agency UK VAT?
When I pay myself a salary, can't I just pay myself my annual salary that I normally pay myself for UK work. Why do I have to pay myself a small salary in Belgium and get involved with Limosa or being declared as an expat at all if I don't pay myself a Belgium salary. Do I make sense?

[syh]

Nodric clarify something for me

If I provide services through my UK ltd company in belgium, then shouldn't it work as the following? Currently 6 month contract anticipated, I know if its longer accordingly to your knowledgeable insight stuff gets more complicated
Uk ltd invoices agency at 0% vat
Uk ltd company pays employee (me) UK salary.
Why does UK ltd company need to pay a belgium salary in Euros at all for work done in Belgium and pay belgium employer taxes and employee pay belgium income taxes, if you are employee who receives a salary for work done on behalf the company whereever you are in the world? Under this method, Limosa and being declared as an expat benefit isn't necessary.

[nodric]

Hi Nodric and other knowledgeable members,
I am missing out on a couple of details so let me see what I have got right and if you'd be willing to help what I don't understand.

If I want to work in Belgium using my UK LTD Co, right now it is a targeted for a 6 month contract. I understand that if it is longer, then this scenario may need to be changed to avoid a big hit in Belgium taxes
I (the UK ltd) bills UK agency
I pay myself (employee of UK LTD CO)
Uk agency bills Belgium client.

When I bill the agency for the work in Belgium, do I charge agency UK VAT?
When I pay myself a salary, can't I just pay myself my annual salary that I normally pay myself for UK work. Why do I have to pay myself a small salary in Belgium and get involved with Limosa or being declared as an expat at all if I don't pay myself a Belgium salary. Do I make sense?

Syh, some facts for you.

LIMOSA is the law here now. If you work here for more than 5 days a month, you have to register, if you intend to work and be paid via a non Belgian company. Of course you can ignore it, but 99% of pimps will demand it if they have a Belgian presence. If the pimp doesn’t ask, then do the gig and worry about it later.

Be warned though, if you rent a flat you will need to register at the commune, something you are legally required to do within 8 days of becoming a resident. Renting a place makes you a resident. Registration at the commune will flag you to LIMOSA (Belgian Social Security) and you’ll get a Belgian tax return in the post. This you will have to complete for all your Worldwide income. Hotels R Us if you want to avoid this pain.

After that, you can work here for 6 months and pay your salary back in the UK. No taxes will be due in Belgium, although you may have to argue that in French or Dutch, with the support of a local accountant. The Belgians are belligerent!

After 6 months has elapsed, or when you become aware that the mission will last longer than the 6 months, the whole dynamic changes. You then need to refer to the details in this thread on that topic.

VAT is chargeable if you bill in your own home country. If you bill another EU country than your own, VAT is not chargeable. Again covered in this thread, and discussed in the VAT Changes thread I started (sticky).

All the answers are in this thread

.

[syh]

Syh, some facts for you.

LIMOSA is the law here now. If you work here for more than 5 days a month, you have to register, if you intend to work and be paid via a non Belgian company. Of course you can ignore it, but 99% of pimps will demand it if they have a Belgian presence. If the pimp doesn’t ask, then do the gig and worry about it later.

Be warned though, if you rent a flat you will need to register at the commune, something you are legally required to do within 8 days of becoming a resident. Renting a place makes you a resident. Registration at the commune will flag you to LIMOSA (Belgian Social Security) and you’ll get a Belgian tax return in the post. This you will have to complete for all your Worldwide income. Hotels R Us if you want to avoid this pain.

After that, you can work here for 6 months and pay your salary back in the UK. No taxes will be due in Belgium, although you may have to argue that in French or Dutch, with the support of a local accountant. The Belgians are belligerent!

After 6 months has elapsed, or when you become aware that the mission will last longer than the 6 months, the whole dynamic changes. You then need to refer to the details in this thread on that topic.

VAT is chargeable if you bill in your own home country. If you bill another EU country than your own, VAT is not chargeable. Again covered in this thread, and discussed in the VAT Changes thread I started (sticky).

All the answers are in this thread

.

Yep thanks. Sorry for the double post, I didn't realize there was a delay between submission and postings so I did it twice. I don't intend to rent a flat, more likely just pay for a room in someone's home who doesn't want me to register. Don't know if my pimp will insist on Limosa or what he has in mind. I need to wait to see if I get the job but just wanted to anticipate some issues. In fact, the pimp rang me up today to shave off my rate. This economic crisis is the worst. I mentioned how troublesome belgium contract work is and so lowering the rate isn't in my best interest but a pimp is a pimp.
Thanks for setting me straight on my questions. For some reason, I couldn't wrap my head around it properly.

[Zinhem]

Don't know if my pimp will insist on Limosa or what he has in mind. I need to wait to see if I get the job but just wanted to anticipate some issues. In fact, the pimp rang me up today to shave off my rate. This economic crisis is the worst. I mentioned how troublesome belgium contract work is and so lowering the rate isn't in my best interest but a pimp is a pimp.

I bet he will ask for the Limosa, mine waiting till I signed, then demanded it under the "comply with local laws" clause of the contract.
I bailed, the agent was angry, so I spoke to the client to apologize, but he was very understanding and I'm going to discuss it with him in person. Project is a migration of a system for a large car company moving from Belgium to Spain, he'd suggested he could solve the problem and use me on the Spanish side of the migration instead.
So explain the problem to the end client, just in case your troublesome Belgium problems can be solved. They all seem to understand the problem.
And do the math yourself, don't trust any numbers you get from pimps.

Difficult times, but you can lose money on a Belgium contract.

[Magic]

Possible contract

Here am I considering a contract in Belgium, I have been there once before for six months and managed to dodge the world and his dog trying to tax me there.

Current contract on offer is 600 Euros so not that good rate.

Plus:
Agent is outside Belgium and happy for me to bill direct to them. (Company to Company)
Previous apartment agency happy to do company rental.

So it is possible for me to do the gig unless someone takes offence to me being there but not going to volunteer that I am paying all my taxes in another country.

Worst:
Well I just guess I will catch the next flight out if it goes tulip after all my family is in a different country and I already pay huge amounts for education, health, taxes etc. (not the UK).

Honestly I cannot see what the fuss is about, as long as you are paying full taxes in your home country, why do they make this so hard. Checked with my accountant here and tells me the gov here does not care as long as I pay all my taxes due here, which includes all worldwide income.

BTW: I plan to fly in on a Monday and out on a Friday night, obviously to be with my family during the weekends.

Can you pm an English speaking Belgium accountant just in case it goes Tulip?

[Zinhem]

Current contract on offer is 600 Euros so not that good rate. Agent is outside Belgium and happy for me to bill direct to them. (Company to Company) Previous apartment agency happy to do company rental.

600? That's wayyyy above the rates I'm seeing for Belgium, and sounds like it has the tax risk priced in. Limosa is demanded by the Belgian client apparently, the agent is just the messenger for the demand.

Worst:
Well I just guess I will catch the next flight out if it goes tulip after all my family is in a different country and I already pay huge amounts for education, health, taxes etc. (not the UK).

In the EU? Doesn't really help. What helps is if you have no money.
I remember being pulled in by the Germans, for not declaring bank interest in other EU accounts (EU Savings Directive means they get a list of accounts and interest paid directly from your EU bank) from that they can work out how much money you have and if you're worth squeezing.
UK Ltd companies make it worse because it's there in the accounts online at companies house website. If you have lots, it's worth their time chasing you and I have a lot of reserve in the company.

With some countries desperate for tax, better to cross every t and dot every i. But still 600? Maybe just 'forget' to file the Limosa if its only a few months for that kind of money.