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

[Brussels Slumdog]

Future planning

Have you paid any SS in the NLs? i.e. The payroll company should be deducting Dutch SS on Dutch income?

I am currently 100% compliant in the Netherlands and currently do not have
a SPL or self employed status in Belgium.
At this stage I am only thinking of what kind of set up I would need if I was
offered a contract in Belgium due to the fact I am a Belgian resident.

Based on your short guide

Continue to work outside Belgium.

If offered a job in Belgium

Quote €50 a day extra

Find a payroll company and pay the max social security and tax less
real travel expenses
Setting up SPL+ Self employed status is too much hassle as I have no
garanteed work in Belgium. In fact I have more chance of non Belgian work than Belgian work

[nodric]

Based on your short guide

Continue to work outside Belgium.

If offered a job in Belgium

Quote €50 a day extra

Find a payroll company and pay the max social security and tax less
real travel expenses

Correct advice based on your circumstances as a Belgian resident. It's the residency thing that kills you, and the only real way out of that trap is having your own local company. I do understand that this can be complex and costly if you do not have sustained work in Belgium.

However, for a Brit ex-pat, using a payroll/umbrella company, or your own LTD CO, providing you with ex-pat status will keep the SS payments to a minimum, by paying them back in the UK.

No one solution can fit 100% of the people needing a solution, and no one is saying it's easy, but we have to try

Work is picking up again in Brussels with all the main companies looking for PMs and similar. Rates are steady around the far side of 650 a day. Still some jokers trying it on to cream huge margins, but with so many agencies chasing the roles you soon uncover the BS.

.

[Swindon]

Manco/Schemes from the past

Nodric. Yes you are right. The best things to do is leaving the Manco and start a company in Belgium. The question is haw to deal with the past years Manco/Schemes? An option is to stay quite and hope nothing happens. This is dangerous seeing how the BTA is catching on the Mancos. The other possibility is to declare the schemes voluntarily through a special ruling office. Have you heard about this? They calculate all the unpaid taxes plus a 10%. But the question is what if you cannot pay the entire bill? Does anyone know if delayed payment is feasible and the cost of it?

[nodric]

Nodric. Yes you are right. The best things to do is leaving the Manco and start a company in Belgium. The question is haw to deal with the past years Manco/Schemes? An option is to stay quite and hope nothing happens. This is dangerous seeing how the BTA is catching on the Mancos. The other possibility is to declare the schemes voluntarily through a special ruling office. Have you heard about this? They calculate all the unpaid taxes plus a 10%. But the question is what if you cannot pay the entire bill? Does anyone know if delayed payment is feasible and the cost of it?

Special Ruling Office. Always being wary of new posters giving such new information, especially as financial advisers and accountants have not yet made this a suggested route to consider. Sounds too much like the scam Connexions tried to pull!

I cannot advise you either way on this. I can ponder on the consequences of either course of action.

If you off-shored a whole junk of cash over n years, and then freely admit to it, you will at a minimum get a BIG tax bill, assessed for unpaid social security which will be retrospectively applied to both previous income, and future income for the following years. On top of this they can levy a penalty of up to 100% of all back taxes etc. Consequence of this, you will go bankrupt, or be paying 1000s of Euros for years to come!

Yes the fine 'could' be 10%, but the tax bill will be at least 50% of the undeclared earnings, and when calculated with what you did declare, is likely to be much higher as the overall total will be way over the max tax allowances to avoid the highest rate being applied. You will also have to pay all back dues on Social Security, assessed on the total income for all the years, which will not only increase the immediate demands, but create year on year problems for you. (see section on the Social Security Trap)

Let's say you had a day rate of 500 Sheckles and declared 40K a year, but hid 70K a year for 3 years.

Tax now assessed on 110K a year plus SS on that new amount. Likely outcome, back taxes and SS of 60K a year. 3 years worth 180K.

Does it really matter how big the fine is now?

Yes they will let you pay over time, but no 10 Euros a week here. Expect to loose a sizeable chunk of your disposable income. What happens if your current contract ends, you have to move to the UK. You're on the bench for 3 months etc.

Unless you owe hardly anything, and if you don't why did you use a ManCo anyway?, then you are inevitably going to go bust.

OK, so lets say you keep quiet and do nothing.

Firstly, the BTA have got to track down anything upwards of 2-3 thousand contractors who went through ManCos over the last few years. All this will require access to all financial records, including all offshore information. A lot of this will be hidden or inaccessible due to bank secrecy, and the fact that anything outside Europe, as all the offshore stuff was, will be almost impossible to access anyway.

Even if the Lux authorities hand over Cnx information, they won't have details of all the offshore transactions anyway. Remember, Cnx operated via Ireland anyway, and only ran admin offices in Lux!

The offshore stuff all went via Mauritius (the Seychelles in earlier years) and South Africa and therefore is impossible to trace.

How many staff would the BTA need to trace and inspect and investigate all those contractors? If contractors freely offer themselves up to the BTA for sacrifice, then they will be laughing all the way to the bank. Why would you do this?

So unless the ManCos gave a list of names, all the payment and banking details directly to the BTA, then there is a lot of difficult investigative work required by the tax man to find anything. Then they will start with the most valuable cases. i.e. those that hid 100K plus a year etc.

The BTA cannot access your offshore account, and unless you give them access, they will never know what you've got in it, or how it got there. Even if they know you have an offshore account, they have no way to access the data about it. They have no powers to go to an offshore bank and demand access to the data. If they did, every offshore customer would leave those banks!

Remember also that this could have repercussions across the whole industry and both agents and end clients were directly involved with some of the ManCos. Fortis Bank used to have Cnx as a preferred supplier! Does that make Fortis liable under similar rules as IR35 in the UK? Lots of interesting scenarios to be explored. Cnx was a direct supplier to the Vlaams Ministry as well!

Does this mean it's all impossible and the BTA will give up. Probably not, but now is not the time to publish your personal financial statements in Le Soir either. If they are determined, and you were a very bad boy, they may want to have a chat one day. There are a lot of things you can do between now and then. There are also a lot of facts that they have to prove, and lot's of assumption on their behalf. These ManCos were not all the same, many lied to contractors, many have complex webs across multiple geographic and political jurisdictions. Sure, they'll have some successes, will get lucky with a few naive contractors, or sloppy accountants. If you want to make it easy for them, then go bare your soul and let us all know how you get on

My own opinion, the BTA could do a lot worse than to offer a one off payment, and a full amnesty to all contractors who worked via ManCos over the last few years. Name and shame the ManCos, make sure the Agencies no longer work with them, and then introduce guidelines on how contractors should operate in the future. Maybe even introduce a 30% rule such as the Dutch did!

Wishful thinking I know

.

[smartwombat]

Very informative - thanks

Does anyone know of a similar resource for potential full-time employees?
Our Belgian subsidiary is undergoing a MBO and want me to work for them.
From what I've read here, I'd be in deep doo-doo taking up that offer.

[nodric]

Does anyone know of a similar resource for potential full-time employees?
Our Belgian subsidiary is undergoing a MBO and want me to work for them.
From what I've read here, I'd be in deep doo-doo taking up that offer.

If you've been freelance up until now, I'd go seek an accountant before taking up any offers. Once you're a permy, your history will come back to haunt you faster than the worse trots you've ever experienced, unless you were whiter than Snow White herself in your contracting days...

[Sam Rutherford]

no degree

Hi,

I'm looking to set up a Belgian company, without a degree.

I have two current UK companies, 6 years and 8 years old.

Anyone experience on whether non-Belgian companies are accepted as 'professional competence', in lieu of a degree?

Thanks, Sam.

[nodric]

Hi,

I'm looking to set up a Belgian company, without a degree.

I have two current UK companies, 6 years and 8 years old.

Anyone experience on whether non-Belgian companies are accepted as 'professional competence', in lieu of a degree?

Thanks, Sam.

Sam,

If you can show 6 years+ as a company director, with accounts and good conduct etc, then this can be acceptable to the BTA. You will need the help of a good accountant to support the case with the Belgians.

Dormant companies do not count, they must have been active for a continuous period, with you as a Director, and of course have been run well and maintained in good order. You may need to provide annual accounts.



.

[Sam Rutherford]

Hi, thanks!

We'll see how we go!

Merry Christmas.

Sam.

[nodric]

Start a Belgian Company for 1 Euro

New rules have been introduced in Belgium that will allow you to start a Belgian LTDCo for 1 Euro capital. If you have read the facts in this post, you will see that to start a company you had to show several thousand Euros in your bank account.

This has now been reduced for new starter companies, known as a SBVBA. Tailored for young people to start a business, it can also be used for IT Consultants.

This is a much easier way for you to start a local company and be compliant in Belgium.

Happy New Year


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