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

[Brussels Slumdog]

This is probabilty not possible for people like me

.

Management company signs contract with agent and receives 100% of funds. Contractor LTD has separate sub-contract and receives say 20% of the fees. Wife of contractor then becomes a shareholder of management company and receives the balance as a dividend into the UK, paying any taxes due. e.g. Management company is in Cyprus, pays wife a dividend with 0% tax, and then UK take/steal their standard withholding tax. A small fee is charged on the dividend to cover the operating costs of the management company.

Messy, but workable assuming wife is not a director of the sub contracting LTD, and is a basic rate tax payer. Again the principal being separating you from the major capital income, and paying in a way to avoid you being taxed on it.

My wife is Belgian which is why I live in Belgium so we complete a joint tax return. This means that any money
she received in UK would end up on our tax declaration form in Belgium. I would be working for a management company in Cyprus and my wife just happens to be a shareholder of the same company.
Your set up would work for someone who has a long term contract in Belgium and goes back home to his wife and kids every week end on eurostar.

[wind]

Messy, but workable assuming wife is not a director of the sub contracting LTD

Why can't she be a director of the subcontracting company ?

If enough contractors are interested in sharing the funding of Ernst & Young, or KPMG, to the tune of about 5-7K Euros for advice on how to structure a tax efficient management company based on the research in this thread and others, then I'm all ears. As I said in my last post, damned hard to get contractors to part with their hard earned pennies

Curiosity always gets the better of me I am willing to contribute around 500 Euro for such an educational investigation, so if there are only 12 other curios contractors...

[nodric]

Your set up would work for someone who has a long term contract in Belgium and goes back home to his wife and kids every week end on eurostar.

Yep, you're correct. The only way it could work for you, is if you had someone non-resident to receive the bulk to the contractor income. The problem remains of separating you from the income, so as a Belgian resident/tax payer, those funds stay out of the jurisdiction of the BTA.

A nominee director would accomplish this, but you still have to overcome how you can spend the dosh, without ever receiving it… A none OECD complaint location would allow you to fritter away the company funds with no liability, but of course you’d then fall foul of the OECD rules having a company in that location, and of course you still have to get the agency to pay the fees to that location!

What you need is a OECD compliant country, that also has lax company rules, so that you can spend the money as you please without having to account for it Of course if you paid bills, and say your mortgage with it, I’m pretty sure the BTA would classify it as income, or as a benefit in kind etc.

[nodric]

Why can't she be a director of the subcontracting company ?

She could be, but you are trying to place a degree of separation between you, and the majority of the funds. If she sat as a Director on the sub-contracting company, this establishes a link between the agency contract and you.

However, most contractors have their partners as a director anyway (can’t assume we are all men and have wives), so perhaps it would be as simple as the partner taking the lions share as a dividend, and you earning squat as a salary, declared into Belgium.

Also as he/she would be fully resident in the UK, or wherever, the company could demonstrate its Centre of Economic Interest was in its home country, especially if he/she did a bit of chargeable work for someone else

Sounds too easy, but worthy of investigation with your accountant.

Curiosity always gets the better of me I am willing to contribute around 500 Euro for such an educational investigation, so if there are only 12 other curios contractors...

Excellent, I also have another contributor, so the virtual fund is now at 1500 Euros. If those that previously PM’d me are still interested, the fund could already be at 3000 Euros

If we get 12 of us on the list, I’ll organise a meeting at a suitable hostelry to discuss a scope for the request to Earnst & Young. That way everyone gets to add their input for the request advice.

So if you have 500 Euros to add to the pot, let me know. Genuine offers only folks as the virtual fund will have to become physical at some point. I know it's great to shoot the breeze on the forum, but some of us really want to find a solution. The reason I’ve been so open in sharing thoughts and ideas, is to try and broaden the thinking, and a problem shared and all that…

There has to be a way to do this, big business does it all the time, so why shouldn’t we be able to lever the same benefits working as a collective?

[wind]

However, most contractors have their partners as a director anyway (can’t assume we are all men and have wives)....

It seems you missed the political correctness revolution where 'she' serves as a gender-neutral pronoun

[Brussels Slumdog]

New tittle required A Short guide - Contracting in the Flemish Republic

After yesterdays election results we may need some advice in working in the new Flemish republic.
After all the years that I have lived in Belgium I have had 1 interview in Wallonie. Are there any contractors
working there? All the contracts seem to be in Brussels or Flanders.

[nodric]

After yesterdays election results we may need some advice in working in the new Flemish republic.
After all the years that I have lived in Belgium I have had 1 interview in Wallonie. Are there any contractors
working there? All the contracts seem to be in Brussels or Flanders.

I’m sure I’ll be corrected, but the only Blue Chip in Wallonie that uses contractors is SWIFT, and they've shifted a lot to India anyway, as well as capping rates, and making all contractors accept the same rate, regardless of skill level

With the recent law changes stating making it much harder to buy property in Flanders unless you are Flemish born, I wonder whether one day the Flemish region will only accept Flemish contractors! Let’s hope Vlaams Belang don’t gain as much success

Maybe the Flemish rulers still have to come to terms with the fact Fortis is now owned by the French

Think I’ll leave before the civil war starts

[Brussels Slumdog]

Already happening

With the recent law changes stating making it much harder to buy property in Flanders unless you are Flemish born, I wonder whether one day the Flemish region will only accept Flemish contractors! Let’s hope Vlaams Belang don’t gain as much success

Maybe the Flemish rulers still have to come to terms with the fact Fortis is now owned by the French

Think I’ll leave before the civil war starts

Its already happened. I speak basic Dutch but they don't accept my accent and they don't accept the Dutch either unless they have to.
The fact is that the Flemish region will face a serious aging problem in the years to come, so they may well need us in the future.

[Sergeant Murphys Cosh]

May I butt in at this point (as interesting as it is), and suggest that rather than trying to find ways of avoiding/evading the system, it might be more beneficial to actually focus on getting the Belgies to legitimately lower their tax rates ?

If, as you said on page 13,

"Problem is that most countries that have operated 'black economies' for so long (and Belgium is
amongst the worst), can't break away from the need they have created for high taxation",
then finding a solution to this would be the real long-term answer.

[nodric]

May I butt in at this point (as interesting as it is), and suggest that rather than trying to find ways of avoiding/evading the system, it might be more beneficial to actually focus on getting the Belgies to legitimately lower their tax rates ?

If, as you said on page 13,

"Problem is that most countries that have operated 'black economies' for so long (and Belgium is
amongst the worst), can't break away from the need they have created for high taxation",
then finding a solution to this would be the real long-term answer.

And then he awoke from a beautiful dream...


Problem 1. Those that make the laws, or rather enforce them, are low paid high taxed employees who hate us all with a passion. Why would they support a preferential scheme for us?

Problem 2. Belgium as an unstable political system, and changes government as rapidly as some of us change contracts. Until such time as there is a stable, progressive and commercially oriented government with majority power, it ain’t ever going to happen.

Problem 3. Belgium’s debt is set to be greater than 100% of GDP in the coming months, and they are just behind Greece in their fiscal poo poo. Grasping everything they can is likely to be the name of the game for sometime to come.