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

[captainham]

I emailed the LIMOSA department the other day to check something (I don't believe I need to register but want to get something in writing in case they come knocking in the future).

Their response was to contact the Social Security department, so I emailed them instead...

...their response was to contact the LIMOSA department so they forwarded my email on to them for me...PERPETUAL CYCLE OF DOOM!

[BlasterBates]

I would read this:

Flanders Investment & Trade - Guide for foreign emplyees working in Belgium - Powered By Publitas.com

It covers self-employment in Belgium.

I have to say having read it I see no difference to any other country I've worked in. i.e. you should register on entering Belgium and if you work less than 183 days you're still liable for tax but only on Belgian sourced income.

Obviously if you bill through a UK agency and/or work through your Ltd I suppose you could argue it's UK sourced, I'm just sceptical they would also see it that way.

[captainham]

I would read this:

Flanders Investment & Trade - Guide for foreign emplyees working in Belgium - Powered By Publitas.com

Thanks, yeah I found that one too, as well as the official LIMOSA stuff of course. I'm 99.9% sure I'm exempt, as I'm invoicing through a UK agency and more importantly 95% of the contract is delivered from my home office here in Blighty, so that to me says I am only liable for tax in UK (I'm never in BE for more than 5 days a month, which means I'm exempt according to LIMOSA website)....but I want to be 100%, not 99.9%. I'm just paranoid, really.

I've got some contact details off Brussels Slumdog for his BE accountant so will ping them a message and try to find that elusive 0.1% that I'm currently missing.

[BlasterBates]

Thanks, yeah I found that one too, as well as the official LIMOSA stuff of course. I'm 99.9% sure I'm exempt, as I'm invoicing through a UK agency and more importantly 95% of the contract is delivered from my home office here in Blighty, so that to me says I am only liable for tax in UK (I'm never in BE for more than 5 days a month, which means I'm exempt according to LIMOSA website)....but I want to be 100%, not 99.9%. I'm just paranoid, really.

I've got some contact details off Brussels Slumdog for his BE accountant so will ping them a message and try to find that elusive 0.1% that I'm currently missing.

Agreed.... I wouldn't see a problem at all with that, I've seen the 5 day rule in the LIMOSA bumf.

In any case less than 5 days a month you'd be below the tax threshold I would imagine. Kind of double "checked".

We're in the realms of a financial hit equivalent to a parking fine, in the highly unlikely event that for whatever reason it was chased up.

[sleek]

Hi,

Just found this forum and though I am not based on UK, I decided to give it a shot as there's lots of questions nevertheless. Found many answers already, but still I have so many doubts...

What I have done so far:

I started to work as contractor on Nov 2012 and moved from Finland to Belgium. I agreed to use Finnish umbrella company which bills my client and pays salary to me. While in Finland I got A1/E101 document which says that I belong to Finnish social security system. I created MIMOSA declaration before I started my work and that's all I havedone. Havent registered as resident as I stay in B&B currently. I initially had 2 month contract which was extended by 6 months after client verified my skills. It may be extended even further (my co-workers have been contracting for years).

Then it struck me as 1000 volts. I will be staying in Belgium well over 183 days which makes me taxable in Belgium instead of Finland and while Finland has one of the highest tax percents in the world, Belgium has even higher and I could have made royal tax deductions from Finnish taxes because I work and live abroad. Now I would need to pay taxes to Belgium since day 1 without any deductions or compensations of flights when I visit my family in Finland - which effectively decreases my net salary from old days!

I would be so grateful if somebody could answer to few questions I had on my mind - officials in Finland seem no to really know the answer...

* I think Belgium says that I have to pay taxes to Belgium whenever I stay in Belgium for over 183 days in ANY 12 month period. But tax agreement between Finland and Belgium says that I have to pay taxes in that country where I stay more than 183 days PER CALENDAR YEAR. How come Belgium can claim anything else, I saw the tax agreement on with my own eyes?

* In worst case, if I will be taxed by Belgium since 1.11.2012, they don't tax my income from 1.1.2012 - 1.11.2012 but only income earned in Belgium after that, right?

* If 183 days per calendar year applies, I pay taxes to Finland on all my income of year 2012 including Belgium income and to Belgium on all my income of year 2013, right?

* I have E101 document, I should not be required to pay social security payments to Belgium, or am I? How is social security paid, various sources states that my tax% would be 50% - does this include social security payments or do I have to pay even more?

* And then, my client has office in Luxembourg also. Should I try to get transfer from Belgium to Luxembourg BEFORE I have stayed in Belgium 183 days so that I would pay taxes either to Finland or to Luxembourg (preferably latter)? I could run between Luxembourg, Belgium and Finland so that I will stay under 183 days in every country and I believe I would pay taxes to Finland only then. Would that work? Citizenship of some low tax% country would be nice in case like this, but oh well, cannot have everything...

And last thing, if somebody could recommend any reliable accountant which would sort all the paperwork needed... I do not speak French or Fleemish a word...

Thank you!

[sleek]

Ok, I slept over the night and researched this matter more and did some calculations about my net income. I've came to conclusion that staying in Belgium over 183 would be pure madness no matter what. If I cannot go to Luxembourg, I'll just need to terminate the contract.

If I can pay taxes to Finland, until 183 days is over I have 10k-20k (depending on how big my total % woulds be in Belgium) more money on my bank account and I virtually can do nothing rest of the year thanks to good unemployment benefits in Finland. And then again, I'll just move to Germany or somewhere else more friendlier neighborhood to find new contracts...

Thank you Belgium, was this REALLY your intention?

[BlasterBates]

Even if you stay less than 183 days you should really register and tax it in Belgium. That applies to any country. You can always claim exemption if you believe that in your special case you are exempt from Belgian tax, i.e. because you work through a Finnish company.

Here is an example of someone who worked in Germany for 4 months and didn´t register, about 5 years ago.

http://forums.contractoruk.com/accou...an-prison.html

The 183 day rule doesn´t apply to Ltd companies

The fact that your contract began very recently means you can put your tax affairs in order.

There is more than likely no or very little advantage in taxing yourself anywhere else. You wouldn´t be subject to the full tax rate in Belgium.

Why put yourself at risk a few years into the future?

[captainham]

And last thing, if somebody could recommend any reliable accountant which would sort all the paperwork needed... I do not speak French or Fleemish a word...

Thank you!

Try this one mentioned here.

http://forums.contractoruk.com/accou...ml#post1641478

[sleek]

Even if you stay less than 183 days you should really register and tax it in Belgium. That applies to any country. You can always claim exemption if you believe that in your special case you are exempt from Belgian tax, i.e. because you work through a Finnish company.

This simply cannot be correct. I may have to declare everything in Belgium, but mutual taxation agreements between Finland and Belgium clearly states that Belgium has right to tax me only if I reside in Belgium over 183 days. This applies of course to Belgians working in Finland also. There should be nothing unclear about this, I've read the the agreement myself and verified it from Finnish tax officials.

If Belgium tries to tax me and NOT honor the agreement, that's another matter then.

Oh, I know where this confusion comes from. Should I work through Belgian company, it would be very clear also that I would need to pay taxes to Belgium on income I earn from Belgian company, no matter how long is my stay. That also is stated on the agreement clearly. And after 183 days I would have to pay taxes to Belgium on my world-wide income. This 183 day thing is used in multiple distinct laws and contracts, perhaps that's why it's confusing?

There is more than likely no or very little advantage in taxing yourself anywhere else. You wouldn´t be subject to the full tax rate in Belgium.

Didn't know that. Why would I not be subject to full tax rate (50% + 6% because I reside in Brussels I think)?

Thank you very much!

Edit: Why I am so worried is these calculations... My gross salary is about 8000 EUR per moth.

Should I pay taxes and everything for it to Finland, my net salary would be about 5000 EUR per month (because all the deductions I can make due to working abroad).

Should I pay full taxes to Belgium it would be, what, 3000-4000 EUR? So in worst case I lose 2000 EUR per month if I have to pay taxes to Belgium. My contract is for 8 months. It makes 16 000 EUR difference or should I terminate the contract on 6 month mark it's still 10 000 EUR.

When I go back to Finland as unemployed, I get 2000 EUR gross per month as unemployment benefits. So if I've had paid taxes to Finland I have 10 000 EUR on my bank account and I make something like 1500 EUR net per month -> I make more money bu doing NOTHING in Finland than continuing to work in Belgium for rest of the year (if I even get extension to my contract after summer)!

Furthermore, if I stay i Belgium over 183 days, Belgium have right to tax my work-wide income for that year. If it happens so that I won't get new contract, I'll still have to go back to Finland after 8 months. After that I'll still get that 2000 EUR gross as unemplyment benefit, but now I pay taxes to Belgium for it which probably makes it much less than 1500 EUR and I actually would be in trouble!

So you'll see why I am so paranoid about this taxation thing, right?

[BlasterBates]

This simply cannot be correct. I may have to declare everything in Belgium, but mutual taxation agreements between Finland and Belgium clearly states that Belgium has right to tax me only if I reside in Belgium over 183 days. This applies of course to Belgians working in Finland also. There should be nothing unclear about this, I've read the the agreement myself and verified it from Finnish tax officials.

If Belgium tries to tax me and NOT honor the agreement, that's another matter then.

Oh, I know where this confusion comes from. Should I work through Belgian company, it would be very clear also that I would need to pay taxes to Belgium no matter how long is my stay. That also is stated on the agreement clearly.



Didn't know that. Why would I not be subject to full tax rate?

Thank you very much!

This link is helpful:

http://www.investinflanders.be/appl/...oyees_1209.pdf

A Belgian non-resident...is only taxable on that part of his income that is received from Belgian sources

So although you are non-resident you still tax income from Belgian sources. If you had income from a Finish company because you have been working there, then that wouldn´t be taxable if you are not-resident.

As it says there you will be expected to register with the Belgian authorities within 90 days. As long as you register and fill out a tax declaration there won´t be a problem. They might not accept that your Finnish income is not taxable because your are invoicing a Belgian client.