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

[sleek]

Effectively you will have an office in Belgium, the office of the client will be your office. This is what the Belgian's may say,

No, that is especially covered within tax agreement Finland and Belgium has signed. There's whole chapter concerning about offices and my company will not have office on Belgium until 12 months have passed - then depending on circumstances there may actually be.

The Finnish tax officials have no jurisdiction in Belgium. The Belgian tax officials will make their own decision. If they find an invoice with your name on it and you haven't declared anything they will calculate the tax for you. That's how it works.

No it does not work like that. Have you ever signed a contract? You know it binds both parties no doubt? It's true that any other country does not have jurisdiction in Belgium than Belgium itself, but if Belgium has signed an agreement, they must honor it. Just as you honor your contracts. If you sign contract you will work for some party for 3 months, why in earth that would not bind you (unless there is another agreement)?

Of course Belgium may choose not to honor their agreements. Do you really think any western country would not honor mutual agreements? It would instantly lead to diplomatic crisis between both parties and probably in EU also as Belgium is de facto capital of EU.

Please, could somebody explain why almost everybody thinks Belgian mutual agreements with another countries would not be valid? That Belgium would do something they as country has agreed not to do? I have great troubles understanding this.

[sleek]

Living in a hotel isn't an excuse for not registering otherwise everyone in Belgium would simply live in a hotel and pay no tax. Think about this....it doesn't give you immunity.

Registering or not registering of course wont affect to any taxes - if I should have registered and paid taxes, I cannot avoid that by not registering.

However, could you please advice me what to do? I went to register but they said I cannot register because I live in hotel. Belgian officials said, not anybody from the forums. And yet you said living in hotel is not excuse not to register. This just do not compute. What you think I should do?

I worked in Luxembourg, stayed in a hotel and had no problem registering with the Lux authorities with my German address.

Luxembourg is not Belgium. But ok, I can accept that Belgium officials were wrong when they said I cannot register. If you are 100% sure of this, I will try again. Actually I will try again just to find out how it is for certain.

[BlasterBates]

No, that is especially covered within tax agreement Finland and Belgium has signed. There's whole chapter concerning about offices and my company will not have office on Belgium until 12 months have passed

Do you believe that you could work in Belgium for a whole year without them taxing you?

...and have you talked this through with a Belgian tax official or accountant?

You've decided you're going to do this and I think you'll probably get away with it, but you're taking a risk.

We can't settle this here. We'll only know whether you're right if the Belgian tax authorities find out what you're doing chase you up and you win the dispute.

I think if you're there for less than three months they probably won't.

Just remember the contractor who thought he could work in Germany for 4 months without being taxed because he was working through a UK Ltd that didn't have an office in Germany.

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

Just got home to find a letter from the German Tax people saying they had "initiated criminal proceedings involving a fiscal offence, summons for being questioned as an accused."

[sleek]

Do you believe that you could work in Belgium for a whole year without them taxing you?

Effectively 183+183 days, yes. If you sign agreement where you agree to work for some company for 12 months, do you think you will NOT need to? If not, why not?

...and have you talked this through with a Belgian tax official or accountant?

One Belgian accountant confirmed this. However, I sure will go to tax office to ask just because of this Forum.

We can't settle this here. We'll only know whether you're right if the Belgian tax authorities find out what you're doing chase you up and you win the dispute.

It seems so. But could you please tell me why you think that Belgium should not honor agreement Belgium has signed with Finland? What is the reason Belgium does not need to honor that very contract? There MAY be such reason and if there is, please tell me.

Just remember the contractor who thought he could work in Germany for 4 months without being taxed because he was working through a UK Ltd that didn't have an office in Germany.

Belgium, Finland and Germany are each separate sovereign countries which may or may not have similar agreements signed or than again they may not.

However. Please remember, I didn't say I do not need to fill tax return. That was once question I was uncertain of. Do I need to pay taxes, that is another matter I'm certain of. Please olaso remember, that I need to pay taxes to Finland of my income. Not to pay to Finland would be fraud.

[sleek]

Btw. I just read tax treaty between UK and Belgium. While almost identical with contract between Finland and Belgium, there is one major difference:

* In UK - Belgian treaty limit to become tax-resident is 183 days in 12 months.

* In Finland - Belgian treaty limit to become tax-resident is 183 days in calendar year.

I can understand that since this is UK forum, it's hard to believe that you can effectively work 183+183 days in Belgium as a Finn and not to pay taxes because UK people need to.

What I do not understand is that why should anybody think that taxes should be paid since day 1. - if that would be the case, all the tax treaties between countries would be void and unnecessary. Why bother to sign hundreds of treaties having tens of pages, if they would not be effective?

[BlasterBates]

However. Please remember, I didn't say I do not need to fill tax return. That was once question I was uncertain.

That's all I'm advising you to do. Otherwise they can only guess when they see an invoice. If they see an invoice it matches up with a tax code, end of story. Then someone at the Belgian office, says yes this guy has a Finnish company and we're happy with that.

[Boo]

Once you´ve registered with LIMOSA I think you can assume they´ll expect a tax return.

No they won't. They will only send you a tax return if they have a place of residence for you and a B&B or Hotel does not suffice for that in Belgium.

Boo

[Boo]

Please, could somebody explain why almost everybody thinks Belgian mutual agreements with another countries would not be valid? That Belgium would do something they as country has agreed not to do? I have great troubles understanding this.

"Almost everybody" is BlasterBates. He represents an umbrella and delights in providing misinformation about the law, the 183 day rule is a particular favourite of his.

Case closed, Sherlock ?

Boo

[BlasterBates]

"Almost everybody" is BlasterBates. He represents an umbrella and delights in providing misinformation about the law, the 183 day rule is a particular favourite of his.

Case closed, Sherlock ?

Boo

No I'm not an Umbrella. Here's the link to the contractor facing criminal prosecution because he followed your advice on european law:

I worked in Germany for 4 months didn't pay tax and now face the threat of a German prison

I'm suspicious when people claim they don't have to pay tax without telling the tax authorities and say it's legal.

Everywhere I've worked in Europe I've signed up with the tax authorities and paid it. It's simple and the tax rates for being there for 3 months are usually low, no social security to pay.

and in any case I'm simply suggesting he fill in a tax return. Living in a hotel doesn't exempt you from tax or filling out a tax return.

I lived in a hotel didn't register and now face a German prison l

If this guy had filled out a tax return he wouldn't be facing criminal prosecution he could then have tried to gain exemption and if not then simply pay the tax and offset it against UK tax. Cost? probably a few hundred EUR to a German accountant.

[sleek]

Let's settle this for good. I got just got reply from Belgium tax officials also and answer was just like I expected (actually "better"). According to Double Taxation Convention dd 18th May 1976 between Belgium and Finland, I do not need to pay taxes to Belgium unless I spent time there more than 183 days per calendary year if - I work for non-Belgium company not having office in Belgium. Nothing unclear about this according to Finnish AND Belgium tax officials. Situation would change if my company would have (de-facto) office in Belgium and that could happen if I spend time in Belgium than 12 months, but in theory, working 183+183 days in Belgium and paying taxes to Finland is perfectly possible and perfectly legal.

What did suprise me a bit - I do not have to fill tax return. They said that since I have no obligation to pay taxes to Belgium, there's no need for me to fill tax return. Though this will change when I register myself to municipality - Belgian tax officials will them assume by default that I am responsible to pay taxes after which I need to return them proof that my fiscal residence is in Finland. Should not be difficult since I have car, aparment, huge loan, wife and family, friends and everything there nor I do have Belgium bank account, car or anything and I even stay in hotel not in aparment. And trust me, I am NOT going to open Belgium bank account or anything :-)

I think this clears everything up, the same response from Belgium and Finland?

Thank you all again!

Ps. Remember again, this is the case for people having their fiscal residence in Finland. YMMV if you reside in any other country.