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

[BlasterBates]

Liar.

Boo

If I´m wrong what are the consequences ?

The consequences that the Belgian´s charge no tax, and you spent half day submitting a tax return.

What are the consequences if you´re wrong Boo?

You end up on the wrong end of a criminal investigation

You do know don´t you that many contractors have got into serious trouble with the Belgian authorities running contracts through their Ltd´s. and when a Belgian tax official audits a client and finds a whole bunch of contractors doing this, do you think he´s only going to go after the ones with more than 6 invoices.

[howtoge]

Why not invoice?

If you already have a bvba or an indépendant in BE and a LTD in UK.
Why can't you just invoice the company in the BE from you company in the UK ?

[HuhWhatWhere]

Whoa, Wait - What Just Happened?

My wife was today offered full-time employment with a Brussels-based entity that, while not outsandingly remunerative, is qualitatively quite a coup. Amongst all the self-congratulations, we've begun researching the tax ramifications on my continued independent contractor employment (currently under our UK LTD CO) and are pretty shocked (as in utter disbelief). I would greatly appreciate the forum's comment on my general conclusions before I take it up with an accountant - we've got a few permutations on the typical hypothetical.

Pertinent Background:
(1) We intend to relocate the family (myself, my wife, and my two children) mid-Summer to a house outside Brussels.
(2) We are naturalised UK citizens.
(3) We are US citizens by birth.
(4) Wife's new job is expected to be long-lived (several years - quite possibly longer).
(5) My wife and I are Directors (and sole employees) of a UK Limited Company, currently rendering service under contract to a single US Inc. that is happy to pay to any of a UK/US/BE Ltd. Co.
(6) Wife will likely give up her UK LTD Directorship and I will continue the business solo.

Conclusions:
(1) With my wife and children sited in Brussels, no amount of commuting or days spent abroad will shift my tax residence from Brussels.
(2) The optimal path, given the likely long duration of our stay, is to establish a standalone Belgian LTD to contract with my US client.
(3) The result of this "optimal" path on a EUR 90K Gross contract p.a. is:

90,000 (gross payments from US client) - 15,000 (presumed expenses, including deductibles) - 56,390 (salary) - 18,610 (employer social security at 33%) = 0 (all income paid in salary and expenses).

56,390 (Salary) - 7,330 (employee social security at 13%) - 23,895 (income tax at 2012 rates) - 3,950 (Brussels income tax) = 21,220 (net take home pay).


Any and all comment is appreciated (as are thoughts on how to improve the result) - many thanks for your assistance!

[stek]

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

I'd say on first взгляд is its a world of pain US global tax filing and just about the EU's most taxed state.

Best advice really is give up your US citizenship.

[BlasterBates]

If you actually were to do your work in the UK you could tax it in the UK. You would have to declare it to the Belgium tax authorities, but you wouldn´t pay "Social Insurance" there may be a top up tax. You could probably do this through a UK Ltd company.

Important for this solution is that you don´t do any work in Belgium, and you would have to prove you were travelling to the UK.

An alternative would be to set up an office in Luxembourg. It is however a bit far to commute on a daily basis. It is possible that under the Double taxation treatment you wouldn´t have any extra tax to pay although you would have to declare it.

Again I stress you demonstrate you do the work there there, so you would need proof that you work in your office there.

By working in the UK or Luxembourg you would have two tax residencies, e.g. Belgium and Luxembourg. Your main residency would be Belgium but you would still pay tax in Luxembourg because that´s where you work and you wouldn´t pay Social Insurance in Belgium and it´s possible that you pay no extra tax, especially if it is a salary.

You would need to think about the added expense though.

[Brussels Slumdog]

My wife was today offered full-time employment with a Brussels-based entity that, while not outsandingly remunerative, is qualitatively quite a coup. Amongst all the self-congratulations, we've begun researching the tax ramifications on my continued independent contractor employment (currently under our UK LTD CO) and are pretty shocked (as in utter disbelief). I would greatly appreciate the forum's comment on my general conclusions before I take it up with an accountant - we've got a few permutations on the typical hypothetical.

Pertinent Background:
(1) We intend to relocate the family (myself, my wife, and my two children) mid-Summer to a house outside Brussels.
(2) We are naturalised UK citizens.
(3) We are US citizens by birth.
(4) Wife's new job is expected to be long-lived (several years - quite possibly longer).
(5) My wife and I are Directors (and sole employees) of a UK Limited Company, currently rendering service under contract to a single US Inc. that is happy to pay to any of a UK/US/BE Ltd. Co.
(6) Wife will likely give up her UK LTD Directorship and I will continue the business solo.

Conclusions:
(1) With my wife and children sited in Brussels, no amount of commuting or days spent abroad will shift my tax residence from Brussels.
(2) The optimal path, given the likely long duration of our stay, is to establish a standalone Belgian LTD to contract with my US client.
(3) The result of this "optimal" path on a EUR 90K Gross contract p.a. is:

90,000 (gross payments from US client) - 15,000 (presumed expenses, including deductibles) - 56,390 (salary) - 18,610 (employer social security at 33%) = 0 (all income paid in salary and expenses).

56,390 (Salary) - 7,330 (employee social security at 13%) - 23,895 (income tax at 2012 rates) - 3,950 (Brussels income tax) = 21,220 (net take home pay).


Any and all comment is appreciated (as are thoughts on how to improve the result) - many thanks for your assistance!

Try to become self employed as the contract is long term then you will not pay 13% and the 33% so you may save the 13%

[paeses]

PM is deactivated and e-mails aren't accessible...

[cojak]

Nodric is not a professional tax advisor and you have not given a reason why you should have PM rights (which you will have after 6 posts).

Why do you want to contact him?

[paeses]

I know he's not, his signature says so, I've also seen last activity is a while ago but I was keen to get in touch with Surfer...

[cojak]

Well you'll have to wait awaile, the last time he was on this forum was July 2011.