Reply to: Belgium contracting: limited company/ management company

[GazCol]

I did a 5 monther in Belgium in 2009 and that's exactly how I worked. Absolutely no issues.

+1 - 3 month contract with a 6 week extension and I operated (and was advised to by a Belgian tax specialist and the client co) on this basis.

[Runs With Scissors]

For now, and the first 6 months, you are covered under your UK limited company and Limosa.

I did a 5 monther in Belgium in 2009 and that's exactly how I worked. Absolutely no issues.

[BlasterBates]

Generally, there is something in the tax treaty about "place of effective management". The reality is that it if the tax office of the country you're in decide your company is resident for tax purposes then fighting that adverse decision is going to be hard work and possibly expensive whether you're in the right or not.

That's exactly the problem

EU - Taxation for workers on postings in other countries - Your Europe

There is however no EU-wide law that settles taxation issues when you work and live in various different countries over a short period of time.

There are only national laws and double tax agreements between countries – and these don't cover all eventualities and vary considerably.

In other words it is a bit of a mine field.

When I was consulting one accountant and this was simply on the issue of VAT let alone income, he was saying he couldn't give me definitive answer, we would only determine the outcome after the tax office had examined it and it could be interpreted in two different ways.

My view as long as you're registered somewhere such as Limosa then you can clarify taxation with Belgian tax office, and if they're not charging tax that's fine.

[jezosaurus]

There are 8 different ways of operating in Belgium.

I've been here 8 years, so I operate the standard limited company route (SPRL/BVBA). I end up slightly better off than I would have done under IR35 in the UK. Mainly because having 3 kids is very tax-efficient, and the company car costs next to nowt in tax.

One of the big issues is that there are so many of these different tax-avoidance scams, that it's hard even for the locals to work out what is or isn't legal. Everyone has a story about them, and some people do operate them quite legally. But there are also stories of having to sell the house to pay the tax man, or repayment deals over the next 20 years.

For now, and the first 6 months, you are covered under your UK limited company and Limosa.

Once you get over the 6 months, you'll have to pay tax in BE, backdated to day 1, however that will leave you loads of time to talk to a local accountant and sort something out that works for you.

NV Stimaa | Home will confuse you about the many options in perfect English.

[doodab]

There is nothing in law which makes a companies' seat move when a sole director moves. The seat is determined by many things including the permanence of the residence of the directors. It is possible to stay Belgium without becoming resident, simply by staying in a B&B instead of taking a flat.

Generally, there is something in the tax treaty about "place of effective management". The reality is that it if the tax office of the country you're in decide your company is resident for tax purposes then fighting that adverse decision is going to be hard work and possibly expensive whether you're in the right or not. It can also have implications regarding liability for payroll taxes etc that can make you much worse off than working through whatever local structure freelancers normally use. Hence many people prefer to avoid taking the risk.

I tend to look at stuff like this to get a picture of how things work.

http://www2.deloitte.com/content/dam...guide-2012.pdf

http://www.hmrc.gov.uk/taxtreaties/i...elgium-dtc.pdf

It's also worth remembering that working as a company is very much a British thing. Many other countries have far simpler ways for freelancers to operate. They might result in paying more tax, but ultimately that's the price you have to pay for working in a country with higher taxes than Britain, and in general rates will reflect that.

[samu]

Belgium contract

Hi guys,

Please don't forward me to the main Belgium thread, since i have read it deeply.
My question is the next:
1- I have been offered a contract of 6 months extensible to 12 in Belgium with a good rate.
2- The agency is w ww.amoriabond.com based in Netherlands.
3- They suggest me "insistently" to use its management company, called w ww.itsinternational.ltd.uk based on London, since client does not allow "other schemes".

My concerns are:
1- At the moment of signing the contract, it suddenly appears not ITs but Acuity Limited, an off-shore company based on Cyprus focus on real state management.
2- In fact, i never spoke with this society, and i realize it will pay me the gross of my moneys as dividends. (my scheme will be self-employed with a basis monthly amount and quarterly dividends).
3- All my incomings will be declared in Belgium, using 2 different bank accounts (what a mess)

Amoria assured ITs is fully compliant in Belgium, but not other solutions like:
a)management companies as Acces Financials (i understand)
b) using my own european limited company with VAT as i have done lot of times for less than 183 days in every country i have worked.

If they are fully compliant, why the **** uses a Cyprus based company to pay me? Is not the same scheme of other "uncompliant" management companies?

Why the **** in core of the European Union is needed this crap schemes to be payed for a simply freelance contract? Why doesn't the same agency pay me as self-employed or payroll, asume all the taxes (nearly 45% of your income), and forget this sucking third parties management companies?

Furthermore, ITs is offering me a costly "tax advisor pack" . But, it was not its work?

How can i reach Belgium tax authorities to know if it is really a legal way to work temporary in Belgium?

Have anyone worked for them? I have not found any references googling.

Hi tomcruise, I had been recommended to go through ITSinternational/Acuity Limited and the payment is similar to what they had suggested to you. Are you using ITS/Acuity now, did you get chance to check whether the payment method is legal. Any feedbacks or suggestion would be much appreciated.

[BlasterBates]

Haven't read linky...

IME I've never come across a issue of effective control moving out of UK where the director is only temporarily outside of the UK. Although the director may be resident elsewhere, the UK links in terms of accountant / bank account / registration become "sticky" and the DTA tends to allow UK taxing rights. Which is not to say company residence can't move - it can - but its not very common without definite positive action.

There are contractors who worked less than 6 months in Germany and were prosecuted for tax evasion. Which is why I post these warnings...and let us say you overstay your welcome then the tax authorities would backdate it to when you started there.

In other words you run a risk.

Why not at least register your business and let the tax authorities decide. Rather than waiting for an audit at some client co and a job lot of brown envelopes being sent out.

In the end if you are there temporarily the tax rates are low, you might be able to claim exemption and you pay no social security. In other words there is any case no financial incentive to run exclusively through the UK tax system other than the cost of an accountant in Belgium...and it might well be possible to do this through your UK Ltd anyway just making sure it's properly registered through LIMOSA or whatever they have.

...not to mention unpaid VAT

[Jessica@WhiteFieldTax]

So where this link talks about "As soon as the director of the company moves, the permanent establishment of the company moves with him", presumably this means where the Director moves full-time to the country in question. What about cases whereby a Director only works M-F in that country, then returns home at weekends?

Haven't read linky...

IME I've never come across a issue of effective control moving out of UK where the director is only temporarily outside of the UK. Although the director may be resident elsewhere, the UK links in terms of accountant / bank account / registration become "sticky" and the DTA tends to allow UK taxing rights. Which is not to say company residence can't move - it can - but its not very common without definite positive action.

[BlasterBates]

No, they take into account a whole range of things like where your kids are schooled, where you own / rent property (hence my recommendation to stay in a B&B), where your car is licenced, whether you have a local bank account, etc etc etc. It is not primarily about where/whether you work full time.

In any case, Belgian law, like that of any other EU country, is subservient to the treaty obligation which imposed the 183 day rule on whether they can tax you as an employee of a company registered in another EU country.

Boo

Perhaps you can post a copy of a letter from the Belgian tax authorities that you received confirming you were exempt from tax.

If you were considering doing it I would recommend actively seeking tax exemption rather than simply staying silent and being "indignant". At least that way you can be sure the tax authorities agree with your standpoint.

[captainham]

And another:

What do we say to a contractor who wants to use a UK limited company for contracting outside of the UK? | Crescenzi Consulting

Evidence appears to be against trying to use your UK LtdCo and sheltering under the 183 day rule, I would say?

[captainham]

In any case, Belgian law, like that of any other EU country, is subservient to the treaty obligation which imposed the 183 day rule on whether they can tax you as an employee of a company registered in another EU country.

Even this very website seems to tally up with what BB is saying though, on the 183 day rule not applying to one man bands:

Contractors' Questions: Does the 183-day rule let me avoid tax? :: Contractor UK


My advice to the OP is to speak to a very good accountant who knows about double taxation and UK/BE tax rules!


Edit: and before anybody says anything, I know the author of that article is also from a company linked to here earlier, but as they are not just an umbrella, I don't think their opinion should just be automatically discounted. Only my view of course.

[Boo]

Here is another useful link:

...snip...Another website funded and run by/for umbrellas

Boo

[Boo]

For Belgium, it talks about "if their main home or centre of economic interests is in Belgium", which I presume you would fall foul of if working full-time in BE.

No, they take into account a whole range of things like where your kids are schooled, where you own / rent property (hence my recommendation to stay in a B&B), where your car is licenced, whether you have a local bank account, etc etc etc. It is not primarily about where/whether you work full time.

In any case, Belgian law, like that of any other EU country, is subservient to the treaty obligation which imposed the 183 day rule on whether they can tax you as an employee of a company registered in another EU country.

Boo

[Boo]

Why you can't use your UK Ltd in a foreign country and pay tax in the UK

Oh, very good Master B. You present the biased opinion of a "Contract Management Service" (Umbrella) in defence of your own biased opinion as a representative of an Umbrella. Convincing ! (Or something...)

Why will you not admit that you are a representative of an Umbrella btw ? Is it because you know you will lack all credibility if you do so ?

Boo

[BlasterBates]

Here is another useful link:

IT Jobs in Belgium | Technojobs

Due to the 183-day ruling, it is possible to work in Belgium as an employee of a UK company up to a maximum of 183 days (six months) and continue to pay taxes in your home country. It is important to note, however, that as soon as you exceed this deadline by even one day, you become liable for Belgian tax from the first day of your contract.

Furthermore, this ruling does not apply to a one-man limited company. Should you own your own company, and be a sole employee (or a relation to an additional employee), the seat of management can be seen as having relocated to Belgium and the company seen as moving to Belgium with you.