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Contracting in Belgium

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Contracting in Belgium

Written by David Noel-Davies

Sunday, 02 March 2008

Leaving the UK to live and work abroad can be a daunting prospect at the best of times. Aside from the practical complications of relocating to another country, the contractor must also be prepared to come face-to-face with the local language, customs and norms that are inevitably different from those in the UK. Despite these obstacles, living and working abroad can be an enriching and highly enjoyable experience, and for those contractors wishing to opt for an assignment closer to home, Belgium is the ideal location.

Country Information

Belgium is located within Western Europe, and shares borders with The Netherlands, Germany, France and Luxembourg. The capital city is Brussels and other major cities include Antwerp, Ghent, Liege and Leuven.

Belgium has an extremely diverse population, with three official languages in operation throughout the country. Foreign nationals comprise around 30% of the population in Brussels, and thriving expatriate communities are abundant throughout Belgium. As a result, English is widely understood but the ability to speak some French or Dutch (or at least be willing to try) would certainly prove to be an advantage.

Working in Belgium

Many International companies, especially in Brussels, adopt English as their primary working language. The standard working day averages at 40 hours a week, 8 hours a day, usually from 9am – 5pm.

Accommodation

A wide range of good quality housing is available for rent in Brussels. All types of accommodation from studio apartments and flat shares to large detached houses can be rented. Unlike many other European cities, there is no shortage of rented accommodation and rents are usually reasonable.

In Brussels, expect to pay from €300 to €400 for a studio apartment or flat share, rising to € 500 to € 850 per month (excluding service charges) for a one bedroom flat. If your family will be accompanying you, you should be able to find a three bedroom flat or house for around €1,000 to €1,500 per month. Luxury and furnished accommodation is generally more expensive.

Temporary accommodation is also widely available for the first few days or weeks of a contract in Belgium. Two organizations offering nationwide hotel reservation services are Belgium Tourist Reservations (Tel: 00 32 2 513 7484) and Belgian Travel House (Tel: 00 32 2 648 6024). The Tourist Information office in the town where you are contracting will also be able to book a hotel room on your behalf.

Travel Possibilities: UK

Travelling home to the UK is remarkably easy when working in Belgium, as you can fly to London in less than an hour and the train takes just two and a half hours. Airlines operating between Belgium and the UK include:

British Airways

British Midland

VLM

SN Brussels

Ryanair – from Charleroi

The range of ferry services currently available, along with the EuroTunnel, provide easy access to the UK by car. Valid British driving licences are accepted in Belgium, and you will not need to exchange it for a Belgian licence.

Travel Possibilities: Elsewhere

Belgium is a highly desirable location for the weekend-traveller. The TGV is a high-speed train providing direct links to Paris (1.5hrs) and Amsterdam (2.5hrs), and Germany, Luxembourg, France and The Netherlands are just a few hours drive away.

Expat Services in Belgium

There are a number of expat communities scattered throughout Belgium where a newly relocated expat can feel at home. As a result, there are numerous facilities that an English expat can make use of including International English-speaking schools, English newspapers, English bookshops, English-speaking clubs and language classes for English-speakers. There is even a dedicated telephone number (1405) for national and international directory enquiries in English. The television channels BBC1 and BBC2 are almost always available as part of the standard television packages on offer throughout Belgium.

For useful expat news and information, see www.xpats.com, where you can also subscribe to the popular ‘Bulletin’ magazine. Expatica is also a useful source of information for the expat in Belgium.

ITECSis a payroll management company assisting expatriates with their contracts abroad. To receive a personalised breakdown on how ITECS can help you, call +31 10 205 1660 (The Netherlands) +32 3 400 6363 (Belgium) or +44 208 863 2589 (UK).

So, On the Tax side...

Welcome to Belgium, where local citizens enjoy one of the highest taxation systems in Europe. As a contractor working abroad, you could find yourself somewhat surprised by the paltry sum you receive after the local tax authorities have had their share. There are, however, a number of tax efficient options that a professional contractor can consider when facing an assignment in Belgium.

Read on through this tried-and-tested selection for a comprehensive view of the good, the bad and the just plain naughty.

Using a UK Ltd Company

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 the sole employee (or a relation of an additional employee), the seat of management can be seen as having relocated to Belgium and the company seen as moving to Belgium along with you.

Offshore Payments

If only it were possible to simply pay unreported salaries offshore, where no taxman could stake his claim; a fund for that rainy-day.

Well, as a few contractors in Belgium can tell you, this possibility exists. Unfortunately, as the more informed contractor can tell you, this is not a recommended option and salaries or consultancy fees paid in this way are likely to be classed as tax evasion in both the UK and Belgium. Beware of solutions that are happy to stash your cash in some offshore account, as the liability will no doubt lie with you.

The Self-Employed Contractor

The option exists for setting up as a Belgian self-employed contractor. In this way, the consultant’s expenses, which are often considerable, can usually be fully deducted from tax. Other insurances and pension plans can be taken out as tax deductions as well. Furthermore, there are generous concessions for the use of a car.

One particularly useful point, peculiar to Belgium, is that you can set up a company retaining profits to be redeemed on dissolving the company at the end of the assignment.

Short-term contractors rarely take up this option as the net-retention rate can be low, and the time and bureaucracy required in managing the company is considerable.

Freelancing

Be particularly wary of providing freelance services to a foreign entity. Firstly, Belgium is unlikely to consider contractors working under the supervision and management of a Belgian end-user as self employed. Their stipulations are far stricter than the UK’s IR35 regulations in this regard. Secondly, there is rarely any justification for receiving a percentage of consultancy fees outside the Belgian system, even into a trust, for work carried out and invoiced to the end-user client in Belgium.

Management Companies

Management or umbrella companies provide varying levels of service, usually including full administration, payroll and immigration facilities. There are a number of these companies in operation throughout Europe, but not all can offer a compliant solution that would be acceptable to the Belgian authorities. As a general rule, if it sounds too good to be true, then it probably is.

There are, however, management companies that offer payroll solutions for a contractor in Belgium, ensuring that taxes are paid at source and that local administrative regulations are met.

Some management companies operate on employee-based solutions. These companies would basically set you up as their employee in Belgium, and would take care of all payroll and administration issues. Your duties would usually consist of simply faxing your timesheet each month. The deemed employer would normally provide monthly payslips and annual tax returns. They would generally take considerably more care to ensure the compliance and efficiency of your solution, as the risk would lie with them.

To find a management company that offers a compliant solution for your assignment in Belgium, you could consider asking your recruitment agent, who will most likely have a preferred choice. Alternatively, you could consult a tax advisor or accountant and ask them to take a look at the solution you have been offered.