IT Contracting in Belgium - Money and Tax
Profile written by Matt Walters of Capital GES (Updated September 2016)
Belgium’s close contact with the European community and fast transport links to the UK make it a popular destination despite relatively high tax and social security rates. Brussels’s status as the ‘capital’ of the EU means that there is a wealth of contract and project-based work available.
1. Before arrival : Limosa
In April 2007, the Belgian authorities brought in legislation, named LIMOSA, which states that all employees and self-employed persons (with a few exceptions) working on Belgian soil must be announced to the Belgian authorities before arrival. In the case of an employee, the employer should complete this process. This announcement does not replace the other registration procedures, detailed below.
2. Upon arrival
For citizens of EEA countries, the first thing to do when arriving in Belgium is to register themselves with the local town hall. Non-EEA nationals must apply for a temporary residence permit from a Belgian embassy or consulate before they arrive, and then register at the town hall within three days of arrival.
After a successful registration, EEA nationals will be invited to collect a temporary registration certificate, while their identity card is being produced. You will be informed by post once your identity card is ready, and you will then need to collect it from your local town hall in person.
II. Taxation in Belgium
The Belgian tax year is the calendar year, and tax returns must be filed by June 30th of the following year. Tax rates are banded between 25% and 50% dependent on income.
Belgium tax allowances and deductions:
a. There is a basic allowance of EUR 7’070 granted to each taxpayer.
b. There are various allowances available for dependants, based on their status.
80% of all alimony paid under obligation of law.
b. Household staff
50% of remuneration paid to household staff under certain conditions.
c. Life insurance premiums, with a maximum of EUR 2’200
d. Pension-savings contributions
III. Social Security
Social security must be paid on your full salary in Belgium. You can either contribute to the Belgian social security system or, in cases where your employer is a non-resident company in Belgium, to the social security system of the country of your employer. In the latter case, your employer will apply for an E101 certificate to show that you are contributing to an EU country outside Belgium. The E101 is initially valid for 12 months and can be extended thereafter upon agreement of the receiving and the sending country.
Care must taken here, and it is worth taking advice, as detachment by means of an E101 may not be the best solution in all cases due to either a) the duration of your intended stay in the country, b) the level of cover provided, or c) the cost of said contributions. It is also worth noting that, under the EU social charter, social security contributions made within an EU country will count towards your pension time stamp for the UK.
Under the Belgian social security system, employees pay a total of 13.07% contributions on their salary. Employers pay on average 35%.
IV. Work permits
Citizens of EU countries, with the exceptions of Romania and Bulgaria, do not need a work permit to take up employment in the Belgium. This also goes for citizens of Switzerland, Liechtenstein, Iceland and Norway. Citizens of these countries need only register with the municipality upon arrival.
Citizens of all other countries must go through a full registration and work permit process. A work permit can only be obtained if no suitable candidate can be found in Belgium or another Member State of the EU.
Capital GES is an international payroll and contract-management company providing tailor-made tax planning services to contractors working overseas. For more detailed information on your personal situation, please contact Capital on +41 32 732 97 00.