Belgium is one of the best locations in Europe for foreign investors who wish to commence any type of business, or who would like to open a company or a subsidiary in this country. The Belgian Government offers various incentives and benefits regarding tax rates, in order to create a profitable and attractive climate for foreign investors.
Belgium is a organized in regions and provinces, which means that tax rates may differ from one province to another. As far as the lowest tax goes, the main locations considered best for foreign investors are Brussels, Liege and Limburg. Taxes are collected on both state and local level. At local level, property taxes and various fees are collected .
Who pays taxes in Belgium?
The tax rates in Belgium depend on whether you are a resident or a non – resident of Belgium. For taxation purposes, a person is classed as resident in Belgium if the family residence or the work place is located in the country. If a person lives in Belgium for at least 6 moths or 183 days per year, and is registered with a local commune, then the respective person is classed as a resident and has to pay an income tax on the worldwide income. The taxable income is the income left after deductions for personal allowance, social security contributions or professional costs.
If a person lives in Belgium for less than 6 months or 183 days per year, the respective person will be taxed on the income earned in Belgium, including capital gains or rents.
Tax concessions for foreigners
Persons who come to Belgium to work temporarily as executives, specialists or researches for a Belgian company, may qualify for a special tax status. This entitles these persons to be treated as non – residents, therefore only taxed on the Belgian – earned income. Certain other expenses such as costs of living or costs for scientists up to a certain amount are tax – free.
In order to obtain this special tax status, the company and the employer or employers must apply to the Belgian tax authorities within 6 months of the beginning of the month of arrival in Belgium.
Types of taxation in Brussels
Considering that Brussels is the main location for most foreign investors, it’s important to note what types of taxes you should expect.
Foreign – owned businesses operating in Brussels may be object to one or more types of taxation.
Value Added Tax is a tax on goods and services, as well as on taxable transactions, such as the import of goods into Belgium and the purchase in Belgium of goods that originate from another EU country. The standard VAT rate in Belgium is 21%, reduced to 12% for certain goods and services, such as pay television or low – income housing. A reduced VAT rate of 5 is applied to basic goods and services.
Corporate income taxes are applied to certain foreign companies. Small and medium – sized companies benefit from reduced progressive tax, provided that certain conditions are met. This reduced rate amounts up to a sum between 24.25% and 34.5%.
Lastly, the personal income tax is applied to resident individuals. A specific regime is applied to senior foreign employees who are transferred to Belgium, or who are hired directly from outside Belgium.