Abc guide for foreign employees coming to belgium immigration_tax_social security

ABC Services

Flanders Investment & Trade

GUIDE FOR FOREIGN EMPLOYEES WORKING IN BELGIUM

Immigration – Tax – Social Security Law – Social Law Formalities

Antwerp Business Center C:\Users\helenac\Dropbox\tools\ABC_Guide for foreign employees coming to belgium_Immigration_Tax_Social Security.docx

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A guide for foreign employees working in Belgium Flanders Investment & Trade, assisted by a prominent consultancy firm, has recently published its booklet A guide for foreign employees working in Belgium. It offers answers

to the most frequently asked questions on the legal aspects of working in Belgium and its tax environment. Disclaimer Flanders Investment & Trade and the contributing consultancy firm have taken great care in compiling these sections. Please be aware, however, that they do NOT offer comprehensive tax or legal advice for specific transactions or investments. Rather, this publication is designed to provide an overview of the subject matters covered and to make the reader aware of certain features of the applicable laws and regulations. Potential investors are strongly urged to retain competent legal and/or tax counsel before implementing a business plan or making an investment. The information presented is based on laws and regulations in effect on January 1, 2008.


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Table of Contents

1. IMMIGRATION FORMALITIES ........................................................................ 4

1.1 GENERAL ............................................................................................................. 4

1.2 WORK PERMIT .................................................................................................... 7

1.3 PROFESSIONAL CARD ..................................................................................... 13

1.4 OBTAINING A VISA TO ENTER BELGIUM ..................................................... 16

1.5 REGISTRATION WITH THE LOCAL AUTHORITY OF RESIDENCE ............ 18

2. TAX FORMALITIES .......................................................................................... 24

2.1 RESIDENCE ........................................................................................................ 24

2.2 BELGIAN TAXATION OF RESIDENTS ............................................................. 24

2.3 BELGIAN TAXATION OF NON-RESIDENTS ................................................... 27

2.4 TAX FILING OBLIGATION ............................................................................... 29

3. SOCIAL LAW OBLIGATIONS .......................................................................... 29

3.1 LIMOSA (WWW.LIMOSA.BE) ................................................................................. 29

4. SOCIAL SECURITY ........................................................................................... 34

4.1 SOCIAL SECURITY COVERAGE ...................................................................... 35


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1. IMMIGRATION FORMALITIES

1.1 GENERAL

Before relocating an employee to Belgium or before a self-employed person moves here, it is crucial to know whether the employee needs a work/professional card and a residence permit. Without the appropriate documents, he may not work or reside in Belgium.

The procedure that has to be followed in this respect depends on the employee's

nationality.

The employee is a national of one of the EEA countries1 or Switzerland

Work Permit – Professional Card

The following countries are members of the European Union:

Austria The UK Poland

Belgium Greece Portugal

Bulgaria Hungary Romania

Cyprus Ireland Slovakia

The Czech Republic Italy Slovenia

Denmark Latvia Spain

Estonia Lithuania Sweden

Finland Luxembourg

France Malta

Germany The Netherlands The EU treaty provides for the free movement of persons within the European Union. As a consequence, employees/self-employed persons who are citizens of one EU Member State are, in principle, free to work in another Member State without a work permit/professional card.

Please note that, for work permit purposes, however, this is not the case for 10 of the 12 countries that joined the EU in May 2004 and January 2007 (see important note below). Visa Requirements

Employees who are nationals of the above countries can enter Belgium on the basis of their national passport, without being in possession of a visa.

1 EEA： E uropean Economic Area (EU members + Iceland, Norway, Lichtenstein)


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Belgian Residence Permit

In the case of a stay in Belgium of less than 90 days within any given period of 6 months,

EEA nationals have to be in possession of a declaration of arrival issued by their local

authority. This declaration of arrival is issued on the basis of the subject’s national

passport and is valid for 90 days. If the subject stays in a hotel, the hotel register takes

the place of a declaration of arrival.

If the subject stays in Belgium for more than 90 days (within any given period of 6

months), a Belgian residence permit has to be applied for. The application has to be filed

with the local council office for the individual’s place of residence.

Important note – work permit:

For the following EU countries (new EU Member States as from 1 May 2004 and 1 January 2007), transitional measures apply:

Bulgaria

The Czech Republic

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia In most cases, employees who are nationals of these new EU Member States still need a work permit in order to work in Belgium legally. The conditions for obtaining a work permit are more lenient, however. Transitional measures will apply until 30 April 2009. Since 1 May 2006, the procedure for obtaining a work permit has been simplified for certain categories of employees that are considered difficult to recruit because there is a shortage in that particular niche of the labor market. It concerns ‘bottleneck professions’ (in Dutch: knelpuntberoepen / in French: postes à pourvoir).

An “authorization to employ” and a work permit are generally issued within five working days upon production of the relevant employment contract and national passport (or

valid Belgian residence permit). Each Region has prepared a list of the jobs in question. Examples include: - engineers, - accountants, - product and marketing managers, - technicians, - translators,

The residence requirements for entering Belgium are no different compared to those for

other EU nationals.


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In the case of a stay in Belgium for more than 90 days within any given period of 6

months, a Belgian residence permit is issued linked to the expiry date of the relevant

work permit. The employee is a non-EEA national

Work Permit

In principle, every non-EEA national working in Belgium has to be in possession of a

work permit, although some categories of workers are exempted herefrom.

The work permit has to be applied for in Belgium by the employer (or an agent).

Professional Card – Self-employed Persons

In principle, every non EEA-national intending to take up self-employment in Belgium has

to be in possession of a professional card, although some categories are exempted

herefrom.

The professional card has to be applied for from the Belgian diplomatic or consular

representative in the applicant’s country of residence or from the local authority where

the applicant is resident in Belgium.

Visa Requirements

In the case of a stay in Belgium of less than 90 days within any given period of 6 months,

it will depend on the subject’s nationality whether a visa is required to enter Belgium or

not: citizens of the USA, Australia, Canada, Korea, Japan, etc. can enter Belgium on the

basis of their national passport.


months, non-EEA nationals have to be in possession of a type D visa in order to enter

the country and are required to obtain a Belgian residence permit.

For more details, see the separate section on ‘Visa Requirements’ further on.

Residence in Belgium

For a stay in Belgium of less than 90 days (within any given period of 6 months), non-

EEA nationals have to be in possession of a declaration of arrival issued by their local

authority. This is issued on the basis of their visa or national passport and is valid for 90

days. If the subject stays in a hotel, the hotel register takes the place of a declaration of

arrival.

If the subject stays in Belgium for more than 90 days within any given period of 6 months,

a Belgian residence permit has to be applied for. This application has to be filed with the

local council office for the individual’s place of residence.


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WORK PERMIT

The employer has to obtain an authorization to employ the employee in question. The employee has to be in possession of a valid work permit. These two documents have to

be obtained prior to the commencement of work in Belgium. In practice, both applications are filed at the same time by the employer or his agent. In the following, we use the term ‘work permit’ to cover both documents, as they are inextricably linked. Procedure for obtaining a work permit The procedure for obtaining a work permit goes as follows:

1. In order to obtain a work permit, an official application form accompanied by a set

of prescribed documents has to be sent to the regional employment office (VDAB in the Flemish region – www.vdab.be).

2. The Employment Office checks the application and forwards it to the relevant

Ministry, which takes the final decision.

3. This Ministry sends the original work permit to the local authority for the district where the employer or its agent is established; the local authority actually issues the work permit. The original authorization to employ will be sent to the employer or his representative.

Types of Work Permits There are three types of work permit: types A, B and C.

1. Type A Work permit Type A is meant for those employees who are able to prove that in the period of 10 years, prior to the application, he has worked in Belgium with a work permit Type B for a consecutive 4 years and with a legal and uninterrupted residence in the same period.

Work permit Type A does not apply for the following categories:

Specialized technicians;

Internships;

Au pairs;

Posted employees;

Researchers and guest professors at a university or other recognized scientific institutions;

Highly skilled employees;

Spouse and children of a self-employed person;

Spouse and children of a person with any other special residence permit for Belgium.

2. Type B

In general, only certain categories are able to receive this type of work permit:

Highly skilled employees;

http://www.vdab.be/


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Managerial employees;

Internships;

Specialized technicians;

Professional athletes;

Au pairs.

The most common type in relation to employment within multinationals is type B, which has to be applied for by the employer. More details about this permit will be explained in the section below.

3. Type C

This type of work permit is meant for categories of persons who are staying in Belgium for a very specific reason and for a limited period only.

Examples are: foreign students, seasonal workers in certain sectors, asylum seekers etc.

The employee is a national of one of the EEA countries or Switzerland The EU treaty provides for the free movement of persons within the European Union. As a consequence, employees/self-employed persons who are citizens of one EU Member State are, in principle, free to work in another Member State without a work permit.

Please note that, for work permit purposes, however, this is not the case for 10 of the 12 countries that joined the EU in May 2004 and January 2007 (see important note above). This principle of free movement also extends to the following countries, which are not part of the EU but members of the EEA (Iceland, Norway and Liechtenstein), as well as to Switzerland.

The employee is a non-EEA national

The most common type in relation to employment within multinationals is type B, which has to be applied for by the employer. The conditions and the procedure for applying for a Work Permit Type B are explained below.

An example of the document can be found in the annex.

General Conditions The Belgian legislation places general restrictions on the issue of work permits and authorizations to employ; they can only be issued if:

the employer can prove that it cannot find an employee on the European employment market with the same qualifications as the foreign employee it wishes to hire (labor market criterion).

Proving that no employee can be found on the Belgian (or European) employment market with the same professional skills, even after training, is a complex matter. In fact, the employer will have to demonstrate that it has searched extensively (by advertising in newspapers, via the local employment office, etc.) for an employee with the same qualifications;


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the person concerned is a national of a country with which Belgium has a manpower agreement (the 12 new EU Member States, Algeria, Bosnia-Herzegovina, Croatia, Macedonia, Montenegro, Morocco, Serbia, Switzerland, Tunisia and Turkey);

a separate employment contract has been signed containing quite specific provisions e.g. dealing with the costs of repatriation and healthcare;

the employee is not yet in Belgium in the view of his employment. A work permit for an employee not qualifying for an exemption from these conditions will by no means be automatically issued.

Exemptions: The conditions are waived for certain categories of employees, the two most common are highly qualified persons and managerial employees. It is usually possible for multinationals to obtain a work permit under one of these two exceptions.

Highly Qualified Employees Highly qualified employees whose annual gross taxable salary is at least EUR 34,2612

(non-taxable expatriate allowances not included) need not fulfill the labor market criterion, or fall under a manpower agreement or have a specific employment contract. Hence, a work permit is generally issued if all the documents mentioned below are provided. The person’s qualifications, position and experience are considered in determining whether or not the employee is highly qualified. The four- (or eight-) year restriction on the validity of a work permit does not apply where the employee is under a contract with the Belgian company (i.e. has not been posted to Belgium) and earns a gross annual salary higher than EUR 57,162.3

Managerial Employees

For managerial employees earning a gross annual salary of at least EUR 57,162, the restrictions relating to the employment market, the labor market, manpower agreement and separate employment contract criteria also do not apply.

The employee is issued with a work permit to which no maximum employment period

applies. An employee who has already worked as a highly qualified employee for several years can obtain a type B work permit as a managerial employee if his position and duties change accordingly.

Formalities to be completed To apply for a work permit, the following documents are needed:

a power of attorney by the employer in favor of a law firm or a consultancy firm, if they handle the application;

a completed work permit questionnaire;

a medical certificate issued by a doctor accredited by the Belgian embassy or consulate in the applicant’s home country or last country of residence;

2 2008 figure. 3 Figure applicable for 2008.


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the employment contract between the employee and the (foreign) employer;

a copy of the subject’s national passport (all pages);

a career résumé;

copy of the applicant’s degree certificates;

3 passport-size photographs of the employee for collecting the work permit;

a service agreement between the foreign employer and the Belgian client (if possible).

In the case of an assignment, we also require:

an assignment letter and assignment agreement to be typed on the employer’s headed notepaper;

a service agreement between the foreign employer and the Belgian client (if possible).

In the case of a transfer, we also need a declaration by the employer that the Belgian

(employee and employer) social security contributions will be paid.

Validity A work permit can be obtained for a period of 12 months, and is renewable annually until the maximum period elapses.

How long does it take? Once the application has been filed, it takes about 2 to 4 weeks for the work permit to

be issued.

Exemptions from having to obtain a Work Permit In principle, all non-EEA citizens working in Belgium have to be in possession of a work permit. Some categories of persons are exempted. The most important categories are:

spouses of Belgian or EEA nationals under certain conditions;

persons employed within the framework of a service agreement between two EEA-member companies;

foreign managerial employees coming to work in Belgium, provided that they are to be employed by the Belgian headquarters (i.e. under a local employment contract) and their gross annual salary exceeds EUR 57,162 (2008 amount);

foreign employees sent to Belgium by their foreign employer to attend academic congresses or closed meetings (‘business trips’), provided they do not stay in Belgium for more than five days a month;

foreign employees sent to Belgium by their foreign employer to receive training, provided that the training does not exceed three months. The exemption is limited to the actual duration of the training and a number of strict conditions have to be complied with, mainly relating to the nationality of the persons concerned (there is a limited list of nationalities) or the place where the employer is has his principal place of business;

research workers sent to Belgium to carry out research with a recognized research institute as part of a visiting agreement. The exemption is limited to the duration of the research project as set down in the visiting agreement between the subject and the institute.

specialized technicians coming to Belgium to assemble/install foreign-built machinery/equipment (for up to eight days);


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specialized technicians coming to Belgium to repair or maintain foreign-built machinery/equipment (for up to five days per calendar month);

persons testing prototypes for a maximum period of four weeks per calendar year.


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WORK PERMIT type B (front and back) (source: www.vmc.be )

Specimen

http://www.vmc.be/


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1.3 PROFESSIONAL CARD

The employee is a national of one of the EEA countries or Switzerland The EU treaty provides for the free movement of persons within the European Union. As a consequence, employees/self-employed persons who are citizens of one EU Member State are, in principle, free to work in another Member State without a professional card. Please note that, for professional card purposes, however, this is not the case for 10 of the 12 countries that joined the EU in May 2004 and January 2007 (see important note above). This principle of free movement also extends to the following countries, which are not part of the EU but members of the EEA: Iceland, Norway and Liechtenstein, It also extends to Switzerland.

The employee is a non-EEA national

All non-EEA nationals carrying on a self-employed business activity in Belgium, must be in possession of a professional card before starting work. This also means that any non-EEA national working in Belgium as a director (in French: administrateur / in Dutch: bestuurder) of a Belgian company, whether or not he draws emoluments, and who thus qualifies as carrying on a self-employed business, must also have a professional card.

There are exemptions to this, e.g. self-employed persons coming to Belgium within the framework of a business trip for a maximum of three months. If an exemption applies, no professional card need be applied for. Procedure for Obtaining a Professional Card An application for a professional card can be filed:

at the Belgian diplomatic or consular representative in the country of residence of the applicant;

at the local municipal authorities where the applicant is resident in Belgium. This is only when the person is legally resident in Belgium.

An application from an illegal residence status is not allowed. Foreigners who already hold a resident permit with an unlimited time span (“yellow card”) are exempt from the professional card. Please note that a key factor in obtaining a professional card is to demonstrate the economic benefit of the business (e.g. a major investment in Belgium) or the creation

of job opportunities in Belgium. The importance of the business may also be judged on its social, cultural, artistic or sporting contribution. The sector which the applicant wishes to be active in may not already be saturated, (e.g. phone shops). Provided this criterion is met, a professional card may be issued within the space of a few months.


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The economic benefit can be proven by one of the following:

useful investments;

creation of new jobs;

positive economic effects on Belgian companies;

stimulation of export;

innovative or specialized character of the activity

etc. Documents needed Generally, the following documents are needed to apply for a professional card. Note that each embassy/consulate may have other requirements needing to be checked upfront.

two official application forms;

a passport valid for at least 12 months at the time of application;

an original medical certificate;

The medical examination for the purposes of applying for a professional card must be carried out by a doctor who is recognized by the Belgian embassy/consulate general. The medical certificate must be stamped and signed by the doctor;

a detailed personal résumé;

certified copies of professional diploma(s) (or educational certificates/certificates

attesting to knowledge of foreign languages).

A letter describing and justifying the professional activities the individual wishes

to carry out in Belgium;

a certificate of good conduct together with a translation issued within 3 months

before the date of application. In cases where the applicant has resided in another country during the last 5 years, the individual should also submit a certificate issued by the relevant authorities in that foreign country;

a certificate of knowledge of business management (business charter) or an

affidavit in the case of an exemption from the need for this declaration;

certain economic information (e.g. brochures, press releases) relating to the

company in Belgium and other countries to prove the economic importance of the application (if possible);

an application fee will be required together with an issuance fee.

If the applicant has been appointed as a company director, the following documents also have to be provided:

the deed of incorporation of the company in Belgium;

a copy of the minutes of the meeting of the board of directors appointing the

applicant to the position of director. Validity A professional card has a maximum validity of 5 years. But it’s possible to receive a professional card with a validity shorter than 5 years. It can be renewed after the initial validity period has ended.


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How long does it take? The authorized civil service of the Ministry of Economy takes the decision on whether or not to issue the professional card. There is no official maximum period in which the decision must be taken. Usually, it takes between the 4-8 months to receive the professional card. If the application is refused, the applicant can appeal within a period of 30 calendar days. When even the appeal fails, the applicant can apply again after 2 years for the same activity under the condition that he can put forward a ‘new’ element that can proof the economic benefit of the activity. What does it cost?

Upon the application of a professional card, the applicant is required to pay EUR 125 in tax stamps.


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1.4 OBTAINING A VISA TO ENTER BELGIUM

All non-EEA nationals must be in possession of a visa to enter Belgium. Different types exist. The type to be applied for depends on the purpose and length of the person’s stay in Belgium. Types of visa There are 4 types of visa: Type A Schengen visa: airport transit visa You can normally stay in the international transit area at the airport without a visa whilst you wait for your connecting flight. However, some nationalities require a visa to do this, even if they do not leave the international transit area. The airport transit visa only authorizes the bearer to transit through the airport's international area. Type B Schengen visa This visa is valid for transit through one or more Schengen countries on the way from one non-Schengen country to another non-Schengen country. The transit may last no longer than five days. Type C Schengen visa This visa allows the bearer to enter the territory of the Schengen countries for a maximum stay of 90 days in a six-month period. The visa may be issued for one or more entries. Type D visa This is a national visa for a stay exceeding 90 days. It is only valid in Belgium, but can also be used for transit through one or more Schengen countries. Type D + C visa This visa entitles you to travel freely within the Schengen area during the first three months after your entry into Belgium, while you wait to receive your official residence permit. The Schengen countries are: Austria Greece Portugal Latvia Belgium Iceland Spain Lithuania Denmark Italy Sweden Malta Finland Luxembourg Estonia Poland France the Netherlands Czech Republic Slovakia Germany Norway Hungary Slovenia


months (this period can be interrupted), a non-EEA national has to be in possession of a

type D visa (work visa, family reunification, etc.) in order to enter Belgium and obtain a

Belgian residence permit, which is a necessary formality (see below). The application has to be filed at the Belgian embassy or consulate in the subject’s home country or last country of residence and can only be filed after issuance of the work permit and prior to arrival in Belgium.


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The documents needed

a medical certificate issued by a doctor recognized by the Belgian embassy/consulate;

a certificate of good conduct covering the last 5 years;

visa application forms;

a valid national passport;

a valid work permit/professional card for Belgium (if available). Note: each embassy/consulate has its own requirements and may request additional documents. How long does it take? Depending on the embassy or consulate concerned and the nationality of the employee concerned (e.g. some embassies and consulates are not automatically authorized to issue such visas and must first apply for approval from the relevant Belgian Ministry), the type D visa can usually be obtained within 1 working week.


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1.5 REGISTRATION WITH THE LOCAL AUTHORITY OF RESIDENCE

Declaration of Arrival - Short Stay: less than 90 days

In the case of a stay in Belgium for less than 90 days within any given period of 6

months, non-EEA nationals have to be in possession of a declaration of arrival issued by

their local authority. The declaration of arrival is issued on the basis of the applicant’s

type C visa or national passport (depending on his nationality) and has to be applied for

within 3 days of arrival in Belgium.

In the case of a hotel stay, the declaration of arrival is replaced by the hotel register.

Below is a specimen document of the declaration of arrival:

Obtaining a Belgian Residence Permit - Long Stay: more than 90 days In the case of a long stay in Belgium (i.e. more than 90 days within any given period of 6 months), a Belgian residence permit has to be applied for. Within 8 days after arriving in Belgium, the employee has to register with the local authority at the place where he intends to reside. For an example of the registration document, please see annex. As each municipality may have its own specific requirements, it is advisable to check what these are before going to the town hall. The following documents should normally be presented (a small fee is payable):


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the employee’s original work permit or professional card (in the case of a self-employed person);

a copy of the applicant’s rental agreement for a residence in Belgium;

the individual’s national passport bearing his type D visa;

3-4 passport-sized photographs;

the individual’s birth certificate, authenticated according to the internal procedures of the country that issues the document. If it is not in Dutch, French, English or German, it should be translated into Dutch or French by a sworn translator.

A certificate of registration in the foreigners’ register (Belgian residence permit) will be issued to the applicant once the above has been complied with. Validity

Related to working in Belgium, there are 4 different kinds of residence permits: 1. Residence permit with limited validity (“white card limited”) 2. Residence permit with unlimited validity, renewable annually (“white card”) 3. Residence permit with unlimited validity, renewable every 5 years (“yellow card”) 4. Residence permit for EU-nationals, unlimited validity (“blue card”)”

These ID-documents are currently being replaced by electronic versions:

white card limited

white card

yellow card

blue card

Electronic ID type A

Electronic ID type B

Electronic ID type C

Electronic ID type E

For foreigners with non-EU nationalities, the type-A electronic IDs will normally be issued with the same validity as their work permits. After 4 years of non-interrupted employment in Belgium, they can apply for type-B electronic IDs. This ID-card will be renewed unconditionally every year, and also enables the holder to work in Belgium without a separate work permit. After receiving the type-B electronic ID, the holder can choose to apply for the type-C electronic ID. This card will only need renewal once every 5 years. This ID-card also allows the holder to work in Belgium without a separate work permit. For all foreigners with EU nationalities, the type-E electronic ID will be issued. The validity of the ID depends on their residence status in Belgium. Students will receive an ID with validity limited to their study period in Belgium.


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Original document

Electronic document

White card limited / White card

Electronic ID type A - B

Yellow card

Electronic ID type C


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Original document

Electronic document

Blue card

Electronic ID type E

Source: www.vmc.be

http://www.vmc.be/


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For family members of those who will be working in Belgium, the following documents of residence will be issued: - Attest van Immatriculatie (registration certificate), model A – ‘the orange card’

This residence document of limited validity is meant for family members with non-EU nationalities who come to Belgium under the procedure of family reunion.

Also asylum seekers, people visiting Belgium for medical reasons and casualties of human trafficking receive this document as their temporary residence permit. The validity of this document depends on the different categories of procedure. !!NOTE!! : holders of this document will need a re-entry visa for Belgium if they

travel outside the border.

- Attest van Immatriculatie (registration certificate), model B – ‘the mauve card’

Same as above, but meant for family members with EU-nationalities who come to Belgium under the procedure of family reunion. This document is also for persons with EU-nationalities who work in Belgium as self-employed or job-searchers. The validity of this document depends on the different categories of procedure.

The orange card

The mauve card

Source: www.vmc.be

http://www.vmc.be/


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2. TAX FORMALITIES

2.1 RESIDENCE

In order to determine the Belgian income tax consequences of the secondment or transfer of an employee to Belgium, it is essential to first establish whether the employee will be treated as either a tax resident of Belgium or a tax non-resident of Belgium. The Belgian Income Tax Code (BITC) defines Belgian tax residence. According to Belgian tax law, an individual qualifies as a Belgian tax resident if he has established his domicile or the seat of his wealth in Belgium (BITC, section 2(1°)(a) and

section 3). The term domicile is taken to mean the place where the taxpayer effectively and enduringly resides, where his family lives and where personal contacts are maintained (article 3/7 of the Commentary on the BITC). The seat of wealth is the place where the taxpayer manages his assets or where the centre of his business activities is located (not necessarily the place where his property/assets are situated). Belgian tax law lays down an opposable legal presumption that an individual has his domicile or the seat of his wealth in Belgium when he is registered in the population register of the municipality where he resides. With respect to the tax residence of a married couple (BITC, sec. 2(1°)), a special rule applies. The tax residence of a married couple is irrefutably deemed to be situated in Belgium if the family residence is located there. However, Belgian tax law includes no contrary provision (i.e. in cases where the family residence is located outside Belgium). The question of ‘family residence’ often comes down to a factual analysis. For the purposes of Belgian tax law, a family residence can be defined as the centre of day-to-day family life or as the centre of household interests.

2.2 BELGIAN TAXATION OF RESIDENTS

Residents of Belgium are taxed on their worldwide income. Taxable income comprises real estate income, income from movable property, miscellaneous income and earned income. For each of these categories, there are specific rules for the calculation of the net income. These rules are described below. Earned income Earned income is divided into six subcategories:

employee salaries and wages;

directors’ emoluments;

profits from agricultural, industrial and commercial activities;

proceeds from a liberal profession;


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profits and proceeds from former work activities;

replacement income: pensions, early retirement payments, unemployment benefit, health insurance benefits, etc.

As a general rule, earned income comprises wages, salaries and other pay (including benefits in kind) received on account of paid work. Repayments of expenditure incurred on behalf of an employer are not considered earned income. Benefits in kind are in principle taxed at the actual value to the beneficiary. Otherwise, the benefit in kind is taxed on a (beneficial) lump-sum basis fixed by statute (car or housing provided by the company, etc.). Stock options granted by the employer are considered earned income and are taxable upon grant (i.e. on the 60th day following the day of the offer) if the options are accepted in writing within this 60-day period. If the options are taxable upon grant, the benefit in kind resulting from the grant of the option is determined on a lump-sum basis. The options are taxed at marginal income tax rates. Net income is determined in six stages

deduction of compulsory social security contributions;

deduction of actual or lump-sum business expenses;

economic exemptions, notably tax measures to promote investment and/or employment;

clearance of losses;

award of the ‘assistant spouse’ quota and marital quotient;

set-off of losses between spouses.


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Belgian Income Tax Rates

Earned income (together with real estate income, ‘current’ alimony payments (see below) and – in very exceptional cases – investment income) is taxed at the following progressive tax rates: Belgian tax brackets in EUR

taxable income tax bracket

% tax due tax on the bracket

total

0 7,420 7,420 25% - 1,855 1,855

7,100 10,570 3,150 30% 1,855.00 945 2,800

10,100 17,610 7,040 40% 2,800.00 2,816 5,616 16,830 32,270 14,660 45% 5,616.00 6,597 12,213

> 32,270 50% 12,213.50 In addition to the above, municipal taxes are due varying from zero to 10% on the principal amount of income taxes charged, calculated on the basis of the above tax brackets. Each taxpayer is also entitled to one or more standard allowances (depending on his personal situation) as shown below. Additional tax relief may also be available in some cases.

Standard tax deductions in EUR Single person

1,510.00 1 child 320.00

Married person

1,510.00 2 children 924.00

3 children 2,442.00 4 children 4,290.50

each additional child

2,056.50

Miscellaneous income This category of taxable income includes all income with the common characteristic of not being earned from work. The following income (non-limitative list) is considered as miscellaneous income (under certain conditions): alimony payments, occasional profits and proceeds, prizes and subsidies, capital gains from (un)developed property, and income from a sublease or the transfer of a lease. Except for ‘current’ alimony payments (meaning no arrears of alimony), this type of miscellaneous income is taxed at separate tax rates (varying between 10% and 33%). 80% of the amount of ‘current’ alimony payments is included in aggregate taxable income (cf. above).


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2.3 BELGIAN TAXATION OF NON-RESIDENTS

General principles A Belgian non-resident, i.e. a person who has not established his domicile or the seat of his wealth in Belgium, is only taxable on that part of his income that is received from Belgian sources. Depending on the type of income received from Belgian sources, the individual may be required to file a Belgian non-resident income tax return. In some cases, the withholding tax or real estate tax paid will be final. Employees who work in Belgium without establishing tax residence here are, in principle, only taxable there if their salary cost is paid/borne by a Belgian tax resident or if they spend more than 183 days in Belgium. Profits from self-employment activity are, in principle, only taxable in Belgium if they are obtained by means of a Belgian establishment or result from business carried on in Belgium. The taxable income of a non-resident is subject to tax at the same rates as that of a resident. If a non-resident also receives other Belgian-source income, such as real estate income or director's emoluments from a Belgian company, it is added to the income taxable in Belgium. Investment income sourced in Belgium or abroad is excluded from the taxpayer’s aggregate taxable income but, in certain circumstances, can be subject to Belgian withholding tax. If the non-resident has a place of abode in Belgium or receives 75% of his worldwide income from a Belgian source (or has treaty protection), he is entitled to the same deductions as a resident. If not, the standard deductions are disregarded or limited. Belgian Special Tax Regime - General Under certain conditions, a foreign executive temporarily assigned to Belgium within an international group of companies may qualify for the special taxation regime. The executive is then treated as a non-resident for Belgian tax purposes, liable to Belgian personal income tax only on his Belgian-source income. Expatriates who qualify as fiscally non-resident are mainly management personnel, research personnel, and foreign personnel without managerial responsibilities who are so highly specialized that recruiting for their posts in Belgium is very difficult, if not impossible. To qualify, certain criteria have to be met:

the individual must be employed in a qualifying entity. This includes a scientific research centre or laboratory or a business under foreign control or part of an international group. Their employment could be in a control or coordination office of, a multinational;

the employment in Belgium must be temporary in nature;

the centre of the expatriate's economic and personal interests may not be Belgium.

An expatriate newly transferred to Belgium is presumed to be a 'non-resident' and not yet established as a Belgian inhabitant. He must, however, provide supporting evidence in a specific application for non-resident status.


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Belgian Special Tax Regime - Benefits The special tax regime recognizes that payments made by an employer to an expatriate fall into one of two distinct categories:

base salary and foreign service premium, both of which are taxable in Belgium to the extent that they relate to services performed in Belgium;

expenses reimbursed by the employer, some of which are not taxable (up to certain limits) for the expatriate and are tax deductible for the employer.

Non-taxable allowances An expatriate is not taxed on reimbursements of supplementary expenses that are incurred by him as a result of his recruitment or transfer to Belgium, whether paid as lump-sum allowances or as specific refunds of document-supported outlays. The Belgian tax authorities tend to treat as non-taxable payment those costs that the expatriate would not have incurred if he had continued to work in his home country. These non-taxable allowances are divided into two parts: non-recurring costs (no limitation) and recurring costs (tax-free up to a limit of EUR 11,250 or EUR 29,750 for expats working in a control or coordination office of a multinational). Non-recurring costs and expenses that are non-taxable include:

costs and expenses incurred in moving to Belgium;

costs of preparing the accommodation in Belgium for occupancy;

costs and expenses incurred when moving out of Belgium. Recurring costs and expenses that are non-taxable (within certain limits, except for school fees) include:

the supplementary cost of accommodation and the cost of living here compared with the same costs in the home country;

school fees (primary and secondary education);

annual travel costs for the expatriate and his family to their home country (air travel, economy class);

loss incurred by his inability to rent out, or to obtain a normal market rent for, accommodation retained in his home country;

traveling expenses resulting from emergencies (death or serious illness of close members of the employee’s family or of his spouse);

exchange rate fluctuations;

tax equalization;

traveling expenses of children attending school abroad, incurred for them to visit their parents, not exceeding two trips per year.

Travel exclusion In addition to the non-taxable allowances described above, the part of the salary relating to services that are rendered outside Belgium (and that can be identified as such) is not subject to Belgian tax. In the absence of any other specific designation, the proportion of overall remuneration relating to workdays spent abroad is excluded from taxable income. The following calculation is made to determine the ‘default’ exclusion for services rendered abroad:


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Travel exclusion = number of working days spent abroad

total number of working days during the period

The total working days in the (tax) period (in Belgium and abroad) may not normally include Saturdays, Sundays or Belgian public holidays, days of sickness or annual holidays. When calculating the number of working days spent abroad, the day of departure is considered spent in Belgium, with the exception that one-day trips abroad qualify as days spent abroad. The day of the return trip is considered as being spent outside Belgium. In addition, weekends and public holidays are excluded even if they are spent abroad on business trips. The expatriate must provide evidence of the number of working days spent abroad (assignment instructions, hotel bills, air tickets with boarding pass, visas, etc.).

2.4 TAX FILING OBLIGATION

In general, employees working and taxed in Belgium need to file a Belgian income tax return each year. The fiscal year is a calendar year. The tax return is issued to the employee individually by the Belgian tax authorities after the calendar year has ended. For Belgian tax residents, the tax return should in principle be filed before 30 June of the year following the income year. For non-residents of

Belgium, the due date is usually put back to September (or later) of the year following the income year. Please bear in mind that a tax filing obligation may also exist in the home country.

3. SOCIAL LAW OBLIGATIONS

On 1 April 2002, the Belgian Act of 5 March 2002 came into force. This Act implements EU Directive 96/71 on the posting of employees and states the following: when an employer has personnel that were hired abroad or work abroad, then, while they are working in Belgium, it has to draw up certain ‘social documents’ and observe a number of obligations imposed by Belgian employment law (sometimes referred to as ‘social law’). These provisions apply regardless of the location of the employer or the nationality of the posted employee. Nor is it relevant what social security system or income tax treatment applies.

3.1 LIMOSA (www.limosa.be)

Every employer who employs an individual in Belgium has to prepare and maintain a separate personnel register with certain details regarding the identity of each foreign employee working in Belgium, including the period during which he was employed in Belgium. For employees not subjected to Belgian social security, a LIMOSA declaration has to be filed before the commencement of work in Belgium.


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A LIMOSA declaration must be filed for all foreign employees coming to work in Belgium temporarily or partially and who, in principle, are not subject to the Belgian social security scheme. Most important categories of individuals who are exempted from this obligation are: - Employees and self-employed persons from the industry of international transport

of persons or goods. - Employees and self-employed persons who attend scientific congresses in

Belgium. - Employees and self-employed persons who attend meetings in a closed circle in

Belgium, not exceeding a total of 60 days per year at such meetings in Belgium. Furthermore, no such meeting may last longer than 20 consecutive calendar days.

- Employees and self-employed persons who are sent to Belgium for the initial assembly and/or the first installation of an item, not exceeding 8 days. It must concern qualified and/or specialized employees of the company delivering the item or the self-employed person delivering the item.

- Specialized technicians carrying out urgent repair or maintenance works to machines or equipment, no longer than 5 days per month.

- Self-employed business people who do not stay in Belgium for more than 5 days per month for their activities.

- Scientists/researchers participating in a scientific program in a university or

scientific institution in Belgium, no longer than 3 months per calendar year for this express purpose.

- Employees who are employed at any foreign public services as a statutory or

contractual staff member. - Employees of an international institution of public law that is established in

Belgium. - Members of a diplomatic or consular mission.


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For your convenience, please find below a schematic overview regarding the LIMOSA obligation and an example of a Limosa Declaration Certificate (’L1 certificate’).

Scope of application of LIMOSA rules

You are a non-Belgian-resident employer

You send your employee to Belgium on a

temporary assignment

You have engaged an employee whom you permanently employ

only in Belgium:

You have engaged an employee whom you

employ partly in Belgium and partly in other

countries

NOTIFICATION REQUIRED

for a defined

period

for an undefined

period



NO


You are a Belgian-resident employer

You are under a notification obligation only if you have engaged an employee whom

you do not habitually employ in Belgium but whom you want to work or perform services in Belgium exceptionally and temporarily (whether or not for 100% of that

employee’s work schedule).


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‘Social documents’ Each company employing personnel in Belgium is required to prepare, maintain and retain certain employment-related documents in order to allow the Social Inspectorate in Belgium to verify whether it is in compliance with the law. These ‘social’ documents mainly include the personnel register, the work regulations and the individual payroll accounts. ‘Social Representative’ These social documents have to be kept by a duly authorized individual residing in Belgium (i.e. the sociaal mandataris/mandataire social, or authorized representative for

employment matters).


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The authorized representative is in charge of keeping the work regulations, the personnel register and the individual accounts for the foreign employer. PricewaterhouseCoopers, for instance, can arrange for someone within its organization to take on these duties.

Work regulations

Each company must draw up work regulations according to Belgian law. The work regulations contain clauses regarding the salary and working conditions applicable within the company. A specific legal procedure must be adhered to when drawing up the work regulations. Separate personnel register All employers must keep a register of their personnel employed in Belgium. The personnel register consists of bound pages, numbered sequentially without interruption. The employees are each assigned a number in the register in the chronological order in which they are hired. Individual payroll accounts These documents must be drawn up for each employee working in Belgium and must be issued to the employees within legally specified time limits. The individual account gives an overview of the salary paid during the past calendar year for work performed in Belgium. It also mentions the (foreign) social security contributions withheld from the employee’s gross salary and any income tax deductions at source. In the case of a new employee, an individual payroll account mentioning certain limited details must already be issued within two months. Moreover, at the time of each monthly salary payment, a Belgian pay slip must be issued and handed over to each employee working in Belgium, even if the salary is paid abroad. Exemption from the obligation to keep “social documents” As a result of filing a LIMOSA declaration (see above), an employer is exempted from the obligation to draw up social documents for a period of 12 months. After the initial 12-month period, the employer still needs to draw up the documents and appoint a “social representative” (see above). Labor law applicable during work assignments When employing personnel in Belgium, a foreign employer has to observe at least the labor, salary and employment conditions laid down in Belgian statutory or administrative provisions or in Collective Labor Agreements that have been declared generally binding (and which carry criminal penalties).


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4. SOCIAL SECURITY Employees who work in Belgium are in principle covered by the Belgian social security system. However, depending on the nationality of the employee, an exception may apply under which the employee remains covered by his home social security system if the employee is seconded to Belgium.

In general, the exception may apply to employees employed in the EU/EEA Member States or Switzerland or to employees from countries that have a social security treaty with Belgium. If an employee working in the EEA for an EEA-based employer (or place of business – in Dutch: exploitatiezetel /in French: siège d’exploitation) remains covered by the social

security system of his home country, as an exception to the main rule that an employee is covered by the social security system of the work country, a so-called E101 statement must be applied for from the social security authorities of the home country. This statement serves as proof to the Belgian social security authorities that the employee continues to be covered in his home country (please note that, within the EEA, there may also arise an exception to the rule that one is covered by Belgian social security when working in Belgium and other EU Member States in the case of a multi-state employment structure). Belgium has social security treaties with the following countries: Algeria Australia Canada Chile Croatia Israel Japan Morocco San Marino Tunisia Turkey Philippines USA On the basis of a social security treaty, a certificate of coverage can be applied for from the social security authorities of the home country to serve as proof to the Belgian social security authorities that the employee continues to be covered in his home country. Please note that a secondment under the home social security system is usually subject to certain conditions and time limits. Where there is no social security treaty, Belgian social security will apply, unless there is no link of subordination towards a Belgian or European employer or a place of business of the foreign company. In the latter case, no Belgian social security contributions are due, meaning that, for assignments from a non-EEA country to Belgium, the employee can remain subject to his home social security regime.


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4.1 Social security coverage

If the conditions to be able to second an employee under the home social security scheme are unfulfilled, the employee will become subject to the Belgian social security scheme. In the salaried persons' scheme, both employees and employers have to pay contributions to the National Office for Social Security (RSZ - ONSS). Belgian social security contributions (ONSS/RSZ) for an employee are calculated on the full gross salary of the employee: - 13.07% in employee’s contribution; - approximately 35% in employers’ contributions. Note that, in certain sectors, some minor differences may exist in the contribution level for employers. The precise percentage of social security contributions due by the employer will thus ultimately depend on the applicable joint committee and the number of employees under contract. Furthermore, numerous measures to promote employment in Belgium might reduce the amount of the employer social security contributions. The classic social security structure encompasses seven sectors:

Old-age and survivor’s pensions;

Unemployment;

Insurance for accidents & diseases;

Insurance for occupational diseases;

Family benefits;

Illness and disability insurance;

Annual vacation.

* * *


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Enclosure: Immigration flow chart - Working in Belgium: the 10 steps

Applicant Work Permit (WP) Authority

Municipality Local Police

Prepare documents for

application

Submit application

for a WP

Handling of application.

+ sends the WP to the local

municipality

After approval of the WP, submit a visa

application

Collect visa from embassy /

consulate

Upon arrival in Belgium

Application for a Residence Permit (RP) at the town council

Investigate application + inform the local

police

In the applicant’s country of origin

Performs police check within 14

working days

Sends convocation letter for picking

up the RP

Collects the RP from the town council

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2

3 4

5

6 7 8

9 10

Abc guide for foreign employees coming to belgium immigration_tax_social security

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