Belgium lies in the middle of the largest industrialized trading bloc in the world, the European Union (EU), and has existed as an independent kingdom since 1830. With a population of around 11 million people, Belgium has three official languages: Dutch, French, and German. The currency of Belgium is the euro (EUR).
Belgium is at the very top of the European hit parade when it comes to the best locations for industry and logistics. It has a modern, private-enterprise economy that has capitalized on its central geographic location, highly developed transport network, diversified industrial and commercial base, and highly educated inhabitants. The industry is concentrated mainly in the populous Flemish area in the north, and much of Belgium’s trade is with other EU countries. It has a relatively equal income distribution, and its gross domestic product (GDP) was EUR 451 billion (532 billion USD) in 2019.
As home to several EU institutions, Belgium is where all important European political decisions are made. Accordingly, it is host to international organizations like NATO, the European Defense Agency (EDA), the European Environmental Bureau (EEB), and the World Customs Organization (WCO). Owing to its central location, Belgium has become a melting pot of different cultures and economic and technological activities.
Foreign Direct Investment in Belgium
The Government welcomes inward investment from foreign companies, providing an array of tax benefits and shelters to encourage inward investment in key growth areas for the country. Tax benefits vary according to Government strategy, but generally, the country is always open to investment opportunities.
Tax Reporting Calendar
Monthly
Report: Withholding tax return (monthly or quarterly, depending on the size of the company)
Legal name of report: Document ‘274’
Information required to complete the form: The total taxable income and payable withholding tax
The document ‘274’ needs to be filed electronically utilizing the ‘finprof’ web application, by the 15th of the following month. It can be submitted on behalf of a partner. The customer is not required to sign the form; however, the sender needs to sign (via certified electronic signature).
Quarterly
Report: Social security return
Legal name of report: DMFA-declaration
Information required to complete the form: Employee quarterly salary and performance (working days) information
The quarterly Social Security return needs to be submitted in an electronic way to the Social Security Administration, a full submission calendar
A partner can submit documents if they are appointed as a service provider. The customer is not required to sign the form; however, the sender needs to sign (via certified electronic signature).
Yearly
Report: Tax return
Legal name of report: Fiche 281
Information required to complete the form: Detailed information per employee on the taxable income and paid withholding taxes
A third party can submit the documents. The customer is not required to sign the form; however, the sender needs to sign (via certified electronic signature).
Payroll providers can gain access to this via a qualified certificate. The company needs to be assigned by the customer as a “service provider.” This is done via a form that needs to be signed by a person who has the authority to sign on behalf of the customer. Legislative decisions are taken by the federal authorities and by the authorities of the communities and regions.
Income Tax in Belgium
The employer is required to do the following:
deduct withholding taxes from a salaried employee
pay withholding taxes quarterly/monthly to tax authorities
file quarterly/monthly withholding tax return (called form ‘274’)
prepare individual yearly tax slip (called form ‘281’) and sent them to employees + tax authorities
It is the responsibility of the employee to fill out a yearly tax return form.
Monthly contributions must be made by the 15th of the following month or by the first preceding regular working day if the 15th is not a regular working day (weekend, public holiday). Small companies only have to pay per quarter, i.e. by the 15th of the month following the quarter.
Withholding Tax Discounts for Start-Up Companies
As of 1st August 2015, any company that starts up in Belgium can benefit from an exemption of withholding tax on earned incomes.
A Belgian employer pays withholding tax on earned income for each employee. It is an advance on the employee’s income tax that is levied on his/her earned income. By applying discounts, the government is hoping that more companies will hire more employees. Discounts will also be given to companies that operate within zones with disrupted economic activity and researchers. The new discounts will apply to companies that have been registered in the Crossroads Bank for Enterprises for a maximum of 48 months.
For an SME(Small-medium-enterprise), the discount rate is 10%.
Working Week and Working Hours in Belgium
The working week in Belgium is Monday to Friday. Working hours must not surpass 8 hours per day or 38 hours per week; additionally, it is generally forbidden in Belgium to work outside the regular working hours, on Sundays, bank holidays, and at night.
Social Security in Belgium
Social security requirements for the employer:
“Dimona” declaration: notification of first day/last day of employment (“Limosa” declaration for foreign employees)
Deduct social security contributions from a salaried employee
Pay the employee and employer contributions towards social security authorities: quarterly + in most cases also monthly advances are to be paid
File quarterly social security return
Social security requirements for the employee:
Reimbursement medical costs
To be able to receive reimbursement of medical costs, the employee should affiliate with a “mutuelle.” There are several different “mutuelles” in Belgium (e.g. Partena, CM, Euromut). You can freely choose which mutuelle you affiliate.
New Employees in Belgium
New starts are required to be registered via a “first day of work declaration” called “Dimona (Déclaration Immédiate – Onmiddellijke Aangifte) declaration.” Under this, employers must declare each hired employee to the social security authorities before the entry into service of that employee. Termination of service must be declared no later than the first business day following the termination of the contract.
Leavers in Belgium
When the employment contract ends, all wages that are still due must be paid without delay. They must be paid on the first payday following the date on which the employment contract ends at the very latest. Another “Dimona declaration” (last day of work declaration) needs to be made to the social security authorities, at the latest the day following the last contract day.
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