Remember when Starbucks flopped in Australia, Walmart failed in Germany, or Home Depot faltered in China?

Despite worldwide recognition and wide-ranging resources, many international brands have failed, flopped, or faltered in foreign markets. The reasons vary, but naivety about a region’s social and business norms, consumer preferences, and regulatory red tape are typical culprits. The point is, due diligence is not only important but multifaceted and nuanced, too. If you’re thinking about moving to Belgium and setting up shop, there are a few things you should know. Is the “Crossroads of Europe” full of rampant opportunities or just risky business?

Let’s find out.

All’s Fair in Rates and Taxes

Taxes shouldn’t keep you up at night. But let’s face it. International corporate tax planning is like doing a tricky dance with two left feet. You’re bound to misstep, stumble, and maybe even stomp on somebody’s toes. It’s an intricate yet delicate facet of doing business in Belgium.

The Lows of High Taxes

Belgium’s tax rates are comparatively high. The country has a 55.4% tax and contribution rate, 44% of which stems from labor tax and contributions.

You and your business in Belgium may be subject to:

• Fuel tax
• Stamp duty
• Property tax
• Transport tax
• Municipal tax
• Provincial tax
• Regional tax
• Withholding taxes
• Corporate income tax
• Value Added Tax (VAT)
• Social security contributions

Corporate tax amounts are dependent on numerous factors, including tax residency, business type and size, deductibles, and generated profits.

Zeroing in on Capital Gains Tax (and Other Pretty Perks)

Capital gains tax is a crucial component of your overall tax strategy. It’s often a thorn in the side of investors, especially where the rate is anything between 15% and 40% in most European countries. That’s not the case in King Philippe’s land, though.

The country’s 0.00% capital gains tax rate is a massive advantage and one of the primary reasons why investors are moving to Belgium.

Under certain conditions, individuals don’t pay capital gains tax on:

• Business share sales
• Income generated from business share sales
• Personal stock exchange activities 

Multiple schemes and structural organizations of a business can take maximum advantage of this zero capital gains tax rule. Corporate taxes can be dramatically decreased, and in some cases, reduced to zero altogether. 

There are also various corporate tax credits, exemptions, and deductions available for foreign-owned businesses in Belgium, including: 

• Notional interest deductions
• Innovation income deductions
• Reduced payroll tax for qualifying researchers
• Foreign tax credits (interest and royal income FTCs)
• Patent and R&D (research and development) tax credits
• Deductions for qualifying patents, R&D, or environmentally-friendly investments 

With proper tax planning, you can significantly reduce the taxes your Belgian company is liable to pay. Master guidance and an in-depth, up-to-date understanding of Belgian tax regulations and reforms are essential for tax optimization. 

After all, you want maximum profitability with minimal costs, right?

The Ups and Downs of Doing Business in Belgium

Belgium’s strategic location, global influence, and world-class economy attract various high-level foreign investors, start-ups, and established companies. Like everything worthwhile, doing business in Belgium isn’t without its challenges. Here are the top advantages of having a company in Belgium. Plus some key considerations.

Belgium’s Economy is a Big Booming Pond

Belgium boasts a multifaceted and thriving economy in the heart of Europe. Embracing outside investment and a commitment to expanding free trade agreements saw it increase foreign direct investments (FDI) by 192% in 2020. It’s also among the top ten leading exporters worldwide, a factor accounting for over 80% of its GDP. Manufacturing, digital, business services, and transportation are just some of the country’s high-ranking sectors. Belgium also embraces innovation, research, and development—evident in its burgeoning industries like biotech, cleantech, and fintech. State-of-the-art infrastructure with an efficient international network of inland ports, seaports, airports, and rail connections also give Belgian businesses a logistical edge.

So, What’s the Catch?

Entering such a cutting-edge economy can be tricky without a sustainable, cost-effective approach and a network of business partners. With the United Kingdom as Belgium’s fourth-biggest trading partner, the ramifications of Brexit are also worth noting. Starting or expanding a business in Belgium requires a customized strategy, marketing expertise, and in-depth knowledge of the ever-changing economic landscape.

A World-Class Workforce

The people of Belgium are multilingual, skilled, and eager to learn. The country boasts world-renowned educational institutions, research centers, and scientific organizations. Around 30% of Belgian employees have a higher education qualification—far above the OECD’s global average. The labor force is also the 10th most productive in the world. Foreigners have access to certain incentives for hiring Belgian employees, reducing overall labor expenses. Available benefits include:

• Exemption from paying social security contributions (SSCs) for your first hired employee (lifelon)
• SSC reductions for a further five employees (for a three-year period)
• SSC reductions for qualifying young employees (until age 25) for a two-year period
• SSC reductions for qualifying older employees between ages 55–59 and 60–65

Tit For Tat

Unsurprisingly, Belgium salaries are comparatively high with steep social security contributions and income tax rates. Expert know-how and tax optimization are essential to offset some of these costs. As a foreigner, starting a business in Belgium requires a deep dive into Belgian culture and business etiquette. The nation consists of two primary ethnic groups: The Dutch-speaking Flemings of the north and the French-speaking Walloons of the south. German is also an official language. Tensions are inherent, so compromise is crucial. A well-versed team can help you navigate these social nuances. Of course, moving your business to Belgium is much more complex than simply mastering language and social differences. Each administrative region (Brussels, Flanders, and Wallonia) also has its own government with varying requirements and financial advantages. Without expert guidance and know-how, the regulatory red tape can leave your business in tatters. 

Location, Location, Location

As a founding member of the EU, Belgium enjoys strategic economic influence with access to 500 million consumers. It’s a fertile ground for product testing and global expansion, with easily accessible trading borders. Belgium is also home to NATO and countless other international organizations, embassies, and lobby groups. Political and administrative institutions aside, it’s a preferred global business destination second only to Singapore. Plus, 80% of Europe’s purchasing power falls within a 500-mile radius of the capital city, Brussels.

The Joys of Relocating

If moving to Belgium was a walk in the park, you’d be there by now. It’s a complex process compounded by time-consuming red tape, mounds of paperwork, and the stress of relocating your business and family. Some people call it a golden visa, but Belgium’s business residency program isn’t a golden visa at all. Instead, foreigners looking to move their business to Belgium can apply for a Professional Card. This special authorization is based on the value your project brings to the Belgian market as opposed to the investment amount. There are various investment avenues to secure residency, which can ultimately lead to Belgium citizenship. That said, finding the right fit while ticking all of the program’s boxes requires business immigration knowledge and expert guidance.

Let’s Bring Your Business to Belgium

Foreign business is booming in Belgium. The economy thrives and drives innovation, there’s a top-notch labor force, and the infrastructure is world-class.

Still, moving to Belgium has its challenges. 

With the Innovation Park team by your side, you can bring your business to Belgium for long-term profitability. Our tailor-made solutions come with everything, from a curated partner network and grant opportunities to end-to-end business support, immigration assistance, and tax optimization.
Book a paid consultation with us today and start doing business in Belgium.