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Belgium Taxation and Investment 2012

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Belgium Taxation and Investment 2012 Taxation and Investment in Belgium 2012 Reach, relevance and reliability A publication of Deloitte Touche Tohmatsu Limited Contents 1.0 Investment climate 1.1 Business environment 1.2 Currency 1.3 Banking and financing 1.4 Foreign investment 1.5 Tax incentives 1.6 Exchange controls 2.0 Setting up a business 2.1 Principal forms of business entity 2.2 Regulation of business 2.3 Accounting, filing and auditing requirements 3.0 Business taxation 3.1 Overview 3.2 Residence 3.3 Taxable income and rates 3.4 Capital gains taxation 3.5 Double taxation relief 3.6 Anti-avoidance rules 3.7 Administration 3.8 Other taxes on business 4.0 Withholding taxes 4.1 Dividends 4.2 Interest 4.3 Royalties 4.4 Branch remittance tax 4.5 Wage tax/social security contributions 5.0 Indirect taxes 5.1 Value added tax 5.2 Capital tax 5.3 Real estate tax 5.4 Transfer tax 5.5 Stamp duty 5.6 Customs and excise duties 5.7 Environmental taxes 5.8 Other taxes 6.0 Taxes on individuals 6.1 Residence 6.2 Taxable income and rates 6.3 Inheritance and gift tax 6.4 Net wealth tax 6.5 Real property tax 6.6 Social security contributions 6.7 Other taxes 6.8 Compliance 7.0 Labor environment 7.1 Employees’ rights and remuneration 7.2 Wages and benefits 7.3 Termination of employment 7.4 Labor-management relations 7.5 Employment of foreigners 8.0 Deloitte International Tax Source 9.0 Office locations Belgium Taxation and Investment 2012 1.0 Investment climate 1.1 Business environment Belgium is a constitutional monarchy in which ultimate power rests with a bicameral parliament. The country is divided into three regions: Flanders, Wallonia and Brussels-capital. Three distinct cultural and linguistic “communities” (Flemish, French and German) have their own parliaments and executives. Belgium is an EU member state (with Brussels, the capital, serving as the seat of the EU) and also is a part of the Benelux, a tariff union between Belgium, Luxembourg and the Netherlands. As an EU member state, Belgium is required to comply with all EU directives and regulations and it follows EU regulations on trade treaties, import regulations, customs duties, agricultural agreements, import quotas, rules of origin and other trade regulations. It also is a member of the OECD. Belgium has one of the most open economies in the world as a result of its economic integration and interdependence with its three main neighboring countries – France, Germany and the Netherlands. Price controls As a general principle, Belgium does not have price controls, although legislation that prevents abuse of a dominant position also effectively prohibits price gouging or predatory pricing and there are some sectors that are subject to price controls. In addition, the government has set a specific pricing policy for the petroleum sector. Intellectual property Patents, trademarks, copyrights and industrial designs and models are legally recognized in Belgium. The recognized holder of intellectual property has exclusive rights to exploit the property, to assign such rights via a license and to bring actions for infringement. For abuse of a patent or trademark, the holder may be awarded damages and obtain an injunction to prevent continued abuse. A licensee alone cannot get an injunction, but must work jointly with the patent or trademark holder to claim damages. Patent protection in Belgium can be obtained under the domestic Patent Act and royal decrees, through the European Patent Convention or the international PCT route combined with the European route (EURO-PCT) international patent under the Patent Co-operation Treaty and the European Patent Convention. Trademark protection in Belgium can be obtained via the Benelux Trademarks Act, the European Community Trademark system and the international Madrid Agreement. The Benelux Trademarks Act provides for unified registration and protection of trademarks throughout Belgium, Luxembourg and the Netherlands via a single common trademark service. Trademarks can co-exist within the region if the trademark holder has knowingly tolerated the use of a previously registered trademark for five years. The original holder of the mark forgoes any rights in failing to object to the registration of the mark for a second time. Copyright is protected by domestic law, which also covers “related rights,” including the rights of performers, producers and broadcasters. The law covers written, audio and visual works. Economic rights under copyright law are valid for 70 years from the death of an author. This law also extends protection to software programs, but unlike other copyrights, protection is automatically vested in the employer unless otherwise agreed. 1.2 Currency The currency of Belgium is the Euro. 1 Belgium Taxation and Investment 2012 Countries participating in the Economic and Monetary Union Austria Germany Netherlands Belgium Greece Portugal Cyprus Ireland Slovakia Estonia Italy Slovenia Finland Luxembourg Spain France Malta 1.3 Banking and financing The national bank of Belgium (i.e. central bank) is responsible for issuing currency, supervising payment and securities settlement systems, maintaining statistics and administering the Belgian Treasury. The framework for Belgian banking law and capital adequacy requirements is set by the EU. As a result, banks from other European Economic Area (EEA) countries can set up in Belgium on the basis of home-country supervision with a minimum of formalities. This “single passport” arrangement also can be used by non-EEA banks that have a full banking license in another EU country. Brussels is the financial center of the country. 1.4 Foreign investment The Belgian government welcomes foreign investment (including wholly foreign ownership of a company), and there are only limited circumstances in which the government may block an investment. Once established, a foreign-owned company is treated in the same way as a Belgian- owned company. Belgium’s tax incentives tend to favor new service industries and high-tech companies. 1.5 Tax incentives Incentives include those for industrial real estate investments, R&D, regional development, investment in capital goods (including accelerated depreciation) and an incentive relating to expatriate employees. Belgium offers a patent income deduction that amounts to 80% of the income, resulting in a maximum effective tax rate of 6.8% on qualifying patent income. The incentive is intended to encourage R&D activities in relation to the development of patents or improvement of patented products or processes. For Belgian operations, the patent income deduction is designed to stimulate Belgian companies to take ownership of the patents or to improve a patent in an R&D center (Belgian or foreign). Other R&D incentives include: • An R&D tax credit that allows (provided certain conditions are satisfied) overall R&D costs to be reduced by 5% to 8%, either by way of a tax deduction or via a refundable tax credit; and • A payroll withholding tax exemption of up to 75%, which is granted for qualifying researchers and reimbursed to the employer (which allows on average a decrease of between 15 and 20% of the salary costs). There are a number of science parks and industrial estates under the auspices of regional and local authorities, which subsidize the supply of services. Social security incentives for the hiring of additional staff, particularly in hard-to-employ categories (e.g. the long-term unemployed), apply across the board. 2 Belgium Taxation and Investment 2012 Fiscal and social security-related incentives are decided on a national basis; project- and investment-related incentives are regional. However, since all incentives must comply with EU rules, they may not discriminate between Belgian companies and companies from other countries in the EEA, and they tend to favor small and medium-sized enterprises (SMEs) that are not subsidiaries of larger firms. Special rules apply to financial institutions. 1.6 Exchange controls There are no exchange controls in Belgium. However, the national bank compiles information on cross-border transactions and transactions with nonresidents (including direct investments, securities trades and commercial credits) solely for balance-of-payment reporting purposes. 3 Belgium Taxation and Investment 2012 2.0 Setting up a business 2.1 Principal forms of business entity Foreign investors are free to operate through any business entity recognized under Belgian law. There are numerous types of company forms (including partnerships, co-operatives and temporary consortia). Foreign companies generally use the subsidiary and branch form. A foreign subsidiary in Belgium generally takes the form of an SA/NV (société anonyme/naamloze vennootschap – limited liability company), but some companies use the SPRL/BVBA (société à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid – private limited liability company). A partnership can be set up as an SNC/SOF (société en nom collectif/vennootschap onder firma) or as an SCS/Comm.V. (société en commandite simple/gewone commanditaire vennootschap). The partners in an SNC/SOF are jointly liable for the activities of the partnership; liability may be limited to the contribution of each partner in an SCS/Comm.V. In addition to the difference in share capital (which is higher for an SA/NV), the main difference between an SA/NV and an SPRL/BVBA is that the latter is essentially based on “a relationship of trust” among specific associates. For this reason, the shares of a private limited liability company are registered shares and their transferability is restricted (e.g. the other shareholders have pre- emptive rights to purchase any shares). Previously, shares in a limited liability company could be bearer shares, so shareholders could remain anonymous. However, as from 1 January 2008, SAs/NVs may not issue new bearer shares. Owners of unlisted bearer shares, which generally are issued by most NV/SA companies, must convert these into registered shares or dematerialized shares before 31 December 2013, taking into account the tax due upon conversion of the shares.
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