Belgium: Each relocation requires case-by-case analysis

Luc Lamy, chair of Alliott Group's Global Mobility Services Group

"We have had a special tax system in Belgium since 1983. Many other countries have followed suit, including France and Luxembourg, quite recently. It’s the first thing to look into in terms of optimisation, because it really helps reduce employment costs."

Companies seconding personnel on foreign assignments should make sure that they do so legally. In this interview, Luc Lamy, a partner at Tax Consult and Chair of the association's Global Mobility Services Group, explains that executives may sometimes also benefit from special tax benefits.

Which particular aspects merit a company’s special attention?

Luc Lamy: First of all, the immigration formalities. Non-European nationals, for example, need a work permit or independent contractor’s card. And a work permit for France does not let you work in Belgium! It’s also important to keep in mind that in Belgium, for example, it takes six to eight weeks to obtain a permit. Belgium also requires the “Limosa declaration” (advance notice of arrival). As far as social security is concerned, the European regulations apply: you may be subject to the system of your home country. 

What about taxes?

Luc Lamy: It depends on the specific country: each bilateral treaty is worded differently. You have to be careful. Is the mere fact of working abroad a taxable event? Should you plan on advance payments of tax? An executive on a 10-month assignment in a foreign country may have the obligation to pay a monthly tax based on his earnings, even if it is paid in another country. You have to pay tax wherever it is due. 

Isn’t there a uniform European tax system?

Luc Lamy: No, there isn’t. Everything depends on the agreements for the avoidance of double taxation. Belgium has signed many of these agreements. In non-signatory countries, it is necessary to examine the domestic laws of the two countries. The same is true outside of Europe. If you send one executive to the USA and another to South America, the tax systems are different. Each relocation therefore requires a case-by-case analysis. We should emphasise however, that international law takes precedence over domestic law. 

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What about the companies themselves?

Luc Lamy: Foreign assignments automatically cost more than local hiring. The company must pay for the costs of housing, relocating the family, etc. In certain countries, the company can save on social security and/or tax expense by signing the lease itself when providing accommodation.

Is there a special tax system for foreign executives?

Luc Lamy: We have had a special tax system in Belgium since 1983. Many other countries have followed suit, including France and Luxembourg, quite recently. It’s the first thing to look into in terms of optimisation, because it really helps reduce employment costs.

For more information

Please contact Luc Lamy, partner at Tax Consult, Alliott Group member firm in Belgium.