Foreign Investement and Trade Opportunities
General investment incentive
Belgium is a very open economy that offers a stable environment for direct foreign investment. There is no discrimination between domestic and foreign companies or between branches and subsidiaries. This means that foreign entities have the same legal obligations as domestic entities, but can also benefit from all the rights accorded to domestic entities.
- Prior authorisation is not required for payments and transfers within Belgium or to and from foreign countries. There are fundamentally no foreign exchange restrictions on the transfer of capital or profits
- Both domestic and foreign entities have the right to sell or buy interests in, or establish business enterprises
- Joint ventures and partnerships are open to foreign investors, except in certain professions e.g. doctors and lawyers
- Non-EU goods can be stored in customs warehouses without payment of custom duties or VAT
Some of the key information you will find in this section:
Belgian holding company
Foreign companies investing in Europe often want to establish a European holding company (EHC) for a range of tax and non-tax reasons. For any multinational company (MNC), a holding company may be a convenient way to own and manage a group of subsidiaries in a particular region, such as Europe. A foreign holding vehicle is a key international tax planning tool to help MNCs drive shareholder value.
Read more about Belgian holding company
Notional interest deduction (NID)
Belgium has had an attractive tax measure that gives equal treatment to equity and debt financing since 2007 (i.e. for financial years ending on 31/12/2006 or later).
Companies/branches can claim a tax deduction for their cost of capital by deducting notional (deemed) interest on their net equity.
Read more about Belgium: notional interest deduction (NID)
Patent income deduction (PID)
The Belgian government has introduced a tax deduction for new patent income, amounting to 80% of the income, thereby resulting in effective taxation of the income at the rate of 6.8%. The new tax measure is aimed at encouraging Belgian companies and establishments to play an active role in patent research and development, as well as patent ownership. The tax deduction applies to new patent income and came into force as of tax year 2008, i.e. financial years ending on or after 31 December 2007.
Read more about Belgium: patent income deduction (PID)
Benefits for Asian investors
On 10 December 2003, Belgium and Hong Kong signed a comprehensive double taxation treaty (DTT), which came into force in Belgium on 1 January 2004 and in Hong Kong on 1 April 2004. The new DTT:
- is the first OECD DTT Hong Kong has entered into (as it is excluded from coverage under China’s existing treaties)
- is the first DTT entered into by an EU Member State, hence, to a certain extent, extending the EU Parent-Subsidiary witholding tax (WHT) exemption to a non-EU jurisdiction
Investing through a Belgian-HK structure therefore offers a number of tax-efficient inbound and outbound opportunities between East and West.
Read more about Benefits for Asian investors
Arm's lenght principle
9 July 2004 saw the official introduction of the arm's length principle into Belgian tax law, a change that not only confirmed this internationally accepted yardstick, but also increased Belgium's appeal for hosting foreign investors.
Read more about arm's lenght principle
Belgium's Advance Ruling Practice
A powerful risk management instrument in tax planning
The Belgian ruling practice relies on a long tradition of both informal and formal rulings (since 1993). In 2003, a generalised advance ruling system was introduced and a fully independent ruling office with sufficient numbers of dedicated staff has been in place since 1 January 2005. The objective of the office is to make the new ruling practice more cooperative and client- and result-oriented.
Read more about Belgium's Advance Ruling Practice
Interest withholding tax exemptions
Belgian tax law allows for numerous interest withholding tax (WHT) exemptions, primarily to either attract foreign capital or to avoid creating tax hurdles in the Belgian financial market.
Read more about Interest withholding tax exemptions
Belgian foreign tax planning for royalties
In order to avoid double taxation on foreign-source royalty income, Belgian beneficiaries are entitled to a foreign tax credit (FTC) to offset foreign withholding tax (WHT) paid abroad, in cases when:
- the royalty income has been subject to an actual tax charge abroad
- the beneficiary uses the royalty-generating asset in Belgium for business purposes, i.e. the royalty income is subject to taxation in Belgium
Read more about Belgian foreign tax planning for royalties
Inbound investment: Belgian patent company
Upon acquisition of a portfolio of patents that have not yet been commercially exploited in Belgium, transferring them to a Belgian company may be the way to go. Depending on the value and the return the portfolio generates, an effective tax rate as low as 0% may be attained.
Read more about Inbound investment: Belgian patent company
Although delays are frequently encountered, the independent courts system is considered effective in enforcing intellectual property rights and all other civil or economic rights.
This attractive investment climate is leveraged by specific investment incentives granted by the various federal and regional governments, resulting in a business-friendly environment. The non-discrimination rule also applies in this aspect. Investment incentives fall into three distinct categories: financial, fiscal and labour measures.
The regions have sole responsibility for granting financial incentives. The responsible authority and the eligibility criteria, the available incentive programmes and the level of assistance are consequently determined by the company’s location. Due to the federal structure of Belgium and the governing schemes of the European Union, potential aid can differ significantly from one region to another. Criteria for receiving financial aid include the number of jobs created, the increased value added per job, the technology content of the project and its attractiveness for the region. Financial aid can currently add up to 21% of the eligible investment in some regions.
A number of employment incentives are available, in general managed by the regions. They all grant businesses a reduction in employer social security contributions depending on criteria such as age and whether the worker was unemployed in the period prior to recruitment. Training incentives in the form of organisational and financial support are also offered by the regional authorities.
Corporate tax-related incentive
Fiscal measures are a second investment incentive, and are mainly managed by the federal government. Because fiscal issues play an important role in investment decisions, Belgium’s authorities offer a range of fiscal measures to facilitate investment.
All information in this Site is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose.