19th February 2020
Home to the EU, delicious waffles and some of the best chocolate and beer in the world, Belgium offers a wealth of opportunity for contractors – with multifarious professional openings for contingent workers. In fact, a recent study by Manpower revealed that 24% of Belgian employers are struggling to fill key positions.
However, at the same time, authorities have implemented several tax measures to boost revenue in the country. This week, reports have indicated that authorities are so intent on clamping down on non-compliance that they are prepared to take on their own royal family. Here’s what you need to know about the Belgian royal tax crackdown.
BELGIAN ROYAL TAX CRACKDOWN
According to reports from L’Echo, the Belgian royal tax crackdown began after Henri de Croÿ, Belgian prince, helped funnel millions of euros into tax havens through an international evasion network. Last week, Finance Minister Alexandre de Croo confirmed that the Special Tax Inspectorate (ISI) was building up files on taxpayers whose names appeared on the prince’s network.
The prince is a descendant of the House of Croÿ, one of the oldest aristocratic families in Europe. The investigation doubles down on a probe launched by prosecutors last autumn, targeting around 50 Belgians who allegedly entrusted the Belgian prince with sums of up to €13 million per person.
De Croÿ allegedly assisted business leaders, members of the nobility and other wealthy individuals in Belgium to stash millions of euros in offshore accounts in tax havens such as the Bahamas, Puerto Rico or the United Arab Emirates.
The accounts were opened in the name of shell companies with addresses in Cyprus, Hong Kong, the Marshall Islands or the UAE, with De Croÿ running the scheme through a network of frontmen he recruited internationally.
De Croÿ has been in the sights of authorities since the early 2010s, with another investigation launched into his alleged fiscal misconduct concluding unsuccessfully in 2013 after some of the evidence gathered was nullified in court.
BELGIUM ROYAL TAX CRACKDOWN: WHAT DOES IT MEAN FOR CONTRACTORS?
Contractors should be aware that the Belgian royal tax crackdown is just one of many measures that Belgium has taken:
- According to official figures, a record €400 million was collected from pursuing tax evasion in 2019. Measures introduced at the turn of the decade have made it far easier to access bank accounts of those suspected of tax fraud.
- In fact, since 2011, the Special Tax Inspectorate (ISI) has made 3,613 investigations using increased powers. Part of these measures allowed authorities to conduct investigations with far more ease, being able to proceed based on just one indication that a person is living above their official income.
- Furthermore, in January 2019, the European Commission ordered Belgium to recover a staggering €700 millionfrom 35 large companies in back taxes, the EU’s biggest move to date in its efforts to crack down on tax avoidance by multinationals.
THE LEGAL BIT
In addition to an awareness of the increasingly strict climate around tax and compliance in Belgium, there are a number of nuances to bear in mind for contractors:
- Employment law requirements are generally straightforward. However, there are a few rules to be acutely aware of – particularly the Limosa Declaration. Under this regulation, an employer sending an employee to Belgium and self-employed professionals working in the country are required to fill out the Declaration before work begins.
- Failure to comply with this could see the employer, the end client and the individual facing fines and criminal charges. These penalties can be extremely damaging, with charges reaching up to €300,000.
- In addition to this, if entering the country as a self-employed professional, you will also need to meet specific criteria in order to be cleared to work here. For example, you must either have a University degree to register your self-employed status, or gain a ‘certificate of experience’ which demonstrates your educational or professional background, or sit an ‘equivalency’ exam on Belgian regulations and legislation.
- Finally, it is strictly prohibited for contractors to stay out of the Belgian tax and social security system by using a ‘one man’, PSC, limited company.
BE PREPARED FOR CHANGE
Ultimately, contractors looking to work in Belgium will find that the country, like many worldwide, has introduced changes to clampdown on fraudulent behaviour. The royal tax crackdown is just one example of a global pattern. Staying ahead of legislative changes can be hugely challenging. To ensure you are compliant in your chosen destination, our expert staff are on hand to help. Contact us today: