A vast percentage of the expat clients Leuven Accountants works for are foreign contractors on a short or long term mission in Belgium (many times for journalist, legal, management consultancy or ITC-work). During their mission, our clients are registered at local town hall as non-residents, despite the fact they are liable for Belgian income taxes as ordinary residents. The contractors might be carrying out their work on a self-employed basis or might have (re)organised their independent status using a company-structure. In the spread sheet hereafter a tax and social security outline is provided for Ms/Mr Average Freelancer working 200 days per year respectively at EUR 300, EUR 350, EUR 400, EUR 450 and EUR 500 per diem. In the last scenario of EUR 100K per annum, simulation is made using a company structure in following scenarios: 1/ director earns a EUR 45000 annual salary, 2/ company pays all earnings out to the director via salary combined with dividends, 3/ all profits of the company are paid out via dividends (interesting for directors not having any basis in Belgium and not interested in Belgian social security coverage). The excel clarification also provides an understanding of the costs that potentially can be tax deducted from the gross income. Of course this is just an average example and we are at your service to fine tune it to your specific personal situation. Please note the section of social security contributions in the excel pages, nearly as important as income taxes.
2/ NON PROFIT ASSOCIATIONS
Although certain specific economical operations performed by not for profit organisations are taxable in Belgium, in principal all possible bonuses remain exempted of company taxes and can also be carried forward to a subsequent financial year accordingly. Very important is the real and factual non-profit purpose of the organisation. No “profits” can ever be appropriated to members (because this would be considered dividends, only applicable by companies).
It is useful to point out the difference between taxes and VAT. Leuven Accountants has a few not for profit associations as clients of which the earnings are entirely exempted of VZW/ABSL income taxes, nonetheless they charge 21% Belgian VAT on (part of) their income. To determine this, the specific operations of the association need to be studied carefully.
3/ LARGER OR SPECIFIC BUSINESSES
Leuven Accountants would be happy to draft a tailored financial plan for enterprises intending to set up a commercial, trading or industrial activity in Belgium. Other than point 1 (suppra), it is difficult to provide a tax-outline on an average basis.
Do not hesitate to contact us for further information.