Droit Fiscalité belge

I.  WHEN ARE PERMISSIONS TO EMPLOY AND WORK PERMITS REQUIRED ?

1.1.     General principles

On the whole, the employer willing to employ, in Belgium, a non-Belgian national, must first be granted permission to do so from the competent immigration authority.

However if the non-national’s entrance on the Belgian territory seeking for employment precedes the employer’s permission to employ, such permission will not be granted unless the employee is :

-          A non-Belgian highly qualified employee who stays in Belgium for less than four years, even if suitable labor can be found in Belgium to fill up any vacancy, as long as the worker’s gross salary exceeds 31.669 € per year (threshold 2004),

-          A non-Belgian executive who holds a managing function in Belgium, as long as his/her gross salary exceeds 52.836 € per year (threshold 2004).

Moreover, non-Belgian nationals must be holders of a work permit to work in Belgium.

The work permit must be sought by the Belgium-based employer - or his representative -, from the sub-regional employment service that covers the employer's place of business (VDAB, FOREM or ORBEM).

Under certain circumstances, the permission to employ and work permit can be refused or withdrawn by the competent authority. If so, an appeal can be lodged by registered mail no later than a month after the notification of the decision received by registered mail.

1.2.     Exceptions

In some cases, the employer may be exempted from obtaining such a permission to employ and the employee, from obtaining a work permit.

This exemption concerns persons who are legally authorized to reside for an unlimited period of time in Belgium (i.e. sales persons who reside abroad or workers employed by coordination centers).

II. WHAT ARE THE RULES FOR ISSUING PERMISSIONS TO EMPLOY AND WORK PERMITS ?

On the whole, permissions to employ are only issued if no suitable local employee can be found on the labour market.

Moreover, such permissions are only issued to nationals of countries that have signed international employment treaties.

Those rules do not apply to employees listed in article 9 of the Royal Decree of 9th June 1999 - modified by the Royal Decree of 6th February 2003 -, the most significant of which are highly qualified employees and executives, as explained above.

Documents to be enclosed along with application forms for permission to employ a non-national and for work permit are among others ; a copy of the individual employment agreement and a medical certificate.

III. REQUIRED LEGAL WORK DOCUMENTS

A company employing workers in Belgium must file the following documents:

-          A staff register listing all employees - in chronological order - with specific information about the employer and each of its employees;

-          The employer must hold an individual account for each employee, listing specific information about the employer and the employee and giving full details of the employee’s salary and how it is calculated;

-          Each month, the employer must deliver a pay-slip with details of its salary to its employees;

-          Work regulations: these regulations consist in a set of rules governing general conditions of employment within the company.

These regulations must contain some specific information required by law, such as working hours, details on how wages / salaries are being calculated and paid, specific health and safety information, etc…

According to the 5th March 2002 Law - which is a transposition of the 96/71/EG European directive on workers posting within the framework of the provision of services -, the foreign employer does not have to comply with Belgian rules on work documents if the workers occupation is temporary (less than 6 months) and if equivalent documents exist.

IV. SOCIAL SECURITY

Basically, the social security system of the country where the work is being done is applicable.

The 19th February 1982 Agreement on Social Security - signed between the United States of America and the Kingdom of Belgium - specifically rules all social security issues of the matter.

It has been agreed that :

-          all workers working on the Belgian or US territory solely fall under the national legislation of their work country (Belgium or the U.S.A.) even though they reside on the national territory of the other party or if their employer or the employer's place of business is on the territory of the latter party. (Article 5, 1°)

-          Independent workers working on the Belgian or US territory solely fall under the national legislation of the country where they mainly reside (Belgium or the U.S.A.). In order to determine the earnings to take into consideration and social security contributions owed under the legislation of that contracting party, the independent professional earnings gained on territories of both parties are taken into account. (Article 5, 3°)

There are few exceptions to those rules (Article 6):

1)      U.S. social security remains applicable to the U.S. citizen – salaried worker - who is detached to Belgium by a U.S. company for a period shorter than 5 years (1°).

2)      U.S. social security remains applicable to the U.S. citizen - independent worker – even though he works on the Belgian territory to the condition that the predictable length of its contract doesn’t exceed 5 years (2°).

3)      Workers of public or private U.S. international transport undertakings who are hired – constantly or occasionally - by a Belgian undertaking, solely fall under the U.S. social security legislation (= legislation of the country where the undertaking’s business place is) (4°)

Other exceptions can be agreed to by the U.S.A. and Belgium as long as workers remain subject to the social security legislation of one of the parties.

V. TAX ISSUES

According to Article 15 of the Agreement between the United States of America and the Kingdom of Belgium – whose aim is to avoid double taxation -, the remuneration derived by a U.S. Citizen in respect of an employment exercised in Belgium shall normally be taxed in Belgium.

Notwithstanding the abovementioned provision, the remuneration derived by a resident of the U.S., in respect of employment exercised in Belgium, shall only be taxable in the U.S. if the following three conditions are fulfilled :

1)      the recipient is in Belgium for a period(s) not exceeding the aggregate 183 days in the relevant “previous year” or “taxable period”, as the case may be,

2)      the remuneration is paid by, or on behalf of, an employer who is not a Belgian resident,

3)      the remuneration is not deductible in computing the profits or income of a permanent establishment or a fixed base which the employer has in Belgium.

The taxable period of point a) has to be interpreted under the law of the country where the employment is exercised, i.e. Belgium.

In Belgium, the taxable period runs from 1st January to 31st December.

Example : An employee who stays in Belgium from 1st July 2003 until 15th December 2003 and from 10th January 2004 until 31st May 2004 will normally have his remuneration taxable in the U.S.

Nota bene : the information contained in this issue is for general interest only and should not be relied upon for practical use without the assistance of a lawyer.