If you have been placing expatriates on fixed term assignments in Belgium since 1st January 2013 and they have been operating as self-employed, ‘its international’ wants you to remind them the temporary suspension of LIMOSA Registration ended 30th June. Your placements must immediately register with LIMOSA and enter the date they started in Belgium. As you know, LIMOSA is mandatory for anyone without a Belgian social security number.
More worryingly is that Belgian tax and social security offices are actively targeting the ‘contractor’ market, partly to boost their revenue but primarily to eradicate what they potentially see as a wide scale abuse of legislation.
‘its international’ understands this interest by the Belgian authorities has encouraged several management companies to withdraw their self-certified ‘fully compliant solutions’, leaving some recruiters and their placements with an irreversible history which could come back to bite them as a result of a subsequent tax audit or investigation.
The Belgian authorities’ concern involves service providers who creatively mitigate the very high social security costs in Belgium by obtaining A1 certificates from countries such as Bulgaria, Gibraltar, Spain or Switzerland for expatriate contractors who are registered for work in Belgium. These A1’s can cost as little as 2% of the declared (not necessarily gross) contract rate in Belgium as an attempt to mitigate Belgian social security costs. The Belgian authorities have recently uncovered this tactic and confirmed it has never been acceptable unless the management companies can prove the contractors were physically present in the (A1) foreign country throughout the 3 months period prior to the start of their assignment work in Belgium and were not simply seconded by those management companies to that (A1) foreign country ‘on paper’. There is no need to spell out the ramifications for all parties in the contract chain – ranging from reputational loss to criminal liabilities. ‘its international’ strongly advises recruiters to obtain irrefutable evidence from their existing service providers that such practices are not being followed. With the current trend to automatic exchange of information between tax offices, ‘its international’ suspects the Belgian authorities may be sharing their findings with other members of the EU.
The good news is its international can facilitate a solution for appropriate placements, be they locals or EU expatriates, yielding circa 73% net income retention from a full declaration in Belgium of the gross contract rate. Those placements will either obtain an A1 from their home country (within the rules) or pay due social security in Belgium. They will be supported by a major Chartered Accountancy firm in central Brussels and all evidence of compliance will be made available to the recruiter.