The Author of the Article
To keep in mind
This article provides an overview of the tax and legal aspects that foreign businesses should consider when performing construction work in Belgium. It covers VAT, income tax, social security, and labor law.
Here are the key points from the article:
- VAT registration: Foreign businesses performing construction work in Belgium may need to register for VAT. The article discusses the factors that determine whether VAT registration is mandatory or optional.
- Income tax filing: Foreign businesses may be subject to Belgian income tax on their profits from construction work in Belgium. The article outlines the filing requirements for foreign businesses.
- Social security obligations: Foreign businesses may have social security obligations for their employees who perform construction work in Belgium. The article provides an overview of these obligations.
Construction work in Belgium: what to do?
It is essentially any work of construction, alteration, completion, fitting out, repair, maintenance, cleaning and demolition of all or part of real property by nature, as well as any operation involving both the supply of movable property and its placement in the real property so that it becomes real property by nature.
The term "construction work" therefore includes:
- the construction and demolition of buildings and other real estate works ;
- the works of equipment of the buildings having for effect to incorporate to the constructions the devices, machines or materials installed;
- Repair, maintenance, renovation and repair of buildings and installations of a real estate nature.
Foreign businesses performing constructions work in Belgium should therefore pay attention to various tax, social and legal aspects:
- VAT
- Non-resident income tax for the company
- Non-resident income tax for the worker
- Social security obligations
- Labour law
VAT
Foreign business performing constructions services in Belgium should pay attention to:
- VAT registration : direct registration vs registration with appointment of a VAT representative
- VAT in relation with clients : reverse charge or not
- VAT in relation with suppliers and subcontactors : Belgian VAT or not
- VAT rate: a reduced VAT rate of 6% exists for housing renovation under certain conditions
The VAT expert's eye
In combination with the general reverse charge mechanism applicable in Belgium, the possibility for an EU company to appoint a fiscal representative can be useful to avoid cash flow problems. Indeed, this mechanism makes the customer liable for VAT (instead of the supplier) provided that the latter is a Belgian company filing periodic returns or a foreign company registered for VAT in Belgium with a fiscal representative.This general reverse charge mechanism should not be confused with the so-called "co-contractor" regime which has been introduced in Belgium for real estate works in the context of the fight against VAT fraud.
Income tax for companies
Foreign business having real estate worksites in Belgium is subjected to corporate taxes if the worksite is considered as a permanent establishment for direct tax purposes.The foreign company will be subject to non-resident tax as long as its site is considered a permanent establishment for direct tax purposes. The tax treaty between Belgium and the country of establishment of the contractor must therefore be carefully analyzed to determine whether or not the conditions for the existence of a permanent establishment are met. When the country has not concluded a tax treaty with Belgium, the construction site will be considered as a Belgian establishment (and therefore subject to tax in Belgium) when it exceeds 30 days.
The taxes will be based on the profits made in Belgium through this permanent establishment after deduction of the charges and related interests according to Belgian tax law. Those profits will be exempted of taxes in the origin country of the business in accordance to the applicable tax convention.
Income tax for posted workers
When a foreign worker is dispatched on a site Belgium, his income for this activity is taxable in Belgium if the foreign business has a permanent establishment. If this is the case, the worker will pay non-resident tax in Belgium on the income based on its activities on Belgian soil. This aslo imply for the employer to retain an advanced payment on the income and to transfer it to Belgian Treasure.
If the employer has no permanent establishment in Belgium but the worker is dispatched more than 183 days on the worksite (six months), the same applies.
Social Security obligations
A company based abroad may post its employees to Belgium on a temporary basis. During the period of posting, the employer is obliged to comply with certain Belgian working conditions:
- Register as an employer
- Declaring employees in Belgium (Dimona declaration)
- Limosa déclaration
- Social Documents to be provided at the request of the Belgian Labour inspectorate (employments documents)
- Liaison person (social mandate holder)
- Affiliation with a payroll agency
- External service provider for health and safety in the workplace
- etc.
The VAT expert's eye
The Limosa declaration is the first step towards legal work in Belgium in accordance with European rules. It is a legal obligation.
Non-compliance with this obligation may give rise to criminal or administrative sanctions.
Labour law
The labour law aspects that apply when employing staff in Belgium are primarily laid down in Belgian domestic law. These labour law regulations include all the rules on working time, the obligations of employer and employee, the documents governing the employment relationship, special protective measures for young employees, etc. However, on an industry level, foreign employers also must comply with certain regulations adopted within that particular industry (Collective Bargaining Agreements).
Foreign company falling into the scope of the joint committee for construction industry should pay attention to:
- Registration construction site ("déclaration 30bis")
- Construbadge
- Loyalty stamp "OPOC"
- Joint liability for social security and tax debts
The VAT expert's eye
Foreign companies who post personnel in Belgium for the purpose of carrying out construction work must adhere to the sector-related loyalty stamp scheme as set down in the collective labour agreement (OPOC).
Loyalty stamps are an advantage granted to construction workers by the ‘Fonds de sécurité d'existence des ouvriers de la construction’ (Construction Workers’ Welfare Fund). This advantage consists of paying an annual bonus to workers who have worked in one or more construction firm(s) during the year of service (that is to say, between 1st July and 30th June of the following year). This bonus rewards the worker for his loyalty to the construction sector and is intended to encourage him to continue working in that sector.
Don't navigate the complexities of Belgian construction tax and law alone.
Navigating the tax and legal complexities of construction work in Belgium can be a daunting task for foreign businesses. From VAT registration to income tax filing and social security obligations, ensuring compliance requires a deep understanding of the relevant regulations.
Here's how our tax advisors can help:
- Expert guidance: Our team of experienced tax advisors has a comprehensive understanding of Belgian tax and legal requirements for construction work. We can provide you with tailored advice to ensure you meet all your obligations and avoid costly penalties.
- Streamlined compliance: We can help you navigate the VAT registration process, ensure accurate income tax filing, and fulfill your social security obligations, saving you valuable time and resources.
- Peace of mind: With our ongoing support, you can focus on your core business activities while we handle the complexities of Belgian tax and law, giving you peace of mind and allowing you to operate with confidence.
- Cost-effective solutions: We offer competitive rates and transparent pricing, ensuring you receive high-quality advice without breaking the bank.
Don't let tax and legal complexities hinder your construction project in Belgium. Contact our experienced tax advisors today and focus on what you do best – building your business.
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