|Both independent contractors and hiring companies face complex cross border rules if they are located in different countries. Because of this we have created our ‘Contractor Solutions’ series with actual circumstances brought to us by our international clients.
The first article was a solution for a French company hiring a contractor in the Netherlands, and the second article addressed questions from a contractor wanting to move to Portugal.
The third article dealt with four different contracting scenarios in Spain, with questions from both hiring companies and contractors.
This new article addresses questions from contractors looking to work with Belgian companies.
We have compiled all these questions so Campbell Curtis, our Solutions Expert, can address them. We hope you find what you need here!
And if you don’t, drop us a comment below in the Contact Us form so we’d get back to you!
Questions we cover
Solutions to Contracting in Belgium
The first question is from a contractor in the UK who is being recruited by a company in Belgium.
|“There is an employer in Belgium who would like to hire me for an IT assignment. I am a British citizen.”
Campbell: Hello and thanks for your inquiry!
There are two possible ways for you to fill this assignment: either 1) remotely from the UK or 2) onsite in Belgium. You may be trying to decide which is best, and I will try to help you with that.
Remote from the UK
If you do the assignment remotely then you are simply serving a foreign client from home. This is easy of course in terms of tax as you would declare the income the same as from any UK client. Your primary concern is going to be setting up the contract and finding a payment method that is reliable and protects you.
A UK umbrella company can be an excellent solution for you. The umbrella company would be an intermediary to the contract with your client. All payments would be verified and tax withheld by the umbrella company. It is as though you are an employee of the umbrella company, and we take care of all the administrative details for you in the UK.
You won’t have any compliance or tax obligations abroad because you are not one of many Belgium contractors, you are a UK contractor. If any issues or disputes arise with the Belgian client, we will facilitate that for you.
Onsite in Belgium
In the second option where you perform the assignment in Belgium, then we can help you with a Belgium umbrella company. Because you are not an EU citizen, you would need a work permit. The Belgium umbrella company can sponsor this for you as a legal entity in the country.
They would also manage your payments and Belgian tax withholding while you are there working. This is far better than you trying to navigate the Belgian tax system and rates on your own.
If you want, the net monthly payment can be sent to your UK account by the umbrella company. This is the least complicated of contractor solutions in Belgium, as you don’t have to manage anything on your own.
|“Can an umbrella company help a British citizen do an IT assignment for an employer in Belgium?”
Campbell: Absolutely! Whether you decide to perform the work remotely or as a Belgium contractor, an umbrella company can be a real support and ally. Both the UK umbrella company and the Belgium umbrella company operate the same way, but in compliance with their respective countries’ laws.
Other benefits of umbrella companies include:
- Manages all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a local or foreign account
- Sponsors work permits
- Helps set up the contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
Belgium Income Tax Calculator
The next question comes from a recruitment agency asking about Belgium income tax and using an umbrella company for contractor solutions in Belgium.
|“My client is about to start a project as a contractor. Currently he is Cyprus, with Romanian citizenship and will be relocating to Brussels to start his new project. His daily rate is EUR 400.
Can you please share what are the steps using your services as an umbrella company?“
Here are the steps to initiate our contractor solutions in Belgium with an umbrella company:
- The company or contractor contact us with their interest
- We request all details about contractor location, company, pay rates and nationality
- We engage one of our vetted umbrella companies in Belgium
- The Belgium umbrella company will supply details about their fees and any additional questions they have related to visas, payment and the contract
- Once the need for service is confirmed, the contractor will be onboarded to the Belgium umbrella company
- The company will be given instructions on how to forward the monthly gross payment to the umbrella company
- After the first month of service, the Belgium umbrella company will receive the gross payment, withhold taxes, deduct fees and forward net payment to the contractor.
|“What is the fee charged from your side?“
The fees are set and charged by the Belgium umbrella company, and once we have all the details in place we can secure a quote for you.
|“What would be his final net income if he is working 20 days per month?“
According to our Belgium Income Tax Calculator, his gross earnings would be EUR 96,000, with net earnings of EUR 44,160. You can check this and amounts for other contractors on the calculator page. Please note that these are estimates only and can change with adjustments to tax policy, and don’t include any tax liability in the home country.
|“How to calculate the final net income using an umbrella company for an EU citizen doing a contract project in Brussels.”
You would subtract income taxes, social contributions and the umbrella company fees, (unless the hiring company is paying or sharing in the fee payment).
|“Steps to using umbrella company services”
The steps are outlined above for your review. Please contact us for more detail on how we will work with your contractor.
|“What are umbrella company fees?”
These are the monthly fees charged each month per contractor, for management and administration. There are no add-on costs.
|“Average working days per month for a contractor”
Contractors in general will work a similar number of days per week as employees. So 20 days per month would be standard.
Popular questions about Contractor Solutions in Belgium
If you are an EU citizen there are few barriers to contracting in Belgium. You wont need a work permit and will just have to work out your tax payments.
Non-EU citizens have a harder time of it, and will need a work permit sponsor. This is where a Belgium umbrella company can help you with sponsorship, tax withholding and client payments.
Contractors can fill remote roles from either their home country, or a third country of their choice. Many use digital nomad visas to work from desirable locations for their clients located around the world.
The primary difference is one of control, where the hiring company directs the work methods, time and conduct of the worker. Some contractors may be misclassified if they are being treated like employees, despite lacking employee status. This is one of the risks of freelancing in Belgium without true independence.
This can be done easily with a contract for service and payment method. The problem is that you won’t have any verification method of their performance at first. An umbrella company can help with this as a third party that confirms time/project completion prior to forwarding contractor payment.
Your client can terminate your contract if there is cause such as poor performance. You don’t have much recourse as there is no severance or other compensation as with employees.
Pursuing legal action would be expensive and difficult, but having an umbrella company would bring a facilitator to any dispute. This is one of the advantages of our contractor solutions in Belgium.
If you have an annual salary rate that you use for a similar employee position, you can divide that by the number of work days in the year. In some cases, you can pay a contractor a ‘localised’ rate based on the economic standard of their home country.
If you are not located in Belgium, you don’t owe any taxes there and don’t need to withhold. However, you still need to pay taxes in the country where you have tax residency.