Belgium is an important business and financial centre in the European Union. There are a lot of skilled workers in different sectors of the economy. If you are looking to fill a specific role or find a specialized skill set, then Belgium may be a good place to start. You will have to decide whether to hire the worker as an employee or contractor, and that can be an important choice that affects the working relationship.
Employees naturally will have more loyalty and will receive benefits and entitlements that give them personal and financial security. But this is a more costly option for the employer due to the expense of those entitlements. A contractor, on the other hand, handles all or their insurance, pension, and benefit costs as self-employed. They can also be retained part-time or for short-term projects.
The benefits of hiring contractors are easy to recognize:
- No long-term financial/HR commitment by the company
- Cost-effective when compared to paying employee benefits and entitlements
- Contracting is a B2B relationship, outside of typical labour laws
- A good way to give a recruit a ‘probationary’ period before hiring
- Can hire for short projects or on a repeat basis
- More flexible to scale up or down, or if different skill sets are needed as the company grows
These are some of the advantages to consider as you recruit remote workers in Belgium, knowing that you can always hire them as employees at a later date as they establish their value to your company.
How to hire and pay remote contractors in Belgium
There are a few choices when it comes to hiring and paying remote workers in Belgium. This will depend on your contractor’s business structure and the type of work relationship you are looking for.
Hire and pay them as a freelancer
Many contractors work as self-employed freelancers, and that is a simple hiring method for your company as long as you can set up a way to verify performance before payment. Using milestones based on timesheets or projects is one way to establish trust for both you and the contractor.
The freelancer would invoice you for the completed work, and you can remit payment by any number of methods, and then send them the next project.
Pay them through their limited company
A more experienced contractor may have their own limited company in Belgium, which would indicate they take their work seriously and have invested time in setting it up. You would contract directly with the limited company, while the contractor is ‘leased’ out and performs the work.
You would pay the limited company’s invoices just like any other business vendor. They, on the other hand, would handle all of their in-country tax and business requirements.
Use an umbrella company in Belgium
A final method that works to the advantage of both the contractor and your company is to use an umbrella company in Belgium. The umbrella company is an intermediary in the contract, facilitating payment to the contractor and ensuring performance for your company.
The umbrella company will forward you the invoice, and you will pay them directly. After withholding taxes and social contributions the umbrella company will issue the contractor a payslip, which simplifies everything for both parties.
What is the LIMOSA declaration?
It should be noted that any non-Belgian contractor will need to file a LIMOSA declaration, that confirms they are making social security contributions in their home country if they are not doing so in Belgium. It also states the work dates and all personal details of the contractor.
You may want to confirm with any ex-pat contractors that they are filing a LIMOSA, or opting to pay into the Belgian social security system and are exempt. The Belgian authorities monitor foreign contractors closely, and Belgian clients are obliged to report contractors who don’t have a LIMOSA declaration. This duty won’t apply to your company as a foreign entity. However, it is a good practice to follow when hiring a new contractor.
Compliance risks when hiring remote workers in Belgium
There are few compliance risks compared to hiring employees because the contract is B2B and outside of any labour laws. However, there are two areas to be aware of.
Misclassification risk: Employee vs. contractor
Misclassification can occur if a contractor is meeting employee-status criteria under the labour regulations in a foreign country. That would include being paid a fixed, monthly amount and acting under the direct control of your company. In that instance, they could claim employee benefits and entitlements, including those that are accrued and past due.
For this reason, it is essential to treat your contractor as a separate business entity, not an employee. This is especially true for freelancers. Using an umbrella company mitigates this risk, as the umbrella company is technically the contractor’s legal employer in Belgium.
Permanent establishment risk in Belgium
Lesser compliance risk is creating permanent establishment (PE) in the country based on the contractor’s activity. The activity does have to create some local revenue, such as concluding regular sales contracts on your behalf. As long as the contractor is not engaged in local revenue creation, it’s not likely that PE would be triggered. It also helps if the contractor’s independent status is clear and does not appear like they are an employee under your control.
How Contractor Taxation helps you hire remote workers in Belgium
Contractor Taxation has a global network of umbrella companies, including in Belgium, who are ready to hire the contractor and administer all the tasks related to taxes, payments, and contributions. As a company looking to hire Belgian contractors, you can recommend to the new hire that an umbrella company is used to assist with the relationship.
Most contractors will be open to this, as it reduces the risk of non-payment with a new client, and relieves them of the administrative burden of self-employment.
Please contact us if you are interested in hiring a Belgian or ex-pat worker for your company as a contractor.