Due to its location at the centre of Europe and its potential 500 million European consumers, Belgium is a perfect country to expand into for companies looking to grow their business.
However, before beginning their recruitment process, employers should familiarise themselves with Belgian laws and practices to avoid legal complications or issues. Additionally, though there are higher tax rates for both companies AND individuals in Belgium than in other European Union member states, investing there can primarily benefit your business.
The three national languages in Belgium are French, Flemish and German. The two main divisions of this country rely on the difference between these languages. Each region also has its governmental structure meaning wage requirements might vary slightly:
- Flanders: Located in the north, Flanders is a Flemish-speaking region governed by the Flemish Parliament and Government.
- Brussels: Belgium’s capital region is Brussels, which is officially a bilingual area. The region is under the legislative power of the Brussels-Capital Region Parliament and the governing power of the Brussels-Capital Region Government.
- Wallonia: French is the primary language of the southern region of Wallonia, governed by the Walloon Parliament and Government.
The type of structure a company uses can impact its success. For example, Walloon companies tend to be more centralised and hierarchical, while Flemish ones are open-organised with less emphasis placed upon rank order than in other parts of Europe.
Workweek and holidays in Belgium
In Belgium, the government protects employees by guaranteeing they can balance work with their daily lives. All workers are guaranteed an hourly wage and, when required, must receive overtime pay according to the law.
While it is legal for companies in Belgium to have a four-day workweek (with no more than six hours per day), shift workers may extend these limits up to 11-hour days and 50 weeks annually, provided certain conditions apply).
Belgium has ten public holidays: New Year’s Day, Easter Monday, Labour Day, Ascension Day, Pentecost, Independence Day, Assumption Day, All Saints’ Day, Armistice Day and Christmas. Each region has its own holidays in addition to these ten.
Tax in Belgium
In Belgium, all organisations conducting profit-making operations must pay an annual corporation tax of 25%. This rate was a substantial decrease from 2018, when it was at about 40%.
The two main deductions from an employee’s paycheck are:
- Social security: Employees contribute 13.07% of income, with employers contributing around 27% of employees’ salaries. Contributions are tax deductible for employers and employees. A unique social security contribution varies between EUR 9.30 and EUR 60.94, collected monthly from net pay. The maximum annual payable amount is EUR 731.28 (USD 727).
- Personal income taxes: Belgian income tax is progressive, so the rate each employee pays is adjusted based on their income. Rates apply to residents and non-residents. Four bands start at 25% for incomes reaching EUR 13,540 (USD 13,413) and up to 50% for incomes over EUR 42,370 (USD 41,974). The first band is subject to a tax-free allowance of EUR 9,050 (USD 8,965), which can increase due to personal circumstances.
Other significant taxes you should know about include the following:
- Local Income Taxes: Belgian residents are subject to communal taxes, up to 9%, with a flat rate of 7% for non-residents assessed on income tax due.
- Corporate Income Tax (CIT): Belgian resident companies and foreign companies permanently established in Belgium pay CIT at 25% on profits. Under the Belgian Companies and Associations Code (BCAC), qualifying companies benefit from a rate of 20% on the first €100,000 (US$99,530) of taxable profits. Insufficient advance payments can incur surcharges of 6.75%.
- Indirect Taxes: The standard rate of Value Added Tax (VAT) on goods and services is 21%. Restaurant and catering services are among the categories attracting 12%, with 6% applying to foodstuffs, some pharmaceuticals, and cultural and leisure activities. Zero-rated categories include exports, various European Union interactions and services relating to education, healthcare and social services.
- Withholding Tax (WHT): Unless exemptions apply through tax treaties, 30% applies to dividends, interest, service fees and royalties paid by Belgian corporations to foreign companies and individuals.
- Capital Gains Tax (CGT): The CIT rate of 25% applies to a company’s capital gains on the disposal of assets.
Employment contracts in Belgium
It is essential to use the regional language when contracting with a client. For example, if you establish your business in Wallonia, you better redact all contracts and agreements in French.
The standard open-ended permanent contract is valid for an indefinite amount of time. Several particular contract types exist under Belgian employment law as well:
- Fixed-term: The contract will end on a specified date or after a specified event.
- Specific assignment: This contract will end after the employee has completed a particular task. For example, actors in a movie may be released from their contracts after filming wraps up.
- Replacement: This contract is for an employee who will temporarily replace another employee absent from work for a specified period. For example, an employee filling in for another employee on maternity leave would be under a replacement contract.
- Temporary: Contracts between an employee and a temp agency are valid for six months maximum.
- Part-time: A part-time employee works fewer than 38 hours a week. Part-time employees still receive certain protections under Belgian employment law.
Benefits in Belgium
When calculating expenses, you also need to consider the benefits you’ll give to your employees. Some benefits you can provide for your Belgian team include the following:
- Insurance plans
- Health insurance
- Stock options
- Company cars
- Meal vouchers
Generally, these benefits count as part of an employee’s yearly salary. Some provisions may be subject to certain taxes.
How to Hire in Belgium
Immigration and labour laws in Belgium are strict, so employers must conduct thorough research before hiring. Some aspects of the process you should keep an eye on include the following:
- Background checks: Belgian employment law restricts employers from conducting extensive background checks on job candidates. If you must perform background checks, you may only gather the information relevant to the functions of the position you’re hiring for. You must also notify candidates before conducting background checks.
- Employee categories: Belgian employment law contains various regulations for different types of employees. Blue-collar employees, white-collar employees, sales representatives, and domestic employees make up the main categories. One notable distinction is that the probationary period for blue-collar employees is shorter than that for white-collar employees. Additional rules apply to students and remote employees.
- Wages: In the private sector, wages are determined through a CLA rather than by law. Specific industries within the public sector currently have a legal minimum wage of EUR 1,625.72 per month. However, Belgium does not have a national minimum wage.
- Regional tensions: The regions of Belgium have different cultural norms that can result in a division between team members.
- Interview restrictions: During job interviews, employers may only ask questions that directly relate to the job and its functions. For example, the interviewer may ask what qualifications and industry experience the candidate has, but they cannot ask about the candidate’s political opinions.
What is required to hire in Belgium?
Hiring in Belgium is an exciting process that leads to many benefits. The country has strict labour laws, so you will need the proper paperwork for your business and employees before setting up shop there or hiring anyone new onto its team of workers.
As it stands now, there are two ways in which entrepreneurs can legally operate within this European Union member state:
- A branch office: This entity is essentially an extension of your company’s main office in the host country. No minimum capital is required to establish a branch office, but your parent company will be fully liable for any issues within its branch.
- A subsidiary: Unlike a branch, a subsidiary is an entirely new business within the host country. A Belgian subsidiary must be incorporated as a public limited liability company (PLC), a private limited liability company (PLLC), or a starter-private limited liability company (S-PLLC).
Hiring new employees in Belgium can be a daunting process. There are many things to consider and potential pitfalls that you might avoid by following some simple rules of thumb, for example, registering your company with the appropriate authorities before hiring.
Regardless of the company type you choose to establish, you will need to take the following steps before hiring new employees in Belgium:
- Register your company with the NSSO.
- Register with the tax collector’s office.
- Enrol in industrial injuries insurance, if necessary.
- Appoint an authorised individual to manage documentation and correspondence with national officials.
- Apply for a company number from the Central Register of Companies.
- If you plan to trade with non-EU members, register with customs for an EORI number. This number will be based on your company number.
- Get in touch with a business counter, your main point of contact for administrative functions.
How to Hire Remote Workers in Belgium
If you’re looking to hire employees in Belgium, some things will make the process smoother. Depending on where in Belgium their home country is located (and if they need access), extra steps might be necessary when recruiting and hiring remotely:
- Schedule accordingly: Companies far from Belgium should consider candidates’ time zones when scheduling interviews and meetings. Please allow your candidate to choose a time that works for them. It’s also a good idea to send an automated reminder before your meeting.
- Exhibit professionalism: Be punctual and formal in your meetings with candidates, as your company’s reputation can strongly benefit from a polished image. Make sure your technology is working beforehand, and maintain constant communication to ensure everyone is on the same page.
- Utilise an EOR platform: Working with a global Employer of Record like Bradford Jacobs is an excellent way to build a team abroad without establishing a branch office or subsidiary. Your Employer of Record can hire and onboard your employees in a matter of days while you continue business as usual from your home country.
With Bradford Jacobs, you can enjoy seamless remote talent sourcing. We attract, find, engage, and onboard the best employees for your business needs, no matter their location. If you want to attract and hire top global talent, contact us today.