-
Your contact person for this topic:
Sofie Jacobs
Tax lawyer
-
Contact:
- +32 11 29 47 01
- s.jacobs@euregio.law
-
Further publications on this topic:
- Types of permanent establishments in Belgium
-
More on this topic:
- International taxation
- Permanent establishment
The company contribution is an important annual obligation for companies. In principle, this applies not only to Belgian companies but also to foreign companies operating in Belgium. Foreign companies are often unaware of this requirement and may find themselves officially affiliated with the National Auxiliary Fund, only to suddenly receive a reminder to pay the company contribution.
In this article, we explain what the company contribution involves and which companies are required to pay it.
1. What is the company contribution?
The company contribution is an annual social security payment required from most domestic and foreign companies to support the social security of the self-employed. This contribution helps the government finance pensions and benefits for the self-employed. It is important to note that the company contribution is distinct from corporate income tax, which is levied annually on a company’s profits.
2. Which foreign companies must pay the company contribution?
Any foreign company subject to the Belgian non-resident corporate income tax is generally required to join a social insurance fund and pay the annual company contribution. But when exactly is a foreign company liable for the Belgian non-resident corporate income tax?
A foreign company is subject to non-resident corporate income tax if it (i) has a Belgian permanent establishment, or (ii) owns or holds a right in rem to immovable property in Belgium.
In practice, the concept of a “Belgian permanent establishment” often causes confusion for foreign companies. This is because the Belgian permanent establishment is a national concept that differs from the permanent establishment definition under double taxation treaties and is formulated more broadly. For example, there is no exception for preparatory or ancillary activities, and construction work already qualifies as a Belgian permanent establishment after 30 days (instead of the usual 12 months under double taxation treaties).
It is important to note that a Belgian permanent establishment does not automatically have the same effects as a permanent establishment under a double taxation treaty. Only the treaty determines which country is entitled to levy taxes. A foreign company is generally liable to pay tax in Belgium only if it has a permanent establishment as defined under the relevant double taxation treaty.
If there is no permanent establishment according to the treaty, no Belgian tax is due. However, if a Belgian permanent establishment exists, the foreign company is required to file a so-called nil return in Belgium and will generally be obliged to pay the company contribution.
3. Exemptions
The company contribution is a mandatory payment to the Belgian social security system. However, a foreign company may be (temporarily) exempt from the contribution in the following cases:
- Start-up companies: Certain types of companies are exempt from the contribution during the first three years after incorporation and registration with the Crossroads Bank of Enterprises (CBE), provided that all directors have been subject to the Belgian self-employed social security system for no more than 12 quarters in the 40 quarters preceding the company’s incorporation.
- Non-active companies: Companies that are considered dormant are also exempt from the company contribution. A company is deemed dormant if it has not carried out any activity in Belgium for a full calendar year and can provide proof of this through a tax certificate issued by the finance administration.
4. Conclusion
If you are a foreign company operating in Belgium and have a Belgian permanent establishment, you are required to join a social insurance fund and pay the annual company contribution. In certain cases, however, exemptions may apply. To avoid any unpleasant surprises, it is important to be well-informed about your obligations regarding the company contribution.
Do you have any questions?
Do you have any questions about the company contribution for foreign companies in Belgium? Feel free to contact our tax lawyer Sofie Jacobs. By email to s.jacobs@euregio.law or by phone on +32 11 29 47 00.
