Doing business in Belgium - Yeah try again lol

mick.fr

Ok,

Crazy story.
I spoke to a potential customer today who is based in Brussels.
This is a serious consultancy job around a specific Microsoft product.
He has been looking for a consultant for 2 months now. Not a luck.

So I called him, introduced myself etc.

So the guy replied to me, "sounds good", "but you have to be based in Belgium for us to make business with you."

To which I replied innocently "Why?"

"Well we do not make business with companies abroad because we do not know if they pay their taxes"

?
This is a private entity by the way, not a gov body.

To which I replied
"Well I do pay my taxes, I can get a tax clearance certificate from my Irish tax office".

"Ah no you have to pay taxes in Belgium"

Yeah well me thinking "50% taxes, yeah you right buddy lol"

"So what do I need to do" i replied

To which he replied : "Well you need to set up a company here in Belgium and pay taxes here."

Innocently I replied "Well even if I was not in order with my taxes, what is your concern here?"

To which he replied: "There is a law in Belgium, if we do business with non tax compliant companies, we can get fined"

Ok fair enough I suppose....

I wonder if it is more a national preference thing or if really such law does exist in Belgium. And if it was, they can't force a company based in Ireland to pay its taxes, so really what is this about lol?

Anyone came across this kind of situation?

Thanks

antoinolachtnai

If you do business in Belgium, it is reasonable to expect you to establish a branch office there. You don't have to establish a whole new company. But you do need to register for the relevant taxes.

The thing with penalties for dealing with non-compliant companies certainly arises in the UK as regards VAT. HM C+E can and does take back VAT which you pay out which isn't reported back by the company you paid it to.

This is one for the tax adviser. It might not be worth the hassle.

ircoha

Protectionism at the heart of Europe. It is a CLOB to expect that all companies in Europe who want to do work in Belgium have to have a Belgium based company.

If u dont do the gig report them to the EU parliament office in Dawson street

antoinolachtnai

No it is not. It is perfectly reasonable to expect you to have a branch office in Belgium to do business there.

http://www.ealg.com/doc/Legal%20Framework/EALG%20Lisbon%20-%20Legal%20framework%20for%20doing%20business%20in%20Belgium%20-%20CAIRN%20LEGAL.pdf

an alternative way to do it would be to have them put you on their payroll (but I presume you don't want that).

mick.fr

antoinolachtnai wrote: »

If you do business in Belgium, it is reasonable to expect you to establish a branch office there. You don't have to establish a whole new company. But you do need to register for the relevant taxes.

The thing with penalties for dealing with non-compliant companies certainly arises in the UK as regards VAT. HM C+E can and does take back VAT which you pay out which isn't reported back by the company you paid it to.

This is one for the tax adviser. It might not be worth the hassle.

Well to clarify I am a one man limited company based in Dublin (Well ok the other director is my wife) and I do consulting around Microsoft technologies.
It does not make sense to set up another company in Belgium, pay 50% of taxes .

mick.fr

antoinolachtnai wrote: »

No it is not. It is perfectly reasonable to expect you to have a branch office in Belgium to do business there.

http://www.ealg.com/doc/Legal%20Framework/EALG%20Lisbon%20-%20Legal%20framework%20for%20doing%20business%20in%20Belgium%20-%20CAIRN%20LEGAL.pdf

an alternative way to do it would be to have them put you on their payroll (but I presume you don't want that).

Well you are right when it comes to regular businesses.
Here we are only talking about a max of 6 months consulting contract for one man.

I believe less and less in Europe. Gov bodies all over Europe who are using Indian companies don't ask them to set up a biz local, see the Irish tender website, full of it.
Full of BS. I am at war now.

antoinolachtnai

So you think you should be able to just roll into another city, go into business there and pay less employment taxes than the local guy doing the same work? Not collect any VAT? How would that make any sense?

The indian company isn't locating staff in the EU I presume. If they were, they'd have to pay taxes.

mick.fr

antoinolachtnai wrote: »

So you think you should be able to just roll into another city, go into business there and pay less employment taxes than the local guy doing the same work? Not collect any VAT? How would that make any sense?

The indian company isn't locating staff in the EU I presume. If they were, they'd have to pay taxes.

Do you realize what you are saying?
You completely misunderstood the story here.

This is biz to biz between 2 entities based in the EU.
If we were to open a company every time we do biz in another EU country, we would be broke soon.

I do regular biz in the UK and UK based customers pay my bills by bank wire. And I do not pay taxes in UK. I pay my taxes in Ireland.
Do you see a problem here?

And no your point about the Indian is completely false.
For temporary business there is absolutely no obligation, and even mention anywhere in any EU legislation, of paying taxes in the country you are providing your service.
And yes those Indian people are working in Ireland, and they pay 0 taxes to the Irish Collector since they are temp expatriate and employees by this Indian based company.
And yes of course this is legal.

antoinolachtnai

No one is asking you to establish a company. It's a branch office. You are entitled to establish a branch office in another EU country. That's what EU membership gives you, and not an awful lot more.

You are hardly temporary if you are in the other country for more than six months. If you are there more than 183 nights, you are almost certainly going to be paying their personal income taxes (but it depends on their exact rules).

In general, you pay tax where you earn the money and where you live. The only exception is if there is a tax treaty. You need to look at the treaty. http://www.revenue.ie/index.htm?/services/tax_info/taxes12.htm

The treaty is complicated, but it probably allows you do what you want to do as regards corporate tax. It doesn't cover VAT. For vat, you are looking at the forth schedule and it probably lets you do what you want.

You have to read the Treaty re India. http://www.revenue.ie/pdf/india.pdf . The rules are there. If the contractor is coming in from Singapore (which doesn't have a treaty, there's been one in the works now for 10 years) he would have to pay taxes here. The indian company would have to pay taxes if it has any sort of permanent establishment here.

All that said, the other country is entitled to make its own rules about doing business. There is certainly a limit to it, but it's hard to say where the limit is.

With all this, it's the preference of the company rather than the government too. You can't force the company to trade across borders.

mick.fr

antoinolachtnai wrote: »

No one is asking you to establish a company. It's a branch office. You are entitled to establish a branch office in another EU country. That's what EU membership gives you, and not an awful lot more.

You are hardly temporary if you are in the other country for more than six months. If you are there more than 183 nights, you are almost certainly going to be paying their personal income taxes (but it depends on their exact rules).

In general, you pay tax where you earn the money and where you live. The only exception is if there is a tax treaty. You need to look at the treaty. http://www.revenue.ie/index.htm?/services/tax_info/taxes12.htm

The treaty is complicated, but it probably allows you do what you want to do as regards corporate tax. It doesn't cover VAT. For vat, you are looking at the forth schedule and it probably lets you do what you want.

You have to read the Treaty re India. http://www.revenue.ie/pdf/india.pdf . The rules are there. If the contractor is coming in from Singapore (which doesn't have a treaty, there's been one in the works now for 10 years) he would have to pay taxes here. The indian company would have to pay taxes if it has any sort of permanent establishment here.

All that said, the other country is entitled to make its own rules about doing business. There is certainly a limit to it, but it's hard to say where the limit is.

With all this, it's the preference of the company rather than the government too. You can't force the company to trade across borders.

Alright I do not know where you getting your references from guys, my posts have been clear enough.

Nobody is talking about long term etc. I said about 3 times this is strictly temporary, I said up to 6 months, this is less.

I am living in Ireland, I am not living in Belgium, this is a temporary service, nobody ask talked about conducting regular biz in Belgium.
I am not an employee of a Belgium company, I am an employee of my Irish based company.
Huge difference here.

When I worked for British customers, for 1, 2, 3, 4 months nobody ever asked to set up a company in Britain.

Your Indian example again is not what I said, you are right, but this is not what we were talking about here.
A couple of guys coming from Bangalore to Dublin for a 3 or even 5 months project to deploy SharePoint Server 2007 for one Irish gov body on the behalf of their employer based in Indian, will pay 0 taxes in Ireland.

Belgians are like French, they like to make things complicated when this should be easy. No wonder why there are so much jobless people in those countries.

mick.fr

antoinolachtnai wrote: »

No one is asking you to establish a company. It's a branch office. You are entitled to establish a branch office in another EU country. That's what EU membership gives you, and not an awful lot more.

Hum interesting and what is a branch office in your opinion?
For me this is a legal entity that is registered as an employer with the local tax office, has a local VAT number, has a capital to deposit in a bank, etc.
Its parent company is based outside the specific country where it is based but still this is a company.

And yes I can set up as many branches as I want and not only in the EU.

mick.fr

antoinolachtnai wrote: »

You can't force the company to trade across borders.

There is absolutely nothing blocking an EU based company doing business with another company based in the EU.
That should be easy.

Anyway I am done with the Belgians, gonna concentrate with the British, they are much easier to deal with.

antoinolachtnai

mick.fr wrote: »

Hum interesting and what is a branch office in your opinion?
For me this is a legal entity that is registered as an employer with the local tax office, has a local VAT number, has a capital to deposit in a bank, etc.
Its parent company is based outside the specific country where it is based but still this is a company.

And yes I can set up as many branches as I want and not only in the EU.

A branch office registers for tax in the host country, but it isn't a distinct legal entity. It doesn't have capital in its own right. It's not a subsidiary as such, it's part of the company of which it is a branch.

You could also incorporate a subsidiary, for sure.

You can of course set up a branch in many places, but the host country doesn't necessarily have to allow this.