Increase in Flat Rate Reimbursement
As costs related to homework are relatively small and difficult to prove, the social security authorities (RSZ/ONSS) and the tax authorities accept to estimate these costs on a lump sum basis. The office allowance is intended to cover, among other things, costs for heating, electricity, water, insurances, office supplies and refreshments.
The social security authorities have indicated in their intermediary administrative guidelines that the office allowance is indexed again. The maximum amount of 140.15 EUR, which applied from 01.06.2022 until 31.08.2022, has been increased to 142.95 EUR per month as of 01.09.2022.
The tax authorities had already indicated in their circular letter of 26.02.2021 that they would follow the amount of the office indemnity as determined by the social security authorities, as well as the evolution of this amount. The amount of 142.95 EUR is therefore exempt from social security contributions and taxes.
The amount of 142.95 EUR is a maximum amount. It is therefore not mandatory to grant this maximum amount, but you are free to increase the amount to 142.95 EUR per month as of 01.09.2022.
We would also like to remind you that a written agreement must be drawn up for teleworkers, in principle at the latest when the employee starts teleworking. In this agreement, specific mandatory provisions must be included such as the place where the telework will be performed, how the costs will be reimbursed, etc.
Other Indemnities for Working from Home
In addition to the office allowance, the employer can also reimburse the following costs on a lump sum basis:
- 20 EUR per month if the employee uses his/her own internet connection for professional purposes.
- 20 EUR per month if the employee uses his/her own computer for professional purposes.
10 EUR per month (5 EUR per item) for the professional use of a personal second computer screen and printer/scanner (and this for a maximum of 3 years). Attention, this allowance cannot be combined with the lump sum of 20 EUR per month for the use of the own PC.
These indemnities have not been increased: the maximum amounts remain the same.
The lump sum amounts can of course only be granted if the office and internet costs are not yet reimbursed to the employee in another way.
Inform your Payroll Business Partner if you wish to increase the current lump-sum office allowance.
Currently there is a draft program law pending in parliament which will provide this “update” by means of a new tax regime which will apply to “inbound taxpayers and inbound researchers”. As the law still needs to be voted, some changes may still be brought to the draft law during the debates in Parliament.
Employers who employ expats benefiting from the current special tax regime (or who are planning new expatriate hires) should monitor the changes and their impact very closely.
The draft program law uses following abbreviations for the new tax regime(s):
- For inbound tax payers: BBIB/ RSII, in Dutch: Bijzonder Belastingstelsel voor Ingekomen Belastingplichtigen, in French: Régime Spécial d’Imposition pour les Impatriés;
- For inbound researchers: BBIO/RSICI, in Dutch: Bijzonder Belastingstelsel voor Ingekomen Onderzoekers, in French: Régime Spécial d’Imposition pour les Chercheurs Impatriés.
As the scope of this article does not allow us to go into all (technical) details of the new regime, we will only highlight the most important changes comparing them to the current special tax regime.
The current special tax regime for foreign executives, known as the “expat status”, has following (well known) characteristics and interesting tax benefits:
- Belgian nationals are not eligible for the expat status (even if they have double nationality or even when they have lived abroad for a (very) long time);
- Not-for-profit organisations (VZW/ASBL) are excluded from the regime;
- Expats who have obtained the special status (and their family) are deemed to be non-residents, even if they live in Belgium; that resulted in the non-application of double tax treaties if the expat was no longer considered a tax resident in his home country;
- No time limit on the expat status as long as the conditions are continuously fulfilled;
- A change of employer in Belgium resulted in the loss of the expat tax status (except in special situations of intra-group switches);
- There are no requirements in terms of salary minimum or diploma as long as it concerned an “executive” function, the decision was based on an analysis of each case at hand;
- Eligible to the regime are key functions/executives and researchers;
- The expat is entitled to three major tax benefits:
- As a non-resident, he is only taxable on Belgian source income;
- Tax free allowances as reimbursement of costs proper to the employer (up to €11.250 or €29.750 for certain types of costs; unlimited reimbursement for certain types of special costs);
- Exclusion from the taxable base of that part of the remuneration that corresponds to professional workdays outside of Belgium.
Under the new special tax regime for inbound tax payers and inbound researchers, which will now have a legal basis, the most important features are:
- Nationality does not have an influence anymore on the eligibility under the new regime, though, a number of conditions are inserted to be eligible:
- During 60 months (5 years) prior to application for the new expat regime
- one should not have been considered a Belgian tax resident;
- one should not have lived within 150km from the Belgian border;
- one should not have been subject to Belgian non-resident tax in respect of Belgian source professional income;
- Not-for-profit organisations (VZW/ASBL) are no longer excluded from the regime;
- Expats who have obtained the expat status (and their family) will be subject to the normal rules on tax residency. An expat who lives in Belgium with his family will therefore normally be treated as tax resident. I the home state continues to consider the expat (and his family) as tax resident, Belgium will treat them as tax non-resident upon the condition of providing an annual tax residency attestation; this means that double tax treaties will have full application under the new regime;
- There is a time limit on the new expat status: there is an initial period of 5 years, with a possibility for an extension with 3 years (maximum of 8 years);
- A change of employer in Belgium will no longer automatically result in the loss of the expat status; the new employer will have the possibility to also make an application for the expat status, but there will be no new 5-year term (as the eligibility starts as from the first employment date in Belgium, even with a change of employer, this date remains the anchor point);
- Eligible to the regime are still key functions/executives and researchers, though the new regime provides for some minimum salary requirements and diploma conditions:
- As mentioned above the new regime is a system with two sub-regimes: “inbound taxpayers” and “inbound researchers”:
- BBIB/ RSII – for inbound taxpayers (employees or company directors):
- the expat must be (i) recruited directly from outside Belgium by a
- BBIB/ RSII – for inbound taxpayers (employees or company directors):
- As mentioned above the new regime is a system with two sub-regimes: “inbound taxpayers” and “inbound researchers”:
- During 60 months (5 years) prior to application for the new expat regime
Belgian company, by the Belgian branch of a foreign company or a not-for-profit organisation, or (ii) seconded by a foreign company which is part of a multinational group to a Belgian company or Belgian branch of a company within that group, or to a non-for-profit organization;
- a minimum of €75.000 gross compensation on yearly basis (excl. of the 30% cost allowance – see further);
- BBIO/RSICI – for researchers (only accessible for employees):
- the expat must be recruited directly from outside Belgium or seconded to Belgium (see above);
- no minimum salary level;
- the expat needs to qualify as researcher:
- alone or in group, at least 80% of working time is research time (as defined in the law);
- qualifying diploma or at least 10 years equivalent experience (diploma= doctor or master-level defined science domains).
- The expat is entitled to following tax benefits under the new expat status:
- Tax free allowances as reimbursement of costs proper to the employer up to 30% of the gross salary (capped at €90.000, possibly indexed as from 2024) paid on top of the contractual salary; the employer’s engagement to use the new 30% system to reimburse costs can thus not be used to reach the €75.000 threshold;
- A system of additional reimbursement for special costs remains: it concerns costs of moving, cost of decoration and organisation of one’s home and school fees (subject to conditions and with certain limitations). Also these reimbursements are not taken into consideration to reach the salary threshold.
It very important to highlight also the new procedure to obtain the new special expat tax regime and the envisaged date of entry into force.
- Under the new regime the application will need to be filed electronically within three months after the start of the qualifying employment (today: 6 months) and the tax authorities will need to make a decision within 3 months (in practice often up to 12 months currently).
- The draft program law has an entry into force date on January 1st, 2022! This is real soon! Eligible employees, directors and researchers starting employment as from that date will fall under the scope of application of the new law if they meet the conditions.
For expats enjoying the tax benefits of the current expat status a complex set of transitional measures will be available. On the basis of “opt-in” or “opt-out” possibilities, the files of the expats enjoying the current special tax regime should be analysed and decisions will need to be made:
- If on January 1st, 2022 one is benefiting from the current expat status for a period of maximum 5 years and one meets the criteria for the new regime (in a retroactive consideration), an application for the new regime can be filed and such will need to be done ultimately on July 31st, 2022. The new regime can then be applied – as from January 1st, 2022 – for the “remaining period” of 5 (or 8) years. If however upon such a request the answer is negative, the new regime is not acquired, but a transitional measure will allow for the old regime to remain applicable for 2 more years.
- If on January 1st, 2022 one is benefiting from the current expat status and does not meet the criteria for the new regime, there will be a transition period of 2 years. After these 2 years, the old regime ceases to be applied (whilst also the new regime is not acquired).
Foreign executives currently benefiting from the special tax regime for expatriates and their employers will need to closely monitor on a case-by-case basis the consequences of all the changes brought to the Belgian special tax regime for expats.
At the moment this article was written it was still unclear how the tax-free allowances for costs proper to the employment will be treated for social security purposes. This topic is not inserted in the draft program law and will need separate legislative work if an exemption for social security is to be added to the new tax regime for expats.
This year, in response to the unprecedented worldwide economic downturn and in addition to existing protectionist ideologies and anti-immigrant sentiments, countries renewed their focus on local workforce protections, but with a new emphasis on mitigating the risk of infection and compensating for skyrocketing unemployment rates. Along with widespread travel restrictions to ban the entry of entire groups of foreign nationals, many governments used a range of methods to restrict admission and work rights by imposing heightened eligibility criteria, decreasing quotas and increasing minimum salary levels.
Most countries promulgated restrictive entry and exit rules, and foreign nationals who were allowed entry faced complex and often intrusive health and entry requirements, and in many cases, strict criteria for work authorization that was implemented before COVID-19. Additionally, many countries divided essential workers from non-essential ones, creating a new category of admissibility, and a rapid acceleration of the digital transformation was seen to limit person-to-person contact during immigration processing. If there was ever a year of rapid global change in immigration rules, this was it.
Birth of New Type of Restrictionsim
As the epidemiological situation around the world changed, COVID-19-related travel restrictions ranged from broad entry bans to constantly changing specific bans with exceptions based on citizenship and/or originating country. A new type of restrictionism developed with the easing of travel restrictions. Policies began to focus heavily on health certificates, medical screenings and other related measures. While borders were starting to reopen, employers reconsidered sending their employees abroad in light of the implications of quarantine requirements. Faced with the inconvenience and interruption caused by mandatory quarantines, many travellers were reluctant (or unable) to partake in any form of travel during this quarter.
Implementation of Immigration Policy Reviews and Overhauls Sidelined by COVID-19 Response
With government resources limited, the need for recovery from government closures—including reconciling application backlogs and regularizing out-of-status foreign nationals—will be at the forefront of immigration administrations’ concerns in the short term. As a result, immigration policy overhauls planned for implementation during late 2020 and into 2021 have been delayed in many countries.
Travel Alliances in Stark Contrast to Divergent Policies
As economies struggled to reopen and compensate for months of closures, travel bubbles (also referred as “travel corridors” and “air bridges”) created among countries with similar COVID-19 infection rates resulted in lenient entry rules or exceptions to entry bans/quarantine, to facilitate travel and help improve each country’s economy. In stark contrast to coordinated agreements, a key 2020 trend was the diversion of many local/state governments from centralized plans that were created to coordinate travel policy changes. This was particularly noticeable in the European Union (EU), where the European Council recommended that EU countries lift the external border restrictions for a limited number of countries, based on objective criteria related to the COVID-19 infection rate and whether reciprocal policies apply. EU Member States, however, took a country-by-country approach, creating uncoordinated and complex entry rules.
Unprecedented Unemployment Rates Exacerbate Protectionism
In both developed and developing economies, the pandemic is causing unprecedented job losses and business closures. The unemployment rate in Organisation for Economic Co-operation and Development (OECD) countries increased by an unprecedented 2.9 percentage points in April 2020 to 8.4%, compared to 5.5% in March. As economies begin to reopen, unemployment is projected to fall, but remain substantially above pre-pandemic levels. As a result, policies across the world will continue to shift more toward the protection of local workforce to mitigate unprecedented job losses. As history has shown, countries will likely continue to turn inward in response to sustained high unemployment rates but will ultimately seek to improve their fiscal situation by welcoming foreign talent and foreign investment (often an underrated source for economic recovery).
Work-from-Anywhere the New Normal
Many employees were moved to remote work situations in countries with temporary and ambiguous remote working concessions, that were often hastily created in reaction to the COVID-19 crisis. In many cases, companies were compelled to follow temporary government remote work regulations that often led to the employer being noncompliant with labour and other laws. Many times, whether an employee could work remotely under their work authorization depended on several factors, such as the terms of the employment agreement (Austria), the location of work (Canada), or the visa category (United States). These and other scenarios created compliance risks beyond those related to immigration law (e.g., employment law, social security law, tax implications, etc.).
Some employees ended up working in a country other than the one where they applied for work rights. As governments scrambled to catch up to such decisions, lawmakers created ambiguous policies that did not contemplate saving employers and their employees from the various legal compliance risks. The combination of uncharted legislative and policy territory and hasty decisions to address immediate needs resulted in a period of chaotic employer policy changes. This is especially important in the context of the Posted Workers Directive in the EU, where employers are required to comply with strict standards to ensure the posted worker’s working conditions are the same as local workers. In many ways, an ideal approach for remote workers would be if more immigration systems separated the need for company sponsorship from work authorization eligibility, which would allow for more flexible employment agreements, such as employee-leasing or third-party placements.
Immigration Policies and Special Concessions for Essential Workers
The pandemic created a new division in the immigration landscape. Essential workers, such as healthcare workers, production and food processing workers, maintenance workers, agricultural workers, and truck drivers, and other categories of workers deemed necessary in the fight against COVID-19, were exempt from entry bans. This approach may create a new policy focused on workers deemed essential by the destination country governments for various situations (even outside this pandemic) and could create more opportunities for local and foreign medium-skilled workers. Labour protections, such as quotas and labour market tests, traditionally disfavoured such applicants, who in many countries are considered medium- and even low-skilled.
Education-focused Immigration Programs May Increase Opportunities for Medium-Skilled Foreign Workers
Prior to COVID-19, immigration programs in countries that sought to attract the best and brightest featured eligibility criteria based on high standards of professional skills and experience. Conversely, education-based programs, such as the post-graduate practical training program in the United States, were the focus of many immigration-related restrictions. When COVID-19 hit, there was a heightened need for medical professionals and other essential—but lower-skilled, lower-paid—workers. Immigration schemes may start to reflect such needs in entry rules; immigration paths may be created especially for such entrants and protectionism may ease to allow special exemptions and rules for medium-skilled workers with certain educations such as vocational or non-traditional schooling, or otherwise. This is already seen in the United Kingdom, where the new points-based system will create a preferential route just for healthcare workers with a job offer.
Fragomen believes the following key trends will strongly impact the immigration landscape in the next several years. While there is no direct action to be taken now, they feel these trends require close observation, as they will likely have a significant impact on how business is conducted in the future.
Health Assessments in the Spotlight
While the topic of an “immunity passport” caught on during the early days of the COVID-19 travel restrictions, the World Health Organization warned that there is no evidence that those who have recovered from COVID-19 have antibodies or are protected from re-infection. Additionally, the U.S. Centers for Disease Control and Prevention has warned that up to half of antibody tests could incorrectly state that an individual has antibodies. For these reasons, among other, immunity passports are not a realistic option as a basis for travel rights. However, health records for travellers, often referred to as a “health passport,” containing antibody test results, recent negative COVID-19 test results and proof of vaccination are now becoming the norm.
Government Need to Increase Revenue May Impact Employer Budgets
Just like nearly every private industry, public government departments suffered from cuts in spending and expenditures in national health and economic recovery programs. As governments aim to rebuild economies post-COVID-19, politicians will have difficult decisions to make with respect to how to recoup funds after months of closures of public services. In some countries, this could result in higher taxes, while in others it may result in cuts on public spending.
Attempts to compensate for losses could have two effects:
∞ Higher application fees and fines for noncompliance. Employers and foreign nationals could see increased application fees for both initial and renewal applications. Fees for noncompliance with immigration regulations could also increase.
∞ Increased enforcement efforts. Government motivations to increase noncompliance fines could lead immigration departments and other governmental bodies that enforce immigration and employment law to expand their watchdog roles and increase the volume of their enforcement efforts, if resources and laws allow it.
This means employers will need to factor increased fees— which could prove to be dramatic—into their budgets. Employers should be prepared for stricter enforcement efforts, including government audits of workplaces and workplace documents, as well as increased strictness in reviewing employer and foreign nationals’ immigration applications.
Mismatch in Demographics to Create Work Opportunities
The working age population in most high-income countries is declining, while elderly populations are growing. By 2050, the prime working-age populations of OECD countries will have shrunk by more than 92 million people, while their populations over 65 years old will have grown by more than 100 million people. This means OECD countries are facing a gap of more than 15 million workers per year, or a total of 400 million workers over 30 years. However, many lower-income countries have working-age populations that are growing faster than job creation rates (e.g., Sub-Saharan Africa, South Asia, Latin America, Middle East). Since it has been proven that the potential income gain from mobility exceeds the gain from more schooling, this could mean a great opportunity for foreign workers.
Manufacturing Will Move to Home Countries, Decreasing Long-term Assignments
COVID-19 has exposed the fragility of supply chains. Governments and companies will start to review manufacturing locations and move facilities home to create a more dependable and sustainable supply chain. Pharmaceutical and medical supply manufacturing locations were under a microscope during COVID-19, as personal protective equipment shortages loomed and reliance on Chinese production was strong. These may be the first of many industries that shift production to other locations in the long term. In 2021 and after the pandemic, U.S. and European companies will likely reconsider their supply and service ties with China, which could either spur a growth in home country production and service jobs, or a spread of production in other production hubs with low wages.
This could reduce out-of-country travel needs and could instead re-focus hiring efforts on local populations (including immigrants in the home country under local hire work permits). This will also force companies to create new forms of automation to decrease the costs of onshore production, which may create needs to cut budgets elsewhere. Alternatively, COVID-19-related financial losses will, for many companies, undercut the ability to move production at this time, as very little spare capital remains to make such drastic changes. However, the conversation and concern were amplified during the pandemic and, in three to five years, moving production posts could become more of a reality for employers with continued concerns about the stability, both economically and politically, in China.
Finally, Fragomen believes the private sector will play an ever more significant role in shaping immigration policy. With the past several years of immigration restrictions spurring the business community to become more involved in policy development at both national and international levels, organisations such as the Global Forum for Migration and Development help the private sector raise awareness of the benefits of labour migration. The pandemic has brought the role of the private sector into even higher relief as governments and organisations work to balance crucial COVID-19 containment measures with mechanisms to support the global economy.
For the full report, please visit the Fragomen website.
For employees not having been granted the “expat status”, but normally frequently travelling for business purposes, COVID19 could cause unpleasant tax surprises. Indeed, in general, on the basis of Article 15 (OECD model) of the applicable double taxation treaty, an employee is taxable in his home State, except where he can prove his physical presence abroad for the performance of his professional activities. The salary corresponding to those working days exercised abroad are then normally exempted in the state of residence and taxable abroad (the working State). If, because of the COVID19 crisis, the employee is unable to perform abroad and this, contrary to his normal working rhythm, this would normally have a serious impact on his tax situation. In principle, this means that this employee would suddenly (at least for the COVID19 crisis period) only perform in his home state and would thus be taxable in his home state on a bigger part of his salary.
In this context, Belgium concluded amicable agreements with Germany, The Netherlands, France and Luxembourg to counter such unexpected effects. The solution is that for those who cannot work in the usual working state because of the COVID19 measures and are stuck at home, these working days from home will be ignored in terms of the analysis of the allocation of the taxing authority on the basis of the applicable double taxation treaty. In other words, the “home” working days are -by fiction- considered to have been performed where work would normally have been performed under a normal work regime.
For employees who fall under the scope of Article 15 of these double tax treaties a solution has thus been agreed upon.
Some expats benefiting from the special tax regime believed such rule would also be applied to their situation. This not true and therefore this may mean “bad news”.
As you know, for expats benefiting from the special tax regime, the taxable basis is calculated using the so-called “travel exclusion”. The days performed outside Belgium are not allocated to Belgium and the corresponding wage is not taxable in Belgium.
COVID19 home working days are not deemed fiscally neutral compared to their normal working and travel patterns.
The tax administration has indicated that the general rules remain in place for expats and therefore there is no “COVID19 tolerance” for working from home for them.
For the calculation of the Belgian taxable basis, they will only consider the working days actually performed abroad.
For the expat who travelled less and was “stuck” in Belgium, this will mean an increase of the Belgian tax debt. For those who were “stuck” abroad and performed more working days abroad, the Belgian tax debt will fall. For the latter group, attention should be paid to a possible increase in foreign tax burden in case they have remained tax resident in their home country.
For one group clearly undesirable effects, for the other a more pleasant prospect in difficult times. For companies that have expats in the first category, I recommend that you have a conversation about this in time, check the contractual agreements (gross/net guarantee) and adjust where needed the salary withholding tax in due time.
The Withdrawal Agreement protects the right of residence for UK nationals and their families who have been living in Belgium. It also protects the exit and entry rights of UK frontier workers in Belgium.
Belgium has opted for an extended application period lasting until 31st December 2021 in order to make sure you have sufficient time to submit your application. During this period, the rights of UK nationals living in Belgium before the end of the transition period, and their family members, are protected.
We strongly recommend that you apply as soon as possible in order to protect your rights for the future and ensure as smooth a transition as possible. You can apply for your new card from 1st of January 2021 until the 31 of December 2021.
The new residence document
If you have a residence right, you will receive a residence card for beneficiaries of the Withdrawal Agreement (M card). This card has a validity of 5 years, after you which you can renew your card or apply for a permanent residence right.
The new document for local border traffic
If you have a status as a frontier worker, you will receive a card for local border traffic as beneficiaries of the Withdrawal Agreement (N card). This card has a validity of 5 years, after you which you can renew your card.
Since 20 August 2020, the Belgian government continued to seek alignment with the EU recommendations and announced new guidelines that would formalise the broadening of the scope of workers considered as highly skilled essential workers exempt from the travel ban. Updated guidelines applicable as of 11 September, make official solutions for both short- and long-term travellers (being less or more than 90 days in any 180 day period).
Long-term travellers from “White Listed” countries
From 25 September onwards Belgium foresees in a removal of border restrictions and quarantine requirement for all travellers coming from so called ‘While Listed’ countries. Travellers coming from these countries are permitted to travel to Belgium regardless of the travel purpose, provided that they comply with standard visa and entry criteria. These countries originate from the listing originally issued under the Council Recommendation of June 30. Countries currently included in the list are: Australia, Japan, New Zealand, Singapore, Rwanda, South Korea, Thailand and Uruguay (list subject to change – check https://diplomatie.belgium.be/nl for a most updated version).
Long-term travellers from countries that are not “White Listed”
All foreign nationals who qualify for a single permit based on a work authorization category exempt from labour market testing are automatically included in the category of essential workers. This includes specialised technicians and shortage occupations in the Flanders and Walloon regions of Belgium. All foreign nationals who have been issued an Annex 46 in the procedure towards obtaining a Single Permit will qualify for the VISA D (B34). Equally, the EU Blue Card applicants continue to qualify for the Visa D (B29).
Short-term travel from countries that are not “White Listed”
Belgium has also included an important exception on the travel ban for short-term travellers who can demonstrate the essential character of their activities in Belgium.. In order to meet these criteria, travellers must obtain an “Attestation of Essential Travel” (template available on the website of the Immigration Office) from the relevant Diplomatic Post. To obtain the attestation, you must submit the documents that prove the essential nature of the activities, such as a work permit B, documents supporting the work authorisation exemption and statement(s) from the employer. We recommend that all travellers obtain this attestation to avoid queries by airline companies or Belgian border inspection services.
Finally it is also Important to mention that self-employed workers will no longer be subject to the travel ban if they can carry the relevant VISA D and/or “Attestation of Essential Travel.” It remains important that all travellers complete the Public Health Passenger Locator Form (PLF) 48 hours prior to arriving in Belgium. Proof that the PLF has been completed will need to be given to the airline when boarding the plane. Travellers will need to quarantine for 10 days upon arrival from a red zone and should only be tested if they present symptoms. Note that that the quarantine can only be lifted based upon the optional self-assessment or to fulfil the essential purpose of the trip and to the extent that this activity cannot be postponed to a later date.
After months of highly restricted access options to Belgium, these adjusted guidelines bring a wind of change and allow companies to reconsider the remobilisation of foreign national staff, which is crucial for business recovery and economic growth.
Opportunities for workforce planning – what companies should do:
1. Keep up to date with government measures. These measures are constantly changing and windows of opportunity for enhanced mobility can appear. It is crucial to develop broad awareness of the restrictions, as well as a deep understanding of business solutions.
2. Develop creative remobilisation strategies. As there are variances among EU countries with respect to border openings, employers can use the more “relaxed” countries, such as Belgium, as entry points into the EU.
3. Explore EU-wide permits/facilitated immigration routes. European legislation and European Court of Justice case law provides facilitated routes for non-EU nationals to work in more than one EU country. This allows companies to explore the full potential of their EU-based workforce while it remains challenging to bring employees from outside the EU.
4. Make sure you remain compliant. The work and travel patterns of your employees may adjust substantially to the current circumstances: working from home and/or client site, furlough schemes and more frequent business travel inside the EU. Employers must remain vigilant to the employment, immigration and social security legislation requirements with which they may have to comply in this new landscape.
Up until then, Belgian employers did not have a tax withholding or reporting obligation for remuneration granted by a foreign parent or affiliated company, if the Belgian employer was not involved in granting that remuneration. The only exception to this rule was the obligation to report stock options meeting the conditions of the Stock Option Law of March 26, 1999. The employee, however, was obliged to report the foreign income in his personal tax return.
The current introduction of the withholding obligation with the taxes being paid at source through payroll is part of the battle against social and tax fraud. Where in the past, Belgian employers sometimes weren’t even aware of foreign remuneration (mostly equity) being granted to their employees by a foreign affiliated company, more communication between the Belgian employer and its foreign affiliated companies will be necessary in the future.
Starting retroactively on March 1, 2019, all taxable remuneration paid by foreign parent companies and/or affiliates will need to be taxed through payroll as it becomes subject to withholding taxes. Withholding taxes are to be declared on a monthly basis and to be paid on a monthly or a quarterly basis. Given the fact that the Law has entered into force on March 1, 2019, there is no withholding obligation for the foreign remuneration granted in January and February 2019. Please note however, that the taxable benefits of these months will need to be reported in the 2019 tax forms that need to be submitted to the Belgian tax authorities before March 1, 2020.
All remuneration paid by foreign parent companies and/or affiliates to Belgian employees will need to be reported by the Belgian employer to whom the foreign company is linked. The reporting will take place via the yearly tax form 281. This form includes the taxable earnings of employees/directors. The employer is obliged to provide the form to his staff, that should use the details mentioned on the form to file their tax returns.
Belgian Social Security on Foreign Remuneration
As a general principle in the Belgian legislation, social charges are due on salary. One of the conditions that needs to be fulfilled for a benefit to be considered as salary is the fact that the benefit needs to be chargeable to the employer. This condition is laid down in the Act of 1965 on the protection of salary. Up to the 3rd quarter of 2018, the Belgian social security authorities believed that benefits were not “chargeable to the employer”, if the employee could not claim the benefit from the Belgian employer in a financial or a legal way (e.g. because the right to the benefit was contractually agreed upon). In other words: if the advantage was granted to the employee by a foreign affiliated company without any intervention of the Belgian employer, no social charges were due.
However, according to the administrative instructions of the National Social Security Office (NSSO) issued in the 3rd quarter of 2018, social security contributions are now due on all benefits that relate to the work performed by the employee in the execution of his/her employment contract with the employer or that relate to the function of the employee carried out for the employer. This principle applies even without any intervention of the (Belgian) employer in the payment/grant of the benefit.
According to most of the Belgian authors specialized in the matter, this point of view of the NSSO is too much, as it interferes with the definition and notion of salary as laid down in the Act of 1965 on the protection of salary. However, as this new point of view has been published in its recent instructions, chances are that the NSSO will enforce its point of view and that we’ll have to wait for the first court cases before any changes might be introduced.
■ Belgian employers should inform their foreign headquarters or affiliated companies of the change in the Belgian regulations even if they are currently not aware of any remuneration granted or paid to their Belgian employees by a foreign affiliated company;
■ Employers should inform Pro‐Pay or their payroll office of the foreign remuneration that will be subject to withholding taxes. In case of doubt about the taxability of certain remuneration or the timing of taxation, employers should seek the advice of a specialized tax consultant;
■ Employers need to inform Pro‐Pay or their payroll office of the remuneration paid by a foreign linked company to the Belgian employees in January and February 2019, in order to ensure correct reporting on the tax form 281.
Pro‐Pay is an independent payroll provider in Belgium offering services to Belgian companies and international companies with employees in Belgium. Find out more at: www.propay.be/en/
The most frequent questions immigration providers receive from clients are:
∞ What Brexit scenario should we prepare for?
∞ When should we start preparing?
∞ How should we prepare?
Answering these questions is difficult, but not impossible.
Preparing for a soft or a hard Brexit?
So what scenario should you prepare for? To answer this question, companies should look at what decision makers are currently doing. Both in the UK and in the EU (at EU and at national level) decision makers keep highlighting their commitment to finding a deal. However at the same time, everyone is also preparing for a no-deal scenario. For example, the French government published a draft law in November 2018 to create a no-deal legal framework. Other countries, such as Germany, Netherlands, Sweden, Italy, Czech Republic have made public their no deal preparations as of the beginning of 2019. In addition, the European Commission published three communications last year – one in July, one in November and one in December – urging all stakeholders, from national administrations to citizens and economic operators, to prepare for a hard Brexit.
This is indeed the most cautious thing to do. On the one hand, possible disturbances caused by a hard Brexit could be very costly for companies. On the other hand, all the efforts put into preparing for a hard Brexit would not be wasted if, eventually, a soft Brexit occurs. Why? Because the hard Brexit and the soft Brexit scenarios are in the end not so different from each.
Three main aspects distinguish them. The first one is the two year transition period (30th of March 2019 – 1st of January 2021) which would be implemented only if the Withdrawal Agreement is ratified and enters into force by 30th of March 2019 (soft Brexit).
The second one is the level of protection to be granted to UK/EU nationals residing in the EU/UK prior to the Brexit day (less generous in case of a hard Brexit). And the third one is the nature of the future EU-UK relationship. In a hard Brexit scenario there would be no time to negotiate. So, from an immigration perspective, we would fall back immediately on already existing immigration schemes (GATS mode IV, EU permits, national permits) as of 30th of March 2019. This does not mean however that, in the future, this could not be re-negotiated and amended. In a soft Brexit scenario, there would certainly be talks about the future arrangements during the transition period, and some more ambitious schemes could be put in place.
Nevertheless, understanding what impact Brexit will have on current employees and future employees is crucial for all businesses. And some of this analysis will be the same in both scenarios. The major consequences will be felt only two years later if there is a soft Brexit. Yet, the sooner companies start preparing, the better chances they stand to avoid all possible disruptions and negative consequences on their employees.
When should companies start preparing?
Ideally, preparations should already be on-going. Although there is still a lot of uncertainty, companies and employees can already take steps to protect their rights and prepare for the future, irrespective of what the future will look like. All concerned people must make sure they are making use of all existing tools and schemes already in place and that they are ready for when new ones will be available for them.
How should companies prepare?
The first thing to do is classify the stakeholders within the company who will be impacted. Some of the stakeholders are easy to identify: EU nationals locally hired in the UK or UK nationals locally hired in an EU country. But Brexit might also have an impact on cross border workers, business travellers, employees temporarily assigned in the UK or an EU country, and even third country nationals in some situations. Moreover, Brexit will also impact future employees. Therefore, recruiters and HR departments must be aware of how their work will be influenced by Brexit.
Once the stakeholders are identified, it is crucial to put a communication strategy in place with tailored messages to all groups of stakeholders. Employers should reassure employees to make sure they retain them. In addition, they should train recruiters and HR specialists to help them understand the implications of a soft or a hard Brexit.
The third step – not necessarily in a chronological order as some of these steps can be taken simultaneously – would be to collect data about the impacted employees. It is no longer sufficient to know who they are. Companies must also have information about their length of stay in the host country, nationality of their family members, type of employment, employment conditions, education, etc. All of this data is necessary to create preparedness strategies and contingency plans.
And lastly, get ready to implement these strategies and plans. Brexit is an ever changing landscape and is very difficult to keep up with. There are no exact deadlines, no exact timelines, no precise outcome. Companies must be flexible. They must make sure they have all the necessary resources and are ready to act at any time. With all the uncertainty around Brexit, only one thing is certain. As cliché as this may seem, companies should definitely hope for the best, but prepare for the worst.
With thanks to Andreia Ghimis, Senior Consultant EU Government and Client Advisory at Fragomen
Public holidays in 2019
|New Year’s Day||Tuesday, January 1st 2019|
|Easter Monday||Monday, April 22nd 2019|
|Labour Day||Wednesday, May 1st 2019|
|Ascension Day||Thursday, May 30th 2019|
|Whit Monday||Monday, June 10th 2019|
|Belgian National Holiday||Sunday, July 21st 2019|
|Assumption Day||Thursday, August 15th 2019|
|All Saints’ Day||Friday, November 1st 2019|
|Armistice Day||Monday, November 11th 2019|
|Christmas||Wednesday, December 25th 2019|
When a public holiday falls on a Sunday or another day which is normally a non-working day (usually a Saturday), it must be replaced by a replacement day on a normal working day. In theory, in Belgium, employees cannot be required to work on public holidays. The employer however is obliged to pay the employee a normal salary for that holiday. In the list above, the public holidays that fall on a non-working day in the course of 2019 have been marked in bold. Employees are entitled to one replacement day in 2019, for the Belgian National Holiday (Sunday, July 21st).
The law of January 4, 1974 provides for the manner in which replacement days should be determined. In theory, the Joint industrial Committee competent for each sector may decide when replacement days shall fall, but in practice we don’t see this very often. If the Joint industrial Committee has not taken its decision before October 1, 2018, each company may decide for itself when the replacement days for its employees will fall. The company may take that decision in one of the following ways:
– By the Works Council.
– If the company has no Works Council, by agreement between the union representatives and the employer.
– If the company has a Works Council nor union representatives, by agreement between all the employees and the employer.
– If no agreement can be reached for the whole company, individual agreements may be drawn up between the employer and each employee.
If replacement days cannot be decided upon using one of the solutions above, they automatically fall on the next normal working day following the public holiday (usually a Monday).
Employers must inform their employees of the replacement days for 2019 by displaying a signed and dated document on the company premises before December 15, 2018.
More interesting news can be found on the news page of Pro-Pay
The Recognised European License
Member countries of the European Union give out a European model driving license. These driving licenses are recognised throughout the European Union (EU) and European Economic Area (EEA) as well as many other locations around the world. In broad strokes, if you have a European driving license and are living in Belgium you need to exchange it before it runs out, or if you are settling here on a more permanent basis (exchange within 2 years of settling in Belgium).
Although you can drive here with your Guadeloupian license (yes, as an overseas department of France it’s part of the EU), it may be worth considering exchanging it for a Belgian one if you plan on being here for a while. At the very least you should get your license registered with your local commune, so that if you were to lose or damage it you can easily request a replacement. So far, so good. The matter gets somewhat more complex however as we venture further afield.
The Recognised non-European License
If you are the proud owner of a recognised non-European driving license then according to the conventions of Vienna and Geneva you may legally drive your car here. However, this only holds true providing you do not possess either a Belgian ID card, or an A, B, C, D, E, F, E+ or F+ card.
As soon as you are officially registered as living here you receive your Identification Number of the National Register (rijksregisternummer/numero national). Your newly acquired residential status automatically means you will need to exchange your license for a Belgian one as you are now a Belgian resident. This in theory should be a straight-forward exchange of licenses.
The non-Recognised non-European License
The same system applies with a non-recognised non-European driving license: you can legally drive here with your foreign driving license until you are awarded residential status. As soon as you have received your national number you will need to exchange your driving license for a Belgian one.
However, as your license is not recognised here, you will need to sit both theory and practical exams before it can be considered for exchange. Unfortunately, a letter from your embassy attesting to the validity of your license is of absolutely no value in this process.
The International Driving License
If you are here on a business trip visa (90 days max) then you may want to request an international driving license from your home country to cover the duration of your stay. Check with your home country whether you need an international driving license to go with your national license in Belgium. This will differ from country to country, but your embassy will be able to advise you.
The international driving license has no actual legal value in Europe. It merely serves as an additional document to go with your national license. An international driving license is valid for one year only and must be collected in person from your home municipality, which means you should have obtained it before coming over.
The Exchange Process
The process of exchange is simple in theory: you go to your local municipality with your current driving license and your Belgian ID card and request an exchange. Your license is sent off for a check and then exchanged for a Belgian one.
It is important that your license meets the following requirements: you have the same nationality as your license – or you can prove you were residing in that country for at least 185 days in the year you received it – you received it before moving here, it is valid, and the categories awarded are recognised here.
If your license is not in one of the recognised national languages, you may need to have it translated by a sworn translator before it can be considered, especially if it is not in our Latin alphabet. If your country does not follow the Gregorian calendar (as we do in Europe) then the valid from/to dates will also need translating. Some embassies provide standard translations of national driving licenses, so it is worth checking with your embassy.
Your license is then sent off to the FOD Mobiliteit en Vervoer who will verify that your driving license is not counterfeit. Providing your license is real and you do not need to sit any additional tests it will be exchanged for a Belgian one. This usually takes between six and eight weeks. The commune essentially acts as a letterbox, so how quickly they send it on to the Ministry can also depend on their own backlog.
If you have to sit both theory and practical tests, then you will need to pass these before your license can be exchanged for a Belgian one. Larger cities such as Brussels and Antwerp offer driving tests in a number of different languages, or you can bring a sworn translator along at your own expense.
Again, much depends on how long it takes for you to book (and sit) your exams and receive your test results. Bring your results along with your national license (and any translations) to your local commune and ask for the exchange process to be initiated. You should have your new license within 6 – 8 weeks.
Good to know: a national foreign license (whether recognised or non-recognised) always exempts you from driving lessons, providing you are requesting a license with the same categories (AM, A, B, C, D, G) given out in Belgium. You may however still need to take theory and practical tests, depending on the license you hold.
You can start taking theory lessons online even before you arrive in Belgium and can book your exams the day you receive your national number. Sending off proof of passing with your current license gets things moving as quickly as possible.
We have to remind expats that driving without a license is illegal in Belgium and leaves you open to fines if you are stopped by the police, and worse: potentially uninsured should something happen. Although some communes provide a document stating your license has been sent off for exchange, we are told this has no legal value at present.
You can request your national license back when you leave Belgian territory and give up your residential status. Should you come back again in future years, you will have to start the exchange process again. Until you have physically received your Belgian license you can still change your mind and request your national license back.
List of recognised EU and EEA driving licenses:
List of recognised non-EU and EEA driving licenses:
FOD directive on exchanging European driving licenses:
FOD directive on exchanging foreign driving licenses:
Exams with an interpreter:
When an expat moves to Belgium they are legally required to exchange their national driving license for a Belgian one. Although the FOD Mobiliteit en Vervoer provides us with a list of countries that award recognised non-European driving licenses (countries not listed are not recognised), and although each and every local commune has received exactly the same directive when it comes to handling foreign licenses, many members report long delays, lengthy processes and conflicting instructions.
One thing is clear: you can drive here with your foreign license as long as you are not registered as a Belgian resident. As soon as you are registered, you need to exchange your license for a Belgian (European model) driving license. It’s this registration process where some of the perceived delay comes from: whereas you can get registered within 2 weeks in a smaller commune such as Waterloo, it can take up to 5 months in a busy commune such as Brussels city centre. Going back to the commune to initiate your driving license exchange after you’ve already been living and working here for five months can feel like red tape for the sake of it.
It is also clear that legally you may not drive without a valid driving license. If your current license has been sent off for exchange, you cannot drive until you have received your Belgian one. Quite simply because under Belgian law you cannot be insured without a valid driving license. The question is at which point your foreign license becomes invalid: is this as soon as it is sent off or only once you’ve received your new one?
“Getting stopped by the police for a routine control and being fined is a risk that some people are willing to take,” Eric explains. “However, it’s not the fine that’s the problem, the problem is if an accident happens. We know of companies that ask their employees to return their car keys to HR on the day they receive their Belgian ID cards. The car stays in lock-up until they have received their Belgian license, it’s a strict policy. A few years ago an expat had an accident while his license had been sent off for exchange and the lease company refused to cover the accident. Thankfully it was mostly material damage to the car, but imagine if you seriously injured someone. You’d be paying both financially and emotionally for the rest of your life.”
“Some communes provide the expat with a document they can show the police in case they are stopped,” adds Koen. “Unfortunately, we’re not sure what the legal validity of this is, even if it is provided by the commune itself. Whether or not this document will get you out of a fine may depend on the policeman who stops you, but you have to take into account your insurer as well. Will they cover you if you drive with a document that certifies your license is being processed? Many brokers will, but you never know for certain until something happens. And finally, the Ministry tells us that such a document holds no legal value. It’s a very murky situation with a lot of grey areas. The expat thinks they are covered and upholding the law, but in actual fact they may not be.”
With the exchange of a foreign driving license taking around six to eight weeks on average it is easy to see why expats, employers and relocators alike would like to see this process speeded up. ABRA’s relocation committee has been exploring the options.
“There are a number of different avenues we have been exploring,” Eric tells us. “The very best outcome would be a faster process altogether. But we understand there are just two people at the Ministry to cover all the driving license exchanges, which means there is an immense backlog. More funds to process foreign arrivals isn’t exactly a popular request.”
“As an interim measure we would like the Ministry to ratify a standard document nationwide that covers expats during the exchange process,” Koen continues. “This of course is a big challenge and one we can use help with. Finally, this document needs to be accepted by insurance and car lease companies, although insurance coverage is for a large part the employer’s responsibility. But it would be good to be able to advise clients which insurance companies will accept such a ‘covering’ document.”
“We have a few client companies who have already expressed an interest in supporting our efforts for this interim document and a faster exchange process. ABRA members – and ReLocate readers – can be of great help here: the more companies that get behind our cause, the stronger our voice will be as we lobby the government. So please ask your clients if they would be willing to attest to the impact of the exchange process on their business. Companies make a serious investment every time they bring over an expat and for them to then have to turn around and say ‘sorry boss, I can’t drive until January’ is problematic to say the least.”
If you would like to get behind our cause and help us lobby for a faster driving license exchange process as well as an official interim document for drivers, then please contact Eric Klitsch or Koen Reekmans via: firstname.lastname@example.org
What kind of preparations are recommended before relocating to Belgium in regards to immigration and visas?
“It is key to find out if you need a Belgian visa or permit to visit, live, work or study in Belgium. The Belgian legislation applicable to the employment of foreigners makes a distinction in the rules applicable to the right to enter and stay and the rules applicable to the right to work. EU/EEA and Swiss citizens can work without a work permit in Belgium. Third-country nationals, however, will typically need a work permit to engage in economic activities.”
What is the Blue Card System? Why is it necessary to differentiate between highly-skilled / highly-paid workers and everyone else?
“In 2000 the European Council met in Lisbon to define the strategic plan that could help the Union’s competitive position in the global market in terms of employment, economic reform and social cohesion as part of a knowledge-based economy. In that meeting the Union set the strategy to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.
In order to establish this goal the EU established measures to attract highly skilled employees from outside of the EU, one of those being the European Blue Card. Why exactly was it deemed so important to put the focus on this? At the time the Council concluded that the growth of the EU would be at stake because of the lack of highly qualified and skilled human capital. Therefore, special schemes and measures had to be put in place to increase Europe’s attractiveness towards highly-educated and talented foreigners to help build this competitive knowledge-based economy.”
There are three types of work permit:
Type-A work permits allow you to work for any employer indefinitely;
Type-B work permits allow you to work for a specific employer for up to a year (renewable);
Type-C work permits allow those staying in Belgium only temporarily – such as students – to work for any employer for up to a year (also renewable).
There has recently been some reform to the “Blue Card System”, have the changes benefited workers or have they made the process more difficult and restrictive?
The EU Blue Card scheme has been in operation since 2009. The scheme was proven unsuccessful for a number of reasons, including more attractive national parallel schemes, limited associated rights and its limited ability to attract young talent. The European Commission adopted a proposal to review the EU Blue Card scheme to address those weaknesses and to improve the EU’s ability to attract and retain highly skilled workers in 2016. It foresees more flexible admission criteria, extended labour market access and intra-EU mobility rights for EU Blue Card holders and facilitated access to EU long-term residency. The Commission’s proposal is currently discussed between the European Parliament, the European Commission and the Council and will hopefully be adopted in the course of 2018.
What are the most common queries that your team deals with in regards to visa processes in Belgium?
- Can my spouse work? Not automatically. “The spouse of a foreign worker does not have an immediate right to work on the basis of the dependent residence permit. They still require a work permit B sponsored by an employer. The good news on the other hand is that the status of dependent spouse offers access to a work permit B category with more relaxed eligibility criteria.”
- Can we expedite the procedure? “Unfortunately it is not possible to opt for an expedited procedure in Belgium. The relevant authorities usually handle applications on a first come first serve basis and strive to deliver in a consistent manner against stable processing times (2-4 weeks for work permit applications and 5-15 working days for visa applications).”
- Does the embassy keep my passport? “Some of our clients who have a very busy travel schedule are terrified of having to surrender their passport at the Embassy while applying for their visa. Luckily we often have good news as most embassies quite cooperative towards the requests from applicants to to give the passport back if they can substantiate the urgent need for this (eg. Business travel).”
- Does the EU Blue Card offer me the right to work in the entire EU? “Unfortunately this is not yet the case. The EU Blue Card only grants work rights in the member state that has issued the EU Blue Card. I have to explain to our clients that they still require work authorisation if they would go to work in any of the other member states.”
- Can my (non-married) partner come with me? Again, not necessarily. “This often creates a “reality shock” for non-married couples as they are forced to make a choice to apply for family reunification by either marrying (abroad or in Belgium) or concluding legal cohabitation upon arrival in Belgium (subject to various eligibility requirements).”
- My work visa is about to expire, should I renew my visa even when I’m already in Belgium and have a residence permit? “The work visa is “transferred” into the residence permit upon completing the town hall registration procedure. The legal status of the foreigner in Belgium is not defined by the visa as soon as they have the valid residence permit. Their status is 100% compliant and covered when they have a valid work and residence permit.”
What is the process from work permit (A, B or C,) to residency (D) to citizenship?
- To apply for unlimited residency you have resided legally in Belgium for an uninterrupted period of five years.
- If you hold a Blue Card from another EU-member state, and have lived elsewhere in the EU, this can count towards your five-year period.
- Acquiring citizenship requires the applicant to have a permanent residency status.
- Once permanent residency is acquired it then follows a ‘Nationality Declaration’ track.
- Nationality Declaration:
– Legal residence of between five and 10 years in Belgium;
– Be able to prove that you speak one of the three main languages;
– You are socially and economically integrated.
Want to acquire citizenship through marriage to a Belgian national?
- You must have been living together for three years;
- Still fulfil the five-year residence requirement;
- Also have knowledge of one of the three main languages.
Are entrepreneurs able to apply for a Professional Card without holding any other visa for residency in Belgium? Are the visa and immigration rules different for entrepreneurs?
“As a rule, a foreign national exercising a self-employed activity in Belgium needs to be in possession of a Professional Card. Some foreign nationals are exempt from this requirement, such as foreign nationals who come to Belgium on a business trip, provided that the trip does not exceed three consecutive months. Whether the entrepreneur needs a visa and/or Belgian residence permit will depend on their nationality and duration of stay in Belgium. The general rules apply which are similar for foreign employees and self-employed.”
What is the EU Intra-Corporate Transfers directive and when do you think it will be transposed into Belgian legislation?
“The EU ICT directive harmonises the conditions of entry and residence for third-country nationals amongst the EU Member States (excluding UK, Ireland and Denmark) in the framework of an intra-corporate transfer (ICT). An ICT is the temporary secondment of a third-country national who resides outside the EU, from a company established outside the EU to which the employee is bound by an employment contract to a group company located in a Member State. This directive introduces for the first time a European ICT work permit that enables the third-country national to work under certain conditions in EU Member States other than the one that issued the EU ICT permit.
Given the intra-EU mobility rights associated with this new EU ICT permit, it is crucial that Belgium implements the European Directive as soon as possible. Not doing so places Belgium at a significant competitive disadvantage not only in attracting this type of skilled worker but investment as a whole. It creates an obstacle for economic growth and strategic planning for multinational companies that have their regional headquarters in Belgium and have positions with pan-European duties or have to develop skills in a multicultural international environment. The transposition of the Single Permit and the EU ICT permit is anticipated for the second half of 2018.”
The European Travel Information and Authorisation System (ETIAS) was adopted by the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs on 19 October 2017. What does this mean for travellers?
ETIAS is an electronic monitoring system and will be compulsory for third country nationals who do not need visas to travel the Schengen Area. It will be the equivalent of ESTA (similar system in the US) and it will aim to ensure that people travelling to the EU do not threaten the security of the Schengen countries and to impede irregular migration.
Legislation setting ETIAS up is being discussed internally in the European Parliament and the Council of the EU. Once both institutions agree upon their respective position, discussions in trialogues between the European Parliament, Council and European Commission will begin.
The European Union has postponed the launch of the European Travel Information and Authorization System (ETIAS) for another six months to November 2023.
With thanks to Jo Antoons, Alexander De Nys, Christine Sullivan, Andreia Ghimis and Rimma Abadjan of Fragomen.
Each region of Belgium has different rules about renting rooms under P2P arrangements, for example in Flanders, even private accommodation providers have to have an authorisation, which may only be granted after inspection, and the property has to meet much the same requirements as for domestic rentals e.g. smoke detectors. The Cabinet of the Premier of Brussels, responsible for Tourism, Rudi Vervoort, enforced on the spot checks in the Brussels region late last year to ensure that standards were being met. Further to this, Brussels region hosts are now also required to register with the Brussels Economy and Employment service. In Flanders business operators will be required to register online with the General Tourism Commission, CGT.
What knock-on effect do these new “tourist accommodation” regulations have for the short-stay market in Brussels? We spoke to Joël Vanmellaert, Managing Director of BBF Serviced Apartments to hear what impact these rules have on the industry and how it may affect the consumer.
First of all, the registration procedure is incredibly complicated. AirBnB have already complained that the regulations are too complex. At the beginning of the year an estimated 2,000 of the 7,000 people offering accommodation had registered their status with their municipality. The impact of this is that the supply will likely dwindle. When supply decreases, the only outcome is an increase in price of accommodation – not good for the consumer.
Secondly, when the “landlord” or owner is being asked to pay tax on their earnings, the one who suffers is of course the end-user, who sees an increase in price, despite the fact that a private let rarely offers the same level of quality that professionally managed accommodation does. And although the newly minted ‘summer agreement’ states that working persons can now earn up to €500 per month untaxed, someone with a nice room on offer can quickly surpass that amount, which means they will have to pay these taxes anyway.
Thirdly, and not at regional level but at local municipal level: there are also municipal taxes to be paid on furnished rentals. Any landlord renting out their property as furnished must register this with the municipality and pay tax accordingly. For example, in Sint Gilles the tax on a furnished accommodation is set at €200 per year. Of course, this is ultimately paid for by the tenant.
The regulations enforced that the beginning of the year will come under review after the initial implementation period, however how will the industry deal with the changes in the meantime? Will this see a welcome resurgence in hotel stays as opposed to internet P2P bookings? Only time will tell.
ReLocate does away with all the drama and takes a “stiff upper lip” look at Brexit. We’ve consulted leading immigration law firms Fieldfisher and Fragomen, who in preparing their own clients for change during and after Brexit negotiations, have shared a few practical steps with us to keep us on the straight and narrow.
Overview of Outcomes
Yes, uncertainty is set to reign until negotiations commence in early 2017. Considering that the European Treaty established a negotiation period of at least two years in case of an exit, it is unlikely that there will be any immediate changes in the near future.
These negotiations could have a wide range of outcomes:
• The Norwegian, Icelandic and Lichtenstein model: the UK would remain subject to the majority of EU legislation, however there would be no role played in the decision-making process and no right to veto, including no independence from EU legislation nor the European Court of Justice;
• the Swiss model: ability to develop mutual agreements with the EU;
• the Turkish model: remaining part of the Customs Union;
• the “sui generis” model*: a completely new approach to UK / EU relations;
• total withdrawal from the EU*: if this is to occur, there would be swift changes to UK legislation.
From an International Business Perspective – Fieldfisher
Companies are best advised to anticipate change and ensure they are in a position to identify possible issues that need to be addressed as they arise. In doing so they can reassure staff on all levels. So what could possibly change? Establishing which regulations may be the most heavily impacted can be difficult, Fieldfisher has broken down the main points to be addressed into three main areas to be assessed within internationally operating companies: social security/welfare, employment law and of course, immigration. Fieldfisher has highlighted the existing regulations that may be affected, and what the knock-on effects of these changes may be.
1. SOCIAL SECURITY / WELFARE
883/2004 and 987/2009: regulates the social security scheme applicable to internationally mobile workers
These regulations are likely to be repealed once the UK leaves the EU, and the mutual treaties previously established between countries will once again be activated.
• The original mutual treaties limit the determination of the social security/welfare scheme to be applied and benefits covered therein;
• they do not provide for any regulation on simultaneous employment (two or more social security/welfare schemes operating at the same time);
• they do not systematically provide for regulations on accumulation of social security/welfare benefits/entitlements;
• they do not systematically provide guaranteed rights in respect of health/sickness costs.
2. EMPLOYMENT LAW
593/2008: determines the law applicable to employment contracts in a cross-border situation
Employment contracts between EU and UK will no longer be viewed in the frame of the “free movement of workers” principle.
UK legislation will have to be rigorously applied in cases of EU staff employed in the UK being brought before a UK court with an extraneous element, and vice-versa. When UK employers employ staff on EU territory, they will have to rigorously apply the legislation of that EU state.
3. IMMIGRATION – from a business perspective
This is still a hot topic of speculation. The UK Government could implement a points system not unlike that of Australia, although there have been indications that this is not preferred by the May administration. The UK borders are unlikely to close completely, however the UK Government is expected to implement some forms of restriction before the “divorce date” to limit a massive influx of people.
The knock-on effects of changes to immigration between UK and the EU are wholly dependent on the outcome of the negotiations. If the right to free movement ceases to apply or is restricted, those businesses built on sourcing international talent will then have to look to the new immigration and employment rulings for guidance regarding any future employment. Attempts to limit net immigration to tens of thousands will then result in severe restrictions to the pool of potential employees in the UK.
Fieldfisher’s advice on handling these potential changes within businesses:
• “Nominate a person or team of people who are responsible for monitoring employment issues. Ensure all staff have a contact person to whom they can address questions or express concerns in all the countries in which the organisation operates. This will ensure that all staff, wherever located get the same consistent message which in turn will give reassurance that the organisation knows what it is doing and what needs to be done as we approach Brexit.”
• “Staff may feel unsettled and anxious about how restriction to free movement may affect their right to live and work in the UK or other EU member states. Given the fact some EU legislation will be repealed, international mobility policies may need to be assessed and adapted, and ensure specialist advice is utilised.”
• “Encourage workers to list their entitlements to pension and other social welfare benefits when starting to work outside the UK.”
“The criteria for nationality applications are not always more demanding than those for long-term or permanent residency, and nationality is the more secure option to guarantee residence rights in the long term.” – Jo Antoons, Fragomen
From an Individual’s Perspective – Fragomen
Companies and individuals are naturally concerned about what Brexit will mean for EU nationals living in the UK and for UK nationals who are residing in another EU country. While UK politicians figure out what approach they will propose for those affected, individuals are wondering what actions they can take now. Fragomen suggest three key points of consideration for UK citizens currently living, working or studying in an EU member state who wish to take measures to safeguard their mobility rights.
1. REGISTER YOUR RESIDENCE IN THE HOST COUNTRY
According to Fragomen the first action step is to register your residence if this was not already done. UK citizens without a residence document who have been residing for more than three months in an EU member state should be encouraged to contact the national authorities and obtain one. Not all EU countries impose registration regulations on EU nationals, and in this case obtaining an official residence document before a divorce date is the safest way to avoid grey areas and maintain your right to reside in the EU even after a formal separation.
2. APPLY FOR PERMANENT RESIDENCE
Permanent residence rights and regulations vary from EU state to EU state. Some require five years of legal residence, some (including Belgium) request only three years when specific conditions are met. Fragomen suggest this action step with two reasons in mind:
• This confirms that you fulfill the requirements for the right to permanent residence, useful in cases of long absences from the EU member state where you currently reside;
• this maintains as many other rights as possible after Brexit. British EU permanent residence holders may have their status automatically transformed to that of non-EU nationals, whereby they are granted long-term residence for the whole of the EU or just the country where they currently reside.
EU or national long-term residence does not boast the same breadth of rights as EU permanent residence, however it does guarantee the right to continue residing in the host member state.
3. APPLY FOR NATIONALITY – but only if it is the right option for you
Obtaining the nationality of the EU country where you have been residing may appear to be the obvious option, however, before taking on an additional nationality, ensure that you’ve considered what is involved in the application process:
• Is dual citizenship allowed in your host country?
• What knock-on effects may a change in nationality have on your taxation status?
• Would this lead to a loss of rights? For example, some EU states grant less generous family reunification rights to citizens as opposed to those granted by EU free movement legislation.
That said, criteria for nationality applications are not always more demanding than those for long-term or permanent residency, and nationality is the more secure option to guarantee residence rights in the long term. Nationality can only be revoked in exceptional circumstances, while residency can be lost after two consecutive years of absence from the host country.
It is essential for businesses to maintain their own sense of structure and identity in this time of uncertainty. When approaching Brexit from an individual’s perspective, each unique personal situation must also be taken into consideration before making a decision. If we are able to maintain a sense of order, promote clarity and adaptability within organisations and keep open channels of communication we will ensure the best outcomes are achieved and business operations and lives carry on as calmly as possible.
With thanks to Stefan Nerinckx of Fieldfisher and Jo Antoons of Fragomen.
You can download their whitepapers by following these links:
Highly skilled personnel – From 1 January 2016, a foreign worker must earn at least 39,824 Euro gross per year in order to qualify for an employment authorisation and work permit type B as a highly skilled worker. In addition, he or she must also hold a higher education or university degree (or the equivalent).
Management personnel – The salary required for an employment authorisation and work permit type B as a manager will be at least 66,442 (or 66,441 in the Brussels region) Euro gross per year from 1 January 2016. Obviously the person in question must also actually hold a managerial position within the company.
Blue card – For the award of a European “Blue card” (i.e. a residence title which (under certain conditions) grants its beneficiary a right to a stay of longer than 3 months, while at the same time granting him the right to work) a minimum gross annual salary of 51,494 Euro is required as from 1 January 2016.
Exemption for executives working at headquarters – For foreign nationals employed at headquarters as executives or managerial personnel to benefit from the work permit exemption, from 1 January 2016 they must earn at least 66,441 Euro gross per year.
Wage elements taken into account – For the calculation of this minimum amount, all sums (gross salary, bonuses, year-end bonuses, double and single holiday allowances, etc.) and benefits in kind such as housing, car, etc. which count as remuneration for work will be taken into account, provided they are expressly included in the employment contract, with the amount specified.
Wage elements not taken into account – The allowances often granted to foreign workers to cover the additional costs that their employment abroad may involve are therefore not eligible (so-called ‘cost of living allowances’, removal costs, children’s school fees, etc.).
On 16 November 2015, a political decision was reached on implementation of the Single Permit Directive, 2011/98/EU.
It provides for:
• A single permit for residence and work for non-EU nationals;
• A single application procedure;
• Equal rights for non-EU nationals.
The directive now needs to be implemented in national law. Since it’s a regionalised matter, each region will transpose it following the agreement reached on the issue.
The political agreement embraces the following characteristics:
• The Single Permit will in principle replace the work permit procedures A, B and C – except for 12 categories of workers excluded from the scope of the directive (e.g., seasonal workers, ICT);
• The 16 November 2015 proposal must be implemented by law; this legislation will be regionalised;
• Employers must apply but the application is signed by both the employer (registered office) and the employee;
• When the regional authorities receive the application they will send a copy to the Dienst Vreemdelingenzaken/Service des Etrangers (which has 60 days to do a security check), as well as process the case;
• The application – once admissible – must be processed and completed within four months; current work permit applications take (only) a few weeks, though the proposal states that an emergency procedure can be applied for – further details will have to be worked out but it seems that it will only be available in very specific cases.
The single permit directive is deemed to be implemented in summer/fall 2016. Whether all regions will do at the same time is not clear yet. To be continued…