Belgium’s prime location in Western Europe, open economy, skilled and multilingual workforce, and established infrastructure make it an attractive option for companies looking to expand.
Compliancemarts 19, 2020|Opdateretjuli 14, 2020
Doing business in Belgium: Advantages and risks
The country’s diverse economy includes transportation services, manufacturing, high-tech and exports, which make up over 80% of the country’s gross domestic product. The Belgian government is supportive of free-market competition, and it embraces global trade and outside investment.
However, understanding Belgium’s local laws, rules and regulations can be challenging. Working with local contacts who are well-versed in these areas is essential when navigating business expansion.
Check out our country guide to learn more about this popular region’s business environment, entity types, taxes, incorporation requirements and more.
Advantages and benefits of doing business in Belgium
Strategic location
As a member of the European Union, Belgium provides access to over 500 million EU consumers.
Trading across Belgian borders is fast. It takes only one hour to complete the compliance requirements for export. This is one of the reasons why Belgium is ranked number one out of 190 economies in the category of trading across borders by the World Bank’s Doing Business report.
Belgium’s market is composed of the French-speaking Wallonia region to the south, the Dutch-speaking Flanders region to the north and a small area of German speakers. This diversity makes Belgium an ideal place for companies to test products before expanding distribution throughout Europe.
Diversified economy
Belgium is committed to strengthening and expanding free trade agreements to ease access to the international market and further the country’s economic growth.
Belgium is the 12th largest exporter and the 14th largest importer of goods worldwide. The service industry makes up nearly 75% of the GDP and employs 73 percent of the workforce. And the region is a hot spot for a growing biotech industry, with a large focus on research, startups and medical trials.
Strong infrastructure
Belgium is known for its highly developed transportation networks, including seaports, inland ports, airports, railways and more. This infrastructure has helped the economy thrive. Belgium’s international rail and air systems are regarded as some of the most attractive worldwide in terms of industry and logistics.
Belgian’s shared borders with France, Germany, Luxembourg and the Netherlands promote ease of trading within the European Union.
Brussels, a global city
Commonly referred to as “the capital of Europe”, Brussels is a hub for European and international governance. NATO and the EU are among the prominent institutions headquartered there.
Beyond politics and administration, Brussels is also an active center for international business. It is second only to Singapore as the preferred destination for international association meetings.
Check out our country guide to learn more about this popular region’s business environment, entity types, taxes, incorporation requirements and more.
Disadvantages and risks of doing business in Belgium
Brexit and Belgium
Belgium has strong ties to the United Kingdom, putting it at high risk from Brexit fallout. The UK is Belgium’s fourth-largest trading partner.
Estimates suggest that Brexit could result in significant job losses in Belgium, which could further compound an already high unemployment rate.
Intellectual property
Belgium has intellectual property rights that are territorial, meaning that businesses are only granted protection in the specific regions in which they are registered. Additionally, there isn’t a single European patent; companies must instead get a “bundle” of patents in each region in which they do business.
High salaries
Belgium consistently ranks high for salary spending when compared to other regions in the European Union. The country’s social security contributions and income tax rates are among the highest in the European Union. Only France has higher social security contributions.
However, the country offsets this expense with a lower income tax.
Paying taxes
Taxation is skewed toward labor income, which can negatively impact growth and employment in Belgium, according to the OECD Economic Survey. The country’s total tax and contribution rate is 55.4 percent. This is high compared to the average 39.9 percent of OECD high-income jurisdictions. Of the 55.4 percent tax rate, about 44 percent is dedicated to labor tax and contributions.
Additionally, companies doing business in Belgium are required to make 11 tax payments annually.
Expanding in Belgium with greater success
Operating in a new country (even one as business-friendly as Belgium) is often a daunting task. Without a firm grasp on the evolving nature of local laws, regulations and business practices, expanding businesses can face the possibility of delayed entry, rising costs, tax penalties—or even civil or criminal litigation.
With our experience and global footprint, CT Corporation delivers the products and services you need to keep you compliant as you do business in Belgium.
Frequently asked questions for doing business in Belgium
Why should I consider doing business in Belgium?
Belgium’s geography and French-, Dutch- and German-speaking populations make it an attractive location to test new products in the European market. The country is also the 12th largest exporter and the 14th largest importer of goods worldwide. A strong infrastructure and robust shipping systems make it an attractive place to do business due to industry and logistics.
What challenges should I consider when expanding to Belgium?
Belgium is at high risk due to Brexit because of its strong links to the United Kingdom. The UK is Belgium’s fourth-largest trading partner and is responsible for 8% of the country’s exports and 5% of its imports.
Additionally, the country has territorial intellectual property rights that require businesses to undertake additional processes to get protections in individualized territories. High tax rates are skewed toward labor income and may adversely affect growth and employment.
What are the entity types available?
There are several entity types to choose from, including public limited company, private limited company and Belgian Branch Office.
How long does it take to complete the incorporation process?
It takes one week, provided that all documents and required translations are completed.