Employees or VAT number in Belgium? Duty to declare because of Belgian establishment?!
Do you have a company number in Belgium as a foreign company? This unique number can be assigned for several reasons. Do you own a Belgian property, carry out VAT activities in Belgium, employ personnel in Belgium...? If so, you have already received a questionnaire in the past, or if not, you can anticipate a questionnaire from the Belgian tax administration soon.
Specifically, the administration automatically assumes you have a "Belgian establishment" unless you provide evidence to the contrary. The existence of a Belgian establishment calls for the filing of an annual tax return for non-resident companies.
A "permanent establishment" under the double taxation agreement
To begin with, it is important to analyse whether your company has a "permanent establishment" in Belgium based on the definition in the double taxation agreement in effect. Do you have an office in Belgium, does the duration of the construction site exceed the threshold included in the double taxation agreement, are there representatives working in Belgium...? A thorough analysis is crucial.
Where there is a permanent establishment under the agreement, the profits related to the Belgian activities are taxable in Belgium. Additionally, the presence of a permanent establishment may also affect the taxation of your employees' wages.
A "Belgian establishment" under Belgian domestic law
Does your company not have a permanent establishment under the double taxation agreement? If this is the case, Belgium is not authorised to tax profits related to Belgian activities.
However,…
Since you have an active company number, you will still appear on the tax radar in Belgium and, based on our internal legislation, we need to determine whether there is a "Belgian establishment". Note that the definition in our domestic law is broader than that in our double taxation agreements. If you meet the internal definition, you are still required to file a tax return regarding taxation of non-resident companies. Indeed, only a zero-tax return, because Belgium has no right under the double taxation agreement to tax the profits.
The Belgian administration carries out targeted checks on this by sending out questionnaires. When a new registration is made in the business register, such a questionnaire automatically follows. As a foreign company with activities in Belgium, you would therefore do well to evaluate the existence of a Belgian permanent establishment.
Erroneous assumption by the Belgian tax authorities?
If you do not have a so-called "Belgian establishment", you must prove this within 30 days of receiving the letter by completing the questionnaire and providing the requested supporting documents.
Did you receive such a questionnaire? Do you wish to evaluate whether your company has a permanent establishment? Do you have any questions about this? If so, be sure to contact one of our specialists.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.
