Working in Belgium: issues for UK employers to consider

Employment rights

Permanent workers based in Belgium will be normally entitled to the benefit of Belgian employment law, regardless of whether they have an English law contract or a contract that is expressly subject to Belgian law. The fact that they are working remotely for a UK employer will not be relevant. 

Where workers are required to travel to the UK frequently to perform their duties, the law applicable will be determined according to several criteria, namely (i) the choice of country law made by the parties, (ii) the country where the worker habitually carries out his/her work, (iii) the place of business through which the worker was engaged and (iv) the fact that the employment contract is more closely connected with a country.

Many of the protections conferred by Belgian law will be familiar to UK employers, since they derive from EU law – for example the laws on discrimination and working time.  However the elements of employment protection that derive solely from Belgian local law are different, and in some important respects more generous to a worker than the corresponding rights under UK law.

All employers – including UK employers - are required to electronically inform the Belgian National Social Security Office (NSSO) of any workers (temporarily or permanently) employed in Belgium. Furthermore, they must register with a certain number of agencies, e.g. Belgium’s NSSO, a payroll office, an insurance company to take out industrial accident insurance, an external service provider for health and safety in the workplace (as the case may be), etc.

Assuming Belgian law applies to the working relationship, it is unlikely that the worker would be able to bring proceedings in an employment tribunal as well as the Belgian employment courts in the event of a dispute.  However there may be some circumstances where such a claim may be possible – for example if the remote worker is a UK national, or there are additional factors connecting the employment to Britain, other than the mere fact of the employer being based in the UK.

Tax and social security

If the worker engaged is resident in Belgium and exercises activities in Belgium, they will be subject to Belgian personal income tax (progressive income tax rates up to 50%, increased by local surcharges of on average 7%) and employer and employee social security contributions (currently around 27% and 13,07% respectively) on their earnings, even though these are derived from a UK employer.

In the event the worker performs their activities in both the UK and Belgium, the remuneration relating to their employment activities exercised in Belgium will be taxable in Belgium in accordance with the applicable provisions in the UK/Belgium double taxation treaty. The UK employer is therefore advised to appoint a payroll agent in Belgium to facilitate the appropriate deductions from the worker’s salary and fulfil certain formalities in this respect (such as submitting specific tax forms).

Assuming the worker is not conducting any ‘business’ on behalf of the employer in Belgium, and is simply working for the UK employer from home, the engagement of a sole remote worker would typically not result for the UK employer in having a permanent establishment in Belgium under the UK/Belgian double taxation treaty. The potential presence of such permanence establishment would for the UK employer trigger tax filing obligations as well as an obligation to pay Belgian non-resident income tax on the income it derives from its operations in Belgium.

The engagement of a sole worker in Belgium could, however, result in the presence of a so-called Belgian fixed-base under Belgian domestic law triggering tax filing obligations for the UK employer (even in the absence of a permanent establishment). This should therefore be closely monitored. Additionally, potential liabilities in relation to Belgian VAT should then also be checked.

Upon a move from the UK to Belgium, the worker could, at least for the first tax year, be liable for tax in both the UK and Belgium.  Any adverse impact for the worker could however be alleviated through the UK/Belgium double taxation treaty although one should apply in advance for treaty entitlement to avoid paying double tax up front.  The same may apply to social security contributions, though there are some exceptions for temporary employment arrangements (known as the “detached worker” provisions) under the UK/EU Trade and Cooperation Agreement, which would avoid the need for social security contributions to be paid in both the UK and Belgium.

Company law considerations

The arrangement envisaged above (i.e. the appointment of a single home-based worker) is not likely to result in a requirement for the UK employer to register with the Belgian authorities as an overseas corporate entity.

A UK employer does not need to work through a local entity in order to hire workers in Belgium. However, from the moment a UK employer hires a worker in Belgium, there are a number of registrations and formalities to be fulfilled by the UK entity (see above).

Immigration

Workers with EU citizenship have a right to freedom of movement and therefore do not need to obtain a visa or work permit.

Since 1 January 2021, UK nationals will in principle need to obtain a work permit or "single permit", which should be applied for by the employer. However, UK nationals who have exercised their freedom of movement rights before 31 December 2020 can continue to live and work in Belgium if they exchange their residence documents at the Belgian municipality in which they live by 31 December 2021 at the latest.

The UK/EU Trade and Cooperation Agreement does not contain any provisions to facilitate new remote working arrangements of the kind envisaged by UK nationals.

Further information

This document is a very brief summary of complex legal provisions.  Specific advice should always be sought, based on your organisation’s precise situation.

For advice on Belgian law please contact Paul Geerebaert, Employment partner and/or Lievin De Wulf, Tax partner at Liedekerke Wolters Waelbroeck Kirkpatrick.