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Tax residency and the 183 days rule

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freegeek

New member
I'm a Belgian citizen with a Belgian company for 10+ years in consultancy. I have no real ties in Belgium (children, spouse, ...) so I'm looking to move to another EU country and take advantage of better taxes. I have done already a lot of research and I understand it's fundamental to prove that you actual move and as I understand one of the primary indicators is the 183 days rule. That's no problem for me because I would actually move and spend 183+ days in my new country. A lot of my customers would still be in Belgium and I have to fly in regularly to meet with my customers, is that an issue? You read so many conflicting information about this.
 

challenge

Trusted
I don't know Belgian laws or its authorities stance on the matter, so i'll abstain from any legal advice on this specific case.
What I can say is that for many EU countries the 183 days rule is just one indicator and not even that important nowadays, I mean it's not enough especially if you will keep doing business mainly in that country, with the same people as before.
e.g. I know EU citizens that were attacked by their former tax agency after years, even though they didn't live there anymore, just because maybe they had an house, or bills on their name, or bank accounts, or their primary market share was still the old country and they flew there regularly (the actual motivation is that some EU countries are some of the worst greedy parasites...)

The relocating step with an active business is tricky, particularly in case of high revenues, as many EU countries nowadays also have "exit taxes" laws in place for companies that move away, even inside EU.
Having the majority of customers in the country you're fleeing from... yes that would still be a big thing they can use against you if they need, as it's pretty obvious you're doing it only for tax savings.
Flying regularly to belgium also it's not good. You have first to make sure to cut you ties cleanly.
There are a bunch of concepts, like Permanent Establishment and ultimately the Double Taxation Treaties (DTTs) between belgium and your new country, that could influence your outcome.
By DIYing you may be fine for a while, but you may also end up with a letter from the belgian tax authorities a year or two later.

Since you don't seem determined to give Belgium the middle finger completely, I suggest to consult an international tax expert that knows your particular company, the belgian law and your personal situation. A decent one that does this for a living every day, not your regular local accountant.
Maybe you could lower your taxes without relocating.

Where you would like to move? Would you like to live in UAE for example or Malta, or would prefer mainland europe?
Revenue?
How many taxes in % of profits are you paying now? (how much of that social/pension contributions)?
 

freegeek

New member
I don't know Belgian laws or its authorities stance on the matter, so i'll abstain from any legal advice on this specific case.
What I can say is that for many EU countries the 183 days rule is just one indicator and not even that important nowadays, I mean it's not enough especially if you will keep doing business mainly in that country, with the same people as before.
e.g. I know EU citizens that were attacked by their former tax agency after years, even though they didn't live there anymore, just because maybe they had an house, or bills on their name, or bank accounts, or their primary market share was still the old country and they flew there regularly (the actual motivation is that some EU countries are some of the worst greedy parasites...)

The relocating step with an active business is tricky, particularly in case of high revenues, as many EU countries nowadays also have "exit taxes" laws in place for companies that move away, even inside EU.
Having the majority of customers in the country you're fleeing from... yes that would still be a big thing they can use against you if they need, as it's pretty obvious you're doing it only for tax savings.
Flying regularly to belgium also it's not good. You have first to make sure to cut you ties cleanly.
There are a bunch of concepts, like Permanent Establishment and ultimately the Double Taxation Treaties (DTTs) between belgium and your new country, that could influence your outcome.
By DIYing you may be fine for a while, but you may also end up with a letter from the belgian tax authorities a year or two later.

Since you don't seem determined to give Belgium the middle finger completely, I suggest to consult an international tax expert that knows your particular company, the belgian law and your personal situation. A decent one that does this for a living every day, not your regular local accountant.
Maybe you could lower your taxes without relocating.

Where you would like to move? Would you like to live in UAE for example or Malta, or would prefer mainland europe?
Revenue?
How many taxes in % of profits are you paying now? (how much of that social/pension contributions)?

I'm looking at Lithuania, Romania and Bulgaria. Lithuania is actually my first choice despite not being the lowest taxes but I like Vilnius and would not mind living there. Tax legislation is also more stable in Lithuania compared for example with Romania where rules for micro companies change sometimes. Anything outside the EU is not an option for me. I would liquidate my Belgian company and start a Lithuanian company, I have less then 300k euro turnover so I would qualify for their micro company rule. I would cut as much ties with Belgium as possible (close all banking accountants, no more bills, no more Belgian cell phone number, ...) and officially deregister with Belgian tax authorities and move my residency to Lithuania.

I can work from Vilnius at least 20 calendar days a month but I have to fly back each month for a few days to meet with my clients. I have a property in Belgium that I would rent out. The only thing on the short term that I can not change are my existing business relations in Belgium. Belgian taxes are insane especially pension and social contributions. Lithuania is part of Schengen so I don't even know how they can check that you are in the country but like I said I could easily prove that I'm 200+days in Lithuania. I find it crazy to think that in the situation I described that the Belgian tax man can still come after me because if that is the case then it's almost impossible to move to any other country at all and still be considered liable for Belgian taxes, after all there will always be some sort of connection because of family etc ...
Of course I will consult with a Belgian tax expert before I would make such move but I would like to have opinions of people who have done something similar.
 

LoveMyLife

Active Member
If you have a property in Belgium, which you will be renting, Belgium tax authorities will consider you to be a Belgium tax resident. You will have to sell it.

Let see how much will you pay in Lithuania:

Personal income tax: 20 %
Social insurance: 24.24 %
Health insurance: 15 %

Total: 59.24 %

I know, it is less than in Belgium. But there are better countries, where you can pay less. And with proper structure, you can pay just a small fraction of it.
 

Konstanz

Active Member
If you have a property in Belgium, which you will be renting, Belgium tax authorities will consider you to be a Belgium tax resident. You will have to sell it.

Let see how much will you pay in Lithuania:

Personal income tax: 20 %
Social insurance: 24.24 %
Health insurance: 15 %

Total: 59.24 %

I know, it is less than in Belgium. But there are better countries, where you can pay less. And with proper structure, you can pay just a small fraction of it.
Agree. Does not make any sense. Incorporate in UAE and move to UAE
WIth UAE residency live part time in UAE, part time in South of Europe. Avoid living in Belgium. You should be fine
 
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freegeek

New member
Agree. Does not make any sense. Incorporate in UAE and move to UAE
WIth UAE residency live part time in UAE, part time in South of Europe. Avoid living in Belgium. You should be fine
must be EU, lots of my customers will simply refuse to do business with an UAE corp
 

freegeek

New member
If you have a property in Belgium, which you will be renting, Belgium tax authorities will consider you to be a Belgium tax resident. You will have to sell it.

Let see how much will you pay in Lithuania:

Personal income tax: 20 %
Social insurance: 24.24 %
Health insurance: 15 %

Total: 59.24 %

I know, it is less than in Belgium. But there are better countries, where you can pay less. And with proper structure, you can pay just a small fraction of it.

I read about the property thing, seems to me that it is totally illegal under EU law that they regard just owning a property as enough substance to qualify you as a tax residence, especially if you rent it out. That would mean that any other EU citizen owning a property in Belgium would be considered Belgian tax resident, makes no sense.
 

Konstanz

Active Member
I read about the property thing, seems to me that it is totally illegal under EU law that they regard just owning a property as enough substance to qualify you as a tax residence, especially if you rent it out. That would mean that any other EU citizen owning a property in Belgium would be considered Belgian tax resident, makes no sense.
I don't know about Blegium. But if non citizen has for example summer house in Spain. They dont' consider you tax resident
 

freegeek

New member
I don't know about Blegium. But if non citizen has for example summer house in Spain. They dont' consider you tax resident
exactly but the Belgian tax man does not care. There is a precedent of a Belgian who moved to another country for a job and the Belgian tax nazi came after him and claimed that the house he owned and now rented out was still enough substance to claim him as a Belgian tax resident. From all the information I have read, including Belgian tax specialist, they all advise to sell your property so that the tax man can not use this precedent to come after you
 

Konstanz

Active Member
exactly but the Belgian tax man does not care. There is a precedent of a Belgian who moved to another country for a job and the Belgian tax nazi came after him and claimed that the house he owned and now rented out was still enough substance to claim him as a Belgian tax resident. From all the information I have read, including Belgian tax specialist, they all advise to sell your property so that the tax man can not use this precedent to come after you
It's interesting. It's usually not like that. Maybe in that case that person could not prove he really lived outside Belgium? Ant rent was not real? I mean usually tax inspectors evaluate if you really lived outside country

Yes it seems to be true. https://www.oecd.org/tax/automatic-...tance/tax-residency/Belgium-Tax-Residency.pdf
It's very "abstract" about property in Belgium
 
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LoveMyLife

Active Member
Well you can incorporate in EU living in UAE. And take profit to UAE without tax.
It is not exaclyt as easy as it can look like. Incorporation in EU and living in UAE have few problems:

Who will be a company director? Person as a resident of UAE? If yes, you face a problem with bank account openning problems or closure of existing bank accounts. Banks has a different black lists. And UAE is in a blaclist of the most banks in Europe.

EU incorporated company will have to pay corporate tax as well as VAT.

Living in UAE is one of choices. Or let say, one ot things which can start a proces. There are some better and more acceptable countries where you can have a residence permit and you does not have to live there too many days and you can be their tax resident. Like Georgia, if you are HNWI.

But having a company in EU, is not a solution, if you are not going to provide services, which can not be provided by a foreign companies.
 

glengoolie

BANNED MEMBER
you could recolate to cyprus but keep your belgian company. if you work from cyprus as employee for company outside of cyprus for more than 90 days, your income is income tax exempt. but since you would be managing the company from cyprus, as the owner, you would pay corporate taxes in there(12.5%) and not in belgium. you could pay yourself the entire income of the company as salary so corproate taxes would be 0 and your income as well but you would probably have to look into social security and healthcare taxes. maybe they would be 0 or the minimum required by the government, since your taxable income would be 0. as for the 183 day rule, you can travel to your belgian customers but you have to spend half a year in total in cyprus, just like anywhere else.

but this is just my theory, no real experience. just an idea you might look into.
 

Sols

Staff member
Mentor Group Gold
you could recolate to cyprus but keep your belgian company. if you work from cyprus as employee for company outside of cyprus for more than 90 days, your income is income tax exempt. but since you would be managing the company from cyprus, as the owner, you would pay corporate taxes in there(12.5%) and not in belgium.
Belgium presumes companies are tax resident if they are incorporated there, even if management and control are elsewhere. It's not quite as strict as UK's rule of any UK company being tax resident, but it could complicate a setup like this. If doable, a Cypriot company would probably bring fewer headaches.
 

CyprusLaw

Mentor Group Gold
Belgium presumes companies are tax resident if they are incorporated there, even if management and control are elsewhere. It's not quite as strict as UK's rule of any UK company being tax resident, but it could complicate a setup like this. If doable, a Cypriot company would probably bring fewer headaches.
I think glengoolie refers to the 100% exemption on remuneration for salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer, from which non doms benefit from. However, this is not as clear as it seems and a formal tax ruling should be obtained to ensure that the exemption applies in your situation
 

glengoolie

BANNED MEMBER
Belgium presumes companies are tax resident if they are incorporated there
this goes against the entire EU so i would doubt that, although i am merely a keyboard warrior here.
 

Sols

Staff member
Mentor Group Gold
this goes against the entire EU so i would doubt that, although i am merely a keyboard warrior here.
UK (even before Brexit), Germany, Sweden, and a few others have similar principles. It's nothing unique to Belgium to have a presumption of local tax residence for locally incorporated companies.
 
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