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Investing In Belgium - Even In Times Of Crisis

By Thierry Afschrift
Posted: 15th November 2011 09:23

The global economic crisis is primarily due to the financial crisis which started on 2007, before reaching its higher point during the second half of 2008. As for the purely financial crisis, it attacked the capacity, and will, of the banks to lend money, a fact that had negative repercussions on the consumers and, generally, on the economic activity.

In such times of crisis, one of the first priorities of the investors is to carefully choose their investments, as, given the volatility of the markets and cash-flow and credit problems; one cannot be mistaken when putting its money on the stake.

The first criterion is obviously the nature of the investment.  In a period where immediate possession of liquidities is important, financial markets seem to be still considered as the best place to invest one’s money, even if they get more and more nervous and over-reactive.  The situation is globally also the same for the real estate business, although the sector has also suffered important losses, but not as important as the energy sector.

Governments had to work not only on short-term development, by injecting cash in the market, but also prepare the future, by the means of a long-term policy for durable development, in order to reduce the negative effects of the crash.

For example, in Belgium, public infrastructure projects have been put in the front line, as well as local investments.  Also, as it’ll be explained further, a number of tax measures have been taken in order lighten in a certain measure the tax pressure.  Little by little, the importance of a stable economy and healthy management of public finances has appeared.  This is why, even if a company should manage to find the perfect investment, it is also important to find the right place to realize it.

Actually, it is difficult to ignore the fact that in our days, more and more European countries face political and/or financial difficulties which may have huge negative effects on the investments made, even if, in theory, these last one are perfectly viable.  Belgium is undisputedly one of these right places to invest.

This is not just our opinion; Belgium occupies this year the sixth place in the list of the European countries the most attractive for the investors.  This place is more than probably due to Belgium’s excellent geo-political situation in the center of Europe, hosting European institutions and NATO, as well as to the stability of its institutions and the quality of its truly business-oriented infrastructure.

The presence of several international institutions allows investors to address a large and multi-cultural public from all over Europe.  Also, it is interesting to know that the United States are the major foreign investor in Belgium, as US investments represent approximately one third of foreign investments in the country.  Therefore, foreign investors can also network with companies from the other side of the Atlantic.

Probably for these same reasons, the real-estate market is always flourishing, despite some conjectural up and downs.

Furthermore, as said before, several measures have been taken by the government in order to attract foreign investors in the country.  Thus, the, at first sight severe, 33.99% Belgian corporate tax rate conceals in the reality several possibilities of tax optimisation and planning.

First of all, the principal advantage of the Belgian tax system is that the taxpayer has the “right to choose the least taxed way”; this important principle provides the right to choose the most suitable way in order to generate the least taxes.  Nevertheless, if the legal consequences of this act are not accepted this act is considered as simulated.  This principle of law is capital for foreign investors, especially in times of crisis, as they can realize their investment by the means of the structure of their choice, as long as their operation is sincere (not simulated).  The substance over form rule, which, sometimes, can be very disturbing when an investor wants to set up a structure exactly as he wishes but the form chosen is not the most “normal” possible,  is not applicable in Belgian tax law.

In addition to this, Belgium is one of the few countries in the world where under certain conditions, dividends produced by stocks and shares held by a Belgian company are deductible from the profit of the Belgian company as ‘definitively taxed incomes’.  This deduction is approved up to a limit of 95% of the amount paid. Moreover, interests on a loan to finance the acquisition of these shares are also deductible.

Also, since the 1st January 2006, a Belgian company can benefit from a ‘tax deduction for equity capital’ also known as a ‘deduction for notional interest’.  From a tax point of view, all companies (whether subject to resident or non-resident corporate tax) are treated as if they had borrowed their own funds at an annual rate of interest equivalent to the rate for 10 years bonds issued by the Belgian state.  The ‘notional interest’ calculated in this way is deductible from the taxable base for corporation tax purposes.

Furthermore, the European Directive 90/434/CEE of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member State is, at last, part of Belgian law and, on the other hand, a new and taxpayer-friendly copyright and royalties law entered into force as from January 1st, 2008.

In conclusion, in the centre of Europe and the heart of EU institutions, and offering political and financial stability, Belgium is endowed with an extremely subtle tax system which, despite an unfriendly first impression, conceals an important number of tax optimization possibilities for companies and group of companies, as well for individuals.


Thierry AFSCHRIFT is the founder and managing partner of the firm. He is admitted to the Brussels, Antwerp and Madrid Bar, while being member of Luxembourg and Geneva bars. He is also founder and Chairman of the Master on Tax Management, from the Solvay Brussels School of Economics and Management of the Université Libre de Bruxelles and deputy judge at the Court of Appeal in Brussels. With over 30 years of experience in domestic and international tax law, Professor AFSCHRIFT leads the firm’s practice and advises a very important number of major Belgian and foreign companies and banks.

Thierry can be contacted on +32 2 646 46 30 or at 


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