If you are after reifying your business idea into a full-blown venture, then you need to brace yourself up for enduring whatever it involves. Fill yourself up with the energy, commitment, and knowledge to establish your dream startup, and give yourself the tag of a proud entrepreneur.
Is Belgium on your Wishlist to locate your business? That’s fantastic, as you are greeted to a modern, highly developed, and capitalist economy when you consider Belgium for basing your venture. The country proves to be a magnet for entrepreneurs and foreign investors, thanks to its geographic location, which allows unhindered access to a wealthy, and populous market base of the European Union. Furthermore, Belgium’s enticing tax regime is another factor that lures people to set up startups here. Being a modern and industrialized society, Belgium relies significantly on trade, particularly with its European neighbors. You can establish your company in any one of the four entities, such as partnership, sole proprietor, subsidiary, and branch.
Now, before you let loose the bridle of your impatient horses, consider knowing the process of starting a business in Belgium. That would facilitate you through your journey of launching a venture and abide by laws while doing so. Read on to know more!
Setting up a company in Belgium is fairly straightforward. At first, you need to come up with a marketable business idea and develop a business and financial plan. This is followed by depositing paid-in minimum share capital in the Belgian business bank account and then getting registered with the Belgian Commercial Register. After that, a business needs to register with the tax authorities and procure a VAT number. You will also have to obtain required special licenses and permits for establishing and operating a business legally. If you are an ex-pat seeking to start a business in Belgium, you will require a foreigner’s professional card. However, if you are a resident of Switzerland, Norway, Iceland, and Leichstein, you are exempt from this requirement.
Now, you shall look at the process of starting a business in Belgium in detail.
Process of setting up a business in Belgium
Belgium’s central and strategic location in Europe makes it one of the wealthiest and most important countries on the continent. The country’s developed infrastructure and its proximity to Paris, Amsterdam, and other crucial cities in Europe offer immense opportunities for new ventures started here. Furthermore, high living standards, grand and old-school cities, and a densely populated global market render the nation a fascinating option for opening a business. However, you may face competition here. Nonetheless, let’s now walk you through the process of establishing a business in Belgium, what it looks like, the needed documents, and so forth. Read on!
- Select a brand name: Although conceiving a brand name is a fun part but isn’t free of challenges. You allow your creative juices to flow freely and come up with a name that entails the essence of your brand and influences people. Take your time to decide on the right business name as it is one of the important business decisions you are going to make. Choose a name that is original, unique, and creative. Make sure you check the availability of whatever name you land on before finalizing.
- Prepare a convincing business plan: Now is the time to draft a solid business plan. In Belgium, you do not have a financial or business plan for starting every business. Nonetheless, it helps, especially when you will go to register your company with Crossroads Bank for Enterprises. An elaborate business plan entails the following and helps you determine your vision and goals of the business.
- Competitor and market analysis
- Description of your business
- Business and its management structure
- Product/ service description
- Marketing strategy in the initial years and later
- Elevator pitch, etc.
- Open a business bank account: In order to register a company, you will need a business bank account. For starting a business in Belgium, the banks here will offer you discounted deals and special accounts, so ensure to consider all these options. Belgian banks offer full-fledged support to people basing a business here and also provide an English language version of their website.
- Register the business with the social security office: Although you can register your business with social security later through the business establishing process in Belgium. But it is recommended to start early. This is because if you don’t have a VAT number or company number, starting a business here might get time-consuming and complicated. The social security office is helpful in navigating the functioning of social security in Belgium. For instance, it ensures that you are establishing social rights like pension plans and child support. Furthermore, the authority will also help you select the best business structure.
- Select a business legal structure: After other harrowing steps comes the phase of choosing a company structure, where you will need to contemplate a lot. You will need to ask, what’s best for my business, what would the effect of this business structure would be on my company, how would this structure evolve down the road, and so forth. The most prominent business legal structures in Belgium are a partnership, limited liability, assisted spouse, cooperative, sole proprietorship, and payrolling.
- Get permits, licenses, NACEBEL codes: Often, before launching certain businesses, you will need to get licenses and permits in Belgium. These permits allow businesses to operate legally, else, without them, you may fall into the storm’s eye. For instance, you will need a permit/ license to start a business/ profession in selling tobacco or alcoholic beverages, carnival attractions, travel agencies, passenger and logistics transport, animal care, etc.
- Crossroads Bank of Enterprises registration: All the companies and their database is recorded in the Crossroads Bank for Enterprises in Belgium. Each company begets a unique identification number, where the number begins with a 0, followed by a specific number of digits. Registering with Crossroads Bank for Enterprises rests on the legal structure of your company/ business.
- Get your VAT number: Your business can be immune from paying certain taxes, particularly when your annual income is low. Nonetheless, VAT number registration is always needed. As soon as your annual income goes high, you become eligible to pay VAT.
Hiring Employees in Belgium
So, eventually, after getting your business registered and setting things in order, you will need to hire people to run your business and handle its different operations. However, recruiting people is supervised by employment and labor laws which one needs to know and abide by. To be a responsible employer, you need to follow these laws and regulations in Belgium, such as providing annual leaves to employees, avoiding overtime beyond a set limit, providing maternity leave to female employees in confinement, etc. With the help of an experienced HR consultant like Zimyo, you can efficiently streamline the process of hiring employees in Belgium.
Read on to know these!
- Trial Period/Probation Period: The trial period refers to the span mentioned in the employment contract to assess the competency and suitability of an employee in the business environment and for the assigned role. Unified Employment Status Act in Belgium suppresses probationary periods, except in relation to temporary workers, agency workers, and students.
- Leave and Holidays: Typically, for a complete holiday reference year, employees are entitled to 20 to 24 days of leave annually. The number of days here depends on whether the working week involves five days or six days.
Furthermore, employees must receive payment for 10 official public holidays. In case a public holiday falls on a day that is normally not a working day or Sunday, an employee must get a replacement day. Employees beginning their careers or restarting their job after a long leave from work must be allowed additional holidays post a 3-months introductory period. The employee must receive holiday pay equal to regular wages.
The holiday pay would be financed via a deduction from the twofold holiday pay of the following year.
Employees in Belgium are entitled to get leave for the following:
- To attend family events such as funerals, marriage, adoption, childbirth, etc.
- To fulfill civil duties such as participating in the electoral process, jury service, etc.
- To appear before the court
This is not an exhaustive list of typically provided leaves in Belgium, as there are many other scenarios where an employee can be allowed to get absent from work. The grounds for such curt leave periods and the duration of time-off allowed are mentioned in the Royal Decree of 1963. Furthermore, sickness and disability leave in Belgium are considered the same.
- Maternity Leave: Women employees must be allowed a maternity leave for up to 15 weeks, which can be extended two weeks further in the case of multiple births. A minimum of 9 weeks’ leave must be allowed before birth, while one week’s leave should be taken at least one week before the anticipated date of childbirth.
- Termination of Services: Employment contracts in Belgium are typically terminated via offering a notice period or furnishing the payment of indemnity in place of notice. An employer may also follow a combined approach where the payment of indemnity and serving of notice period is provided. Employee, as well as the employer, may terminate the services on serious grounds regardless of whether the employment contract was established for a definite or indefinite term. A serious ground is explained as a serious fault that makes it virtually impossible to continue the employment relationship. In such a scenario, there is no need to serve a notice period or the payment of indemnity. However, when terminating the employees for a serious cause, the following formalities are to be observed:
- Dismiss the employee within three working days since the fact of serious cause comes into his/ her notice.
- The employee must be informed about dismissal and its ground through registered mail within three days or at the same time.
- Pension: The standard retirement age in Belgium is 65 years. However, as per the Act of 10 August 2015, it was decided by the Federal government to raise the retirement age to 66 by the year 2025 and to 67 years by 2030. Nonetheless, there are certain exceptions to this retirement age limit:
- For labor-intensive jobs
- If the employee can prove the number of years fr which she/ he was employed (which must be 63 years of age and 42 years of employment by 2019).
The employee gets a pension from the Belgian Social Security System. Moreover, in addition to social security perks, employees may also get further pension insurance which was included in their salary package.
- Work Hour Norms: A standard working week in Belgium entails 38 hours, while work hours per day cannot exceed 8 hours per week. However, the maximum working week can be lower in certain industries with mutual agreement. In the scenario of work performed in shifts, employees can work up to 11 hours a day or even 12 hours continuously. Under special cases, weekly work time may exceed 38 hours, given that the yearly or quarterly average stays at 38 hours per week. Employees can work during public holidays or Sundays only under austere legal conditions.
Overtime is prohibited except under certain conditions. Employees must be paid 1.5 times the regular wage rates in case of overtime and 2 times if overtime is performed on Sunday or a public holiday. Employees are also entitled to paid rest periods in the scenarios of overtime.
How easy is it to conduct business in Belgium?
How conducive an economy is with its requirements, procedures, and formalities to start a venture rests on several factors such as getting credit, getting electricity, managing permits, payroll management, etc. These aspects are studied and estimated by the World Bank. The Doing Business Report states the ranks of these indicators for 190 countries. The individual ranks on these factors are then perused to confer an overall Ease of Doing Business rank (EODB). The higher the EODB position of a country, the easier to start a business there. Belgium got 46th rank among 190 countries and scored 75 out of 100. Now, let’s see where the country lies in EODB sub-indices according to the Doing Business report 2020.
- Starting a Business: You need to endure certain procedures, deposit paid-in minimum share capital, and of course, invest your time throughout when starting a business in the country. The Doing Business views time, cost, and formalities involved in launching a business. Belgium got 48th rank in this sub-index and scored 92.3 out of 100. In 2008, the country introduced a publication and electronic registration system accessible to all notaries, thereby rendering the process smoother. This system adopted automatic publication and a single registration number in the state gazette of notice of incorporation.
- Managing Permits: Permits and licenses are a necessity to operate a business legally. The requirements of permits and licenses depend on the legal structure of a business, the kind of activities it undertakes, etc. The Doing Business reckons the procedures, formalities, costs, and time involved in procuring construction permits. Furthermore, it also looks at the safety mechanisms and quality control mechanisms in the system that allows construction. Belgium got 45th rank among 190 countries and scored 75.5 out of 100.
- Getting Electricity: Can you imagine a business thriving without electricity? Without a doubt, you have nodded a big no. To get an electricity connection for a business, you would have to go through certain formalities and procedures, fulfill costs, and be involved in it with your time. The Doing Business considers Getting electricity a potential indicator for the EODB index, thus, measuring the time, cost, and procedures the process entails. Belgium bagged 108th rank among 190 countries and scored 70.6 out of 100. The country enhanced the access to information regarding the connection process and lowered the time it used to take, thus, rendering the process faster.
- Getting Credit: To grow a business, one would ultimately need to procure credit. The Doing Business report probes into the credit information and reporting systems and assesses movable collateral laws in a country. Belgium secured the 67th position in this sub-index among 190 countries and scored 65 out of 100. The country executed a new Pledge Law, which enabled the attachment of security interest to the proceeds of the original asset, and enforcement of the security interest out of court, thus, bolstering access to credit.
- Managing Payroll: To manage payments and income-related matters in your business that is growing consistently, you will eventually need to incorporate an efficient payroll management system in the company. You may choose from different payroll management services available out there, the one that suits your business requirements and is reliable, with Zimyo being the preferred option.
- Paying Taxes: Paying taxes is another business indicator regarded by the Doing Business, where it measures the time, contribution, total tax rate, cost, and a number of formalities involved in the process of tax filing. Belgium was ranked at the 63rd position and scored 78.4 out of 100 among 190 countries. The country adopted a law to facilitate and promote the survival of viable businesses facing difficulties.
- Enforcing Contracts: Businesses may, at a point, land in some commercial legal dispute, and thus, arises the need to enforce contracts. The Doing Business considers this as another EODB indicator, where it looks into the time, procedure, and costs involved in enforcing contracts. Furthermore, it also assesses the efficiency of court laws and systems in resolving a commercial dispute. Belgium got 56th rank among 190 countries and scored 64.3 out of 100. In 2009, the country set established a binding time limit as a standard procedure for submitting written requests and tightened deadlines to deliver expert opinions, thereby enhancing the process of enforcing contracts.
- Resolving Insolvency: To resolve insolvency in a business, the laws of a country play a deep role. The Doing Business, thus, considers and estimates the efficiency and strength of commercial insolvency laws and framework. Belgium got 9th rank, which is indeed great, among 190 countries and scored 84.1 out of 100. The country adopted a new law that facilitates and promotes viable businesses going through financial difficulties.
All in all, so far, we saw that in Belgium, it is pretty straightforward to start a company, making it a good choice. The best and the most significant ground for launching a business in the country is its strategic location in the heart of the European Union and its connectivity to diverse industrial areas throughout the continent. Thus, this beautiful country offers a populous market with a global character and a high standard of life for people, startups, and ventures.
Zimyo is a leading HR and Payroll management services provider in Belgium with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.