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Hiring top remote talent from around the world has become easier, thanks to globalization and technological advancements. Remote work also makes it possible for you to hire the best and brightest workers from various backgrounds, cultures, and experiences, regardless of where in the world they are based.
Belgium — a significant business and financial hub in the European Union — is a great place to find skilled professionals. However, hiring remote workers in Belgium does come with risks. Your company must follow local labor rules and tax obligations, or you could land your company in legal trouble. Importantly, the consequences of misclassifying remote workers and employees are serious.
This comprehensive guide will take you through everything you need to know to hire and pay remote workers in Belgium. We’ll also walk you through the simplest, safest, and most efficient method to manage remote workers in Belgium, all while removing the risk and inconvenience.
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To hire and pay remote employees in Belgium, companies must own a local legal entity in the country or work with a global employment partner who can hire locally for them. Alternatively, you could also choose to hire your worker as a contractor.
Your business can set up a legal entity in the country to ensure you are paying and hiring remote employees legally. Opening a legal entity can offer your business more flexibility and name recognition across the globe. However, it can also be time-consuming, complex, and costly — especially during tax season. If you don’t have the resources to establish a legal entity in Belgium and handle compliance yourself, there’s another way to get the most from the Belgian employment market.
Without established local relationships in Belgium, managing taxes, benefits, compliance, and payroll can be complicated. If you don’t have the expertise and local knowledge, opening a legal entity in any country can be a challenge. A viable alternative is to work with a global employment partner who can hire and pay employees on your behalf.
Some global employment providers have their own legal entities in the countries they operate, while others rely on partner companies. An experienced partner like Remote can minimize uncertainty and accelerate the process of hiring and paying remote workers by taking on the responsibility and legal risks of international employment.
While companies can open a legal entity or work with a global employment partner to pay and hire employees, some companies choose to only work with independent contractors. Independent contractors are hired to provide specific services; they sign a contract with a client and work for an agreed rate. In Belgium, a remote independent contractor needs to sign a business license to operate.
Unlike employees, independent contractors do not work directly for the company. They usually do not have set working hours, and are not provided with benefits and equipment. Hiring independent contractors can give your business greater control over your budget and accelerate the onboarding process. It does come with some risks, though. If your company misclassifies someone as an independent contractor who should be considered an employee, you could face massive fines and penalties.
Companies that hire remote workers in Belgium will likely pay them in Euros (€). Your company can pay Belgian workers in your preferred currency, but you should agree on exchange rates in advance with your remote workers to balance any currency fluctuations.
Belgium has some of the highest tax rates in all of Europe. There are four income tax brackets and the rates in 2023 are as follows:
25%: Up to €15,200
40%: €15,200 to €26,830
45%: €26,830 to €46,440
50%: Over €46,440
When working remotely or hiring remote workers, staying compliant and understanding where remote employees pay taxes is vital. Independent contractors, employees, residents, and nonresidents all pay the same rates on taxable income in Belgium.
Belgium collects taxes on both state and local levels. The most important taxes collected are:
Income tax (federal)
Social security (federal)
Corporate taxes (federal)
Value-added tax (federal)
Property tax (local)
Communal tax (local)
A person or company who has lived in Belgium for at least six months out of a year, and is registered with a local commune, is considered a resident for tax purposes. Residents and companies are required to pay Belgian income tax on all of their income. A person or company who has lived in Belgium for fewer than six months out of the year is only taxed on income earned in the country.
Most businesses in Belgium pay a 25% corporate tax. Companies with profits of less than €100,000 have a 20% corporate tax rate. Belgium's taxable income is income after social security contributions, personal allowance, and professional cost deductions.
Per diem is a daily allowance given to employees by their employer to cover living expenses, including lodging, meals, and incidental expenses. In Belgium, per diem is not taxable if:
Per diem payments are under €17.41 per day
Employees are away from the office for at least six hours
Employees provide an expense report for their purchases
Independent contractors cannot use per diem payments. Belgian remote employees are only allowed 16 per diem trips a month, with a yearly limit of 40 per diem trips to a particular location.
The amount of money paid to an employee regularly for a specified reason is known as an allowance; this includes family, health, or office allowances. Employees in Belgium are not required to account for or produce documentation for the use of an allowance.
Unlike allowances, reimbursements are paid by an employee and repaid by the employer, mileage, transportation, or mileage reimbursements. For this expense, employees usually need to provide documentation. These reimbursements are deductible from the taxable value.
Your company must have an understanding of the taxes and statutory fees that affect your payroll and your employees' paychecks in Belgium. To pay and hire remote workers in Belgium, you must contribute to the country's comprehensive social security system.
Belgium set employees' contributions to social security taxes at 13.07%. The employer's social security contribution is between 25% and 27%. The social security contributions cover:
Allowances in the event of sickness
Allowances in the event of incapacity for work through illness or invalidity
Allowances in the event of accidents at work
Allowances in the event of industrial disease
Learning how to manage global payroll and keeping your company compliant can be challenging. You have to make sure you pay your workers on time, classify your workers correctly, and guard your intellectual property. It may be beneficial for your company to work with an expert global payroll partner, like Remote, who can provide comprehensive payroll, benefits, compliance, and tax services once you decide to hire in Belgium.
The national minimum wage in Belgium for 2023 is €1,955 a month — one of the highest minimum wages in the EU. Belgium reviews the minimum wage biannually to ensure it coincides with price levels.
In Belgium, remote employees can work up to eight hours a day and up to 38 hours a week. If employees work for more than 38 hours a week, they must receive overtime pay. On weekdays and Saturdays, the rate of overtime pay is 50% for the hours worked. On Sundays and on public holidays, the rate of overtime pay is 100%. Employees cannot work more than 11 hours a day or 48 hours a week.
Employment legislation in Belgium protects employees under the law or collective bargaining agreements. Employees are protected against discrimination based on age, race, religion, sexual orientation, and gender expression. Other protections include:
Social security contributions
Paid time off
For more inform
Paying contractors in Belgium requires approving and filing invoices, sending payments, and keeping on top of compliance. This process can be time-consuming and requires a lot of manual effort, especially if you have multiple contractors based all around the world. Remote offers services that provide effortless contractor management — from automated payments to tax compliance.
However, it’s important to remember that Belgium treats independent contractors and employees differently, and there are risks associated with misclassification.
Some of these risks include:
Penalties and fines: You may be liable for back taxes and associated penalties for paying late.
Back wages and benefits: You may be required to compensate workers for lost wages or benefits that resulted from the misclassification.
Legal issues: You may be vulnerable to lawsuits from groups or individuals harmed by misclassification.
Unfavorable look on your company: You may scare off qualified, top talent from wanting to work for your business.
Converting a contractor to an employee can protect the employer from penalties, provide a better experience for the employee, and make it simpler for both parties to collaborate. Remote's employer of record services can easily help you convert your contractors to employees when you're ready to do it.
You can pay remote employees in Belgium by establishing a local legal entity in the country. However, the burden of compliance falls on you. You'll not only have to understand and follow local regulations, but you'll also have to be aware of permanent establishment risks while hiring and paying remote employees in Belgium.
Permanent establishment refers to a company's continued presence in a country. Companies prefer to avoid establishing a permanent presence in other countries with remote employees to avoid paying higher corporate taxes and complying with other regulations.
Working with an employer of record (EOR) is the safest and most scalable approach to avoid permanent establishment while paying remote workers. An EOR allows you to hire full-time employees in Belgium, alleviating the burden of local legal requirements. You also don't have to worry about sorting out taxes, compliance, payroll, and benefits for your remote employees because the EOR will handle all of that for you.
Learn more about how an EOR like Remote can offer businesses the resources to pay and hire remote workers without risking permanent establishment.
Hiring remote workers in Belgium can be a great value-add to your global team, but it can also be a lot of effort. Before hiring remote workers, it's critical to understand how to reduce risk, pay remote workers, and adhere to local laws. Opening a local entity, setting up payroll, offering benefits, and staying on top of employment regulations require time and money.
But, managing remote workers in Belgium does not have to be complicated. There is an easy-to-manage, scalable method for managing this process while remaining compliant with all local labor regulations. Simply partner with a global employment provider like Remote to do all the heavy lifting for you.
Remote can assist your business by handling global payroll, benefits, taxes, stock options, and compliance in Belgium and countries all around the world. Using Remote's best-in-class features can give you more time and resources to focus on attracting top talent and growing your businesses.
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