The COVID-19 pandemic negatively impacted the Belgian economy in 2020 and its effects will continue into 2021. According to the National Bank of Belgium, real GDP contracted by 6.2% in 2020, and the impact on public finances led to a deficit of 10.1% of GDP and a national debt level of 115% of GDP. Early economic forecasts for 2021 indicate that Belgium’s GDP might grow by as much as 3.9%, and the deficit will likely shrink to 7.6% of GDP. Belgium will continue to rely on European Union financial support mechanisms, as well as interventions by its regional governments, as it aims to restart and rebuild the economy and implements a comprehensive economic recovery plan in the wake of the global health pandemic in 2021.
COVID-19 restrictions are likely to remain in place through 2021. As Belgium’s vaccination plan gains momentum, however, those measures are expected to be rolled back. Support measures, still ongoing at the beginning of 2021, should limit job losses (at least in the short term) and constrain the number of bankruptcies in the most affected sectors such as leisure, restaurants, hotels, and transport.
Belgium holds a unique position as a logistical hub and gateway to Europe, which will be of critical importance to jump-start the economy. Since June 2015, the Belgian government has undertaken a series of measures to reduce the tax burden on labor and to increase Belgium’s economic competitiveness and attractiveness to foreign investment. A July 2017 decision to lower the corporate tax rate from 35 to 25 percent further improved the investment climate. As it stands, the center-left government that took office on October 1, 2020 will not reverse this decision.
Belgium boasts an open market well connected to the major economies of the world. As a gateway to Europe, host to major EU institutions, and a central location closely tied to the major European economies, Belgium is an attractive market and location for U.S. investors. Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support a broad range of economic activities
Belgium boasts a dynamic economy and attracts significant levels of investment in chemicals, petrochemicals, plastics and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors. In 2020, Belgian exports to the United States were worth $29 billion, and the U.S. market represented Belgium’s 5th largest export destination. Of note, major Belgian exports included chemicals (65.6%), machinery and equipment (9.7%), and transport equipment (4.5%). In 2020, the United States ranked as Belgium’s 4th largest supplier of imports with a total value of imported goods of nearly $27 billion. Major U.S. exports to Belgium included chemicals (38.5%), transport equipment (12.9%) and machinery and equipment (12%).
To fully realize Belgium’s employment potential, it will be critical to address the fragmentation of the labor market. Job growth accelerated in Belgium prior to the COVID-19 pandemic (+6.9% in the period 2014-2019), driven by the cyclical recovery and the positive impact of past economic and market reforms. Large regional disparities in unemployment rates persist, however, and there is a significant skills mismatch in several key sectors.
|TI Corruption Perceptions Index||2020||15 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||46 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||22 of 131||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||$63.2||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2019||$48,030||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Belgium maintains an open economy and its prosperity remains highly dependent on international trade. Since World War II, making Belgium attractive to foreign investors has been the cornerstone of successive Belgian governments’ foreign and commercial policy. Competence over policies that weigh on the attractiveness of Belgium as a destination for foreign direct investment (FDI) lie predominantly with the federal government, which is responsible for developing domestic competition policy, wage setting policies, labor law and most energy and fiscal policies. Attracting FDI is, however, a responsibility of Belgium’s three regional governments and their investment promotion agencies: Flanders Investment and Trade (FIT), Wallonia Foreign Trade and Investment Agency (AWEX), and Brussels Invest and Export (BIE). One of their most visible activities is the organization of the Royal Trade Missions. In October 2021, a Royal Trade Mission led by Princess Astrid is planned to visit Atlanta, New York City, and Boston. Neither the federal government nor the regional governments currently maintain a formal dialogue with investors.
There are no laws in place that discriminate against foreign investors. Belgian authorities are developing a national security-based investment screening law, which will not likely be finalized and delivered to Parliament for a vote before the second half of 2021. The Belgian government, however, has coordinated with the European Commission on its investment screening mechanism. In practice, this arrangement allows the European Commission to issue opinions when an investment poses a threat to the security or public order of more than one member state. Furthermore, the regulation sets certain requirements for EU member states that wish to maintain or adopt a screening mechanism at the national level. Member states will keep the last word on whether or not a specific investment should or should not be allowed in their territory.
Limits on Foreign Control and Right to Private Ownership and Establishment
There are currently no limits on foreign ownership or control in Belgium and there are no distinctions between Belgian and foreign companies when establishing or owning a business, or setting up a remunerative activity. The forthcoming investment screening mechanism may establish some limits based on national security.
Other Investment Policy Reviews
In July 2019 the OECD published an in-depth productivity review of Belgium:
Belgium was included in the WTO Trade Policy Review of the European Union, which took place February 18-20, 2020: https://www.wto.org/english/tratop_e/tpr_e/tp495_e.htm
In order to set up a business in Belgium, one must:
1. Deposit at least 20% of the initial capital with a Belgian credit institution and obtain a standard certification confirming that the amount is held in a blocked capital account;
2. Deposit a financial plan with a notary, sign the deed of incorporation and the by-laws in the presence of a notary, who authenticates the documents and registers the deed of incorporation. The authentication act must be drawn up in either French, Dutch or German (Belgium’s three official languages); and
3. Register with one of the Registers of legal entities, VAT and social security at a centralized company docket and obtain a company number.
In most cases, the business registration process can be completed within one week (https://www.business.belgium.be/en/setting_up_your_business). The process is bureaucratic and can be challenging for foreigners, particularly if they do not speak the language of the region. Assistance from the regional Investment Authorities (see below) is recommended; these authorities are competitive and will offer support and incentives to companies considering establishing in their territory. Contacting the office of the U.S. Foreign Commercial Service at the U.S. Embassy in Brussels for assistance is also recommended.
Based on the number of employees, the projected annual turnover and the shareholder class, a company will qualify as a small or medium-sized enterprise (SME) according to the meaning of the Promotion of Independent Enterprise Act of February 10, 1998. For a small or medium-sized enterprise, registration will only be possible once a certificate of competence has been obtained. The person in charge of the daily management of the company must prove his or her knowledge of business management, with diplomas and/or practical experience. In the Global Enterprise Register, Belgium currently scores 7 out of 10 for ease of setting up a limited liability company.
Business facilitation agencies provide for equitable treatment of women and under-represented minorities in the economy.
A company is expected to allow trade union delegations if it employs 20 or more full-time equivalents (FTEs).
The three Belgian regions each have their own investment promotion agency, whose services are available to all foreign investors:
Flanders: Flanders Investment & Trade, https://www.flandersinvestmentandtrade.com/en
Wallonia: Invest in Wallonia, http://www.investinwallonia.be/home
Brussels: Brussels Invest & Export, http://why.brussels/
Belgium does not actively promote outward investment. There are no restrictions for domestic investors to invest in certain countries, other than those that fall under UN or EU sanction regimes.
3. Legal Regime
Transparency of the Regulatory System
The Belgian government has adopted a generally transparent competition policy. The government has implemented tax, labor, health, safety, and other laws and policies to avoid distortions or impediments to the efficient mobilization and allocation of investment, comparable to those in other EU member states. Draft bills are never made available for public comment, but have to go through an independent court for vetting and consistency. Belgium publishes all its relevant legislation and administrative guidelines in an official Gazette, called Le Moniteur Belge (www.moniteur.be).
Foreign and domestic investors in some sectors face stringent regulations designed to protect small- and medium-sized enterprises. Recognizing the need to streamline administrative procedures in many areas, in 2015 the federal government set up a special task force to simplify official procedures. It also agreed to streamline laws regarding the telecommunications sector into one comprehensive volume after new entrants in this sector had complained about a lack of transparency. Additionally the government strengthened its Competition Policy Authority with a number of academic experts and additional resources. Traditionally, scientific studies or quantitative analysis conducted on the impact of regulations are made publicly available for comment. However, not all stakeholder comments received by regulators are made public.
Accounting standards are regulated by the Belgian law of January 30, 2001, and balance sheet and profit and loss statements are in line with international accounting norms. Cash flow positions and reporting changes in non-borrowed capital formation are not required. However, contrary to IAS/IFRS standards, Belgian accounting rules do require an extensive annual policy report.
International Regulatory Considerations
Belgium is a founding member of the EU, whose directives and regulations are enforced. On May 25, 2018, Belgium implemented the General Data Protection Regulation (GDPR) (EU) 2016/679, an EU regulation on data protection and privacy for all individuals within the European Union.
Through the European Union, Belgium is a member of the WTO, and notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT). Belgium does not maintain any measures that are inconsistent with the Agreement on Trade-Related Investment Measures (TRIMs) obligations.
Legal System and Judicial Independence
Belgium’s (civil) legal system is independent of the government and is a means for resolving commercial disputes or protecting property rights. Belgium has maintained a wide-ranging codified law system since 1830. Specialized commercial courts apply the existing commercial and contractual laws. As in many countries, Belgian courts labor under a growing caseload and ongoing budget cuts causing backlogs and delays. There are several levels of appeal.
Laws and Regulations on Foreign Direct Investment
Payments and transfers within Belgium and with foreign countries require no prior authorization. Transactions may be executed in euros as well as in other currencies.
Belgium has no debt-to-equity requirements. Dividends may be remitted freely except in cases in which distribution would reduce net assets to less than paid-up capital. No further withholding tax or other tax is due on repatriation of the original investment or on the profits of a branch, either during active operations or upon the closing of the branch.
There are three different regional Investment Authorities:
Competition and Antitrust Laws
The contact address for competition-related concerns:
Federal Competition Authority
City Atrium, 6th floor
tel: +32 2 277 5272
fax: +32 2 277 5323
EU member states are responsible for competition and anti-trust regulations if there are no cross-border dimensions. If cross-border effects are present, EU law applies and European institutions are competent.
Expropriation and Compensation
There are no outstanding expropriation or nationalization cases in Belgium with U.S. investors. There is no pattern of discrimination against foreign investment in Belgium.
When the Belgian government uses its eminent domain powers to acquire property compulsorily for a public purpose, current market value is paid to the property owners. Recourse to the courts is available if necessary. The only expropriations that occurred during the last decade were related to infrastructure projects such as port expansions, roads, and railroads.
ICSID Convention and New York Convention
Belgium is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and regularly includes provision for ICSID arbitration in investment agreements.
Investor-State Dispute Settlement
The government accepts binding international arbitration of disputes between foreign investors and the state. There have been no public investment disputes involving a U.S. citizen within the past 10 years. Local courts are expected to enforce foreign arbitral awards issued against the government. To date, there has been no evidence of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
Alternative Dispute Resolution is not mandatory by law and is therefore not commonly used in disputes, except for matters where the determination by an expert is sought, whether appointed by the parties in agreement or in accordance with a contractual clause or appointed by the court in the context of dispute resolution.
Belgium has no domestic arbitration bodies. Local courts recognize and enforce foreign arbitral awards. Judgments of foreign courts are recognized and enforceable under the local courts. There are no reports or complaints targeting Court proceedings involving State Owned Enterprises (SOEs) or alleged favoritism for them.
Belgian bankruptcy law is governed by the Bankruptcy Act of 1997 and is under the jurisdiction of the commercial courts. The commercial court appoints a judge-auditor to preside over the bankruptcy proceeding and whose primary task is to supervise the management and liquidation of the bankrupt estate, in particular with respect to the claims of the employees. Belgian bankruptcy law recognizes several classes of preferred or secured creditors. A person who has been declared bankrupt may subsequently start a new business unless the person is found guilty of certain criminal offences that are directly related to the bankruptcy. The Business Continuity Act of 2009 provides the possibility for companies in financial difficulty to enter into a judicial reorganization. These proceedings are to some extent similar to Chapter 11 as the aim is to facilitate business recovery. In the World Bank’s 2020 Doing Business Index, Belgium ranks number 9 (out of 190) for the ease of resolving insolvency.
4. Industrial Policies
Since the August 1980 law on regional devolution in Belgium, investment incentives and subsidies have been the responsibility of Belgian’s three regions: Brussels, Flanders, and Wallonia. Nonetheless, most tax measures remain under the control of the federal government, as do the parameters (social security, wage agreements) that govern general salary and benefit levels. In general, all regional and national incentives are available to foreign and domestic investors alike. The federal government does not have a practice of issuing guarantees or jointly financing foreign direct investment projects.
Belgian investment incentive programs at all levels of government are limited by EU regulations and are normally kept in line with those of the other EU member states. The European Commission has tended to discourage certain investment incentives in the belief that they distort the single market, impair structural change, and threaten EU convergence, as well as social and economic cohesion. In January 2016, the European Commission ordered Belgium to reclaim up to USD 900 million in tax breaks from 36 companies (12 of which are U.S. companies) going as far back as 2004. The Belgian Government had given these breaks to companies through a series of one-off fiscal rulings. The scheme had reduced the corporate tax base of the companies by between 50% and 90% to discount for excess profits that allegedly resulted from being part of a multinational group. However, in a February 14, 2019 ruling, the EU General Court decided that the excess profit ruling was not a State-aid scheme. Observers note that the ruling is based on a procedural defect from the European Commission, and highlight that the General Court did not per se validate the excess profit ruling. Belgium challenged the EC decision legally and won, but the EC has appealed the ruling.
In their investment policies, the regional governments emphasize innovation promotion, research and development, energy savings, environmental protection, exports, and most of all, employment. The three regional agencies have staff specializing in specific regions of the world, including the United States, and have representation offices in different countries. In addition, the Finance Ministry established a foreign investment tax unit in 2000 to provide assistance and to make the tax administration more “user friendly” for foreign investors.
It is permitted for companies established in Belgium, foreign or domestic, to deduct from their taxable profits a percentage of their adjusted net assets linked to the rate of the Belgian long-term state bond. This permits companies to deduct the “notional” interest rate that would have been paid on their locally invested capital had it been borrowed at a rate of interest equal to the current rate the Belgian government pays on its 10-year bonds. This amount is deducted from profits, thus lowering nominal Belgian corporate taxes. Even though this system was made slightly less attractive in the recent past, it remains an important tool to stimulate investment in Belgium.
As of 2019, corporate groups may aggregate gains and losses from multiple Belgian subsidiaries or branches and pay taxes on the total amount of profit. As a result, companies generating low profits while operating a subsidiary at a loss will no longer be taxed.
Dividend distributions are generally subject to a 30% withholding tax. However, reduced rates are possible, and a full exemption can be claimed if the dividends are distributed by a Belgian tax-resident company to a receiving firm that:
- was established in Belgium or an EU member state;
- directly holds 10% of the capital of the distributing company;
- has maintained this holding for at least one year with no interruptions; and
- is appropriately incorporated in a cross-border situation.
Withholding taxes on dividends paid to corporate shareholders in treaty countries are no longer taxed in Belgium. Dividends distributed by subsidiaries of companies in Belgium are 100% tax exempt.
More information about the Belgian tax system can be requested at:
Federal Public Service Finance –
Foreign Investment Cell
Parliament Corner, Wetstraat 24 B-1000 Brussel, België
Tel: 02 579 38 66 – Fax: +32 257 951 12
Foreign Trade Zones/Free Ports/Trade Facilitation
There are no foreign trade zones or free ports as such in Belgium. However, the country utilizes the concept of customs warehouses. A customs warehouse is approved by the customs authorities where imported goods may be stored without payment of customs duties and VAT. Only non-EU goods can be placed under a customs warehouse regime. In principle, non-EU goods of any kind may be admitted, regardless of their nature, quantity, country of origin or destination. Individuals and companies wishing to operate a customs warehouse must be established in the EU and obtain authorization from the customs authorities. Authorization may be obtained by filing a written request and by demonstrating an economic need for the warehouse.
Performance and Data Localization Requirements
Performance requirements in Belgium usually relate to the number of jobs created. There are no national requirement rules for senior management or boards of directors. There are no known cases where export targets or local purchase requirements were imposed, with the exception of the military offset programs that were reintroduced under Prime Minister Verhofstadt in 2006. While the government reserves the right to reclaim incentives if the investor fails to meet employment commitments, enforcement is rare. However, in 2012, with the announced closure of an automotive plant in Flanders, the Flanders regional government successfully reclaimed training subsidies that had been provided to the company.
There is currently no requirement for foreign IT providers to share source code and/or provide access to surveillance agencies.
5. Protection of Property Rights
Property rights in Belgium are well protected by law, and the courts are independent and considered effective in enforcing property rights. Mortgages and liens exist through a reliable recording system operated by the Belgian notaries.
However, on the World Bank’s 2020 ranking on the ease for registering property, Belgium ranks only 139th out of a total of 190 countries.
Intellectual Property Rights
Belgium generally meets very high standards for the protection of intellectual property rights (IPR). The EU has issued a number of directives to promote the protection and enforcement of IPR, which EU Member States are required to implement. National laws that do not conflict with those of the EU also apply. Belgium is a member of the World Trade Organization (WTO) and so party to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Belgium is also a member of the World Intellectual Property Organization (WIPO) and party to many of its treaties, including the Berne Convention, the Paris Convention, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.
IPR is administered by the Belgian Office of Intellectual Property (OPRI), which is part of the Directorate-General for Economic Regulation in the Ministry for Economic Affairs: https://economie.fgov.be/en/themes/intellectual-property/institutions-and-actors/belgian-office-intellectual. This office manages and provides Belgian IPR titles, oversees public awareness campaigns, drafts legislation, and advises Belgian authorities with regard to national and international issues. The Belgian Ministry of Justice is responsible for enforcement of IPR. Belgium experiences a rate of commercial and digital infringement – particularly internet music piracy and illegal copying of software – similar to most EU Member States.
Belgium is not included on USTR’s Special 301 Report or the Notorious Markets List.
For additional information about treaty obligations and points of contact at local IPR offices, please see the WIPO’s country profiles at http://www.wipo.int/directory/en/ .
6. Financial Sector
Capital Markets and Portfolio Investment
Belgium has policies in place to facilitate the free flow of financial resources. Credit is allocated at market rates and is available to foreign and domestic investors without discrimination. Belgium is fully served by the international banking community and is implementing all relevant EU financial directives. At the same time, in 2020 Belgium ranked 67th out of 190 for “getting credit” on the World Bank’s “Doing Business” rankings, and in the bottom quintile among OECD high income countries.
The Belgian city of Bruges established the world’s first stock market almost 600 years ago, and the Belgian bourse is well-established today. On Euronext, a company may increase its capital either by capitalizing reserves or by issuing new shares. An increase in capital requires a legal registration procedure, and new shares may be offered either to the public or to existing shareholders. A public notice is not required if the offer is to existing shareholders, who may subscribe to the new shares directly. An issue of bonds to the public is subject to the same requirements as a public issue of shares: the company’s capital must be entirely paid up, and existing shareholders must be given preferential subscription rights. Details on the shareholders of the Bel20 (benchmark stock market index of Euronext Brussels) can be found on http://www.gresea.be/Qui-sont-les-actionnaires-du-BEL-20.
In 2016, the Belgian government passed legislation to improve entrepreneurial financing through crowdfunding and more flexible capital venture rules.
Money and Banking System
Because the Belgian economy is directed toward international trade, more than half of its banking activities involve foreign countries. Belgium’s major banks are represented in the financial and commercial centers of dozens of countries by subsidiaries, branch offices, and representative offices. The country does have a central bank, the National Bank of Belgium (NBB), whose governor is also a member of the Governing Council of the European Central Bank (ECB). Being a Eurozone member state, the NBB is part of the Euro system, meaning that it has transferred the sovereignty over monetary policy to the ECB.
Belgium has one of highest number of banks per capita in the world. Following a review of the 2008 financial crisis, the Belgian government decided in 2012 to shift the authority of bank supervision from the Financial Market Supervision Authority (FMSA) to the NBB. In 2017, supervision of systemically important Belgian banks shifted to the ECB. The country has not lost any correspondent banking relationships in the past three years, nor are there any correspondent banking relationships currently in jeopardy.
Since the introduction of the Single Supervisory Mechanism (SSM), the vast majority of the Belgian banking sector’s assets are held by banks that come under SSM supervision, including the “significant institutions” KBC Bank, Belfius Bank, Argenta, AXA Bank Europe, Bank of New-York Mellon and Bank Degroof/Petercam. Other banks governed by Belgian law – such as BNP Paribas Fortis and ING Belgium – are also subject to SSM supervision as they are subsidiaries of non-Belgian “significant institutions.”
In 2018, the banking sector conducted its business in a context of gradual economic recovery and persistently low interest rates. That situation had two effects: it put pressure on the sector’s profitability and caused a credit default problem in some European banks. The National Bank of Belgium designated eight Belgian banks as domestic systemically important institutions, and divided them into two groups according to their level of importance. A 1.5% capital surcharge was imposed on the first group (BNP Paribas Fortis, KBC Group and Belfius Bank). The second group (AXA Bank Europe, Argenta, Euroclear and The Bank of New York Mellon) is required to hold a supplementary capital buffer of 0.75%. These surcharges are being phased in over a three-year period.
Under pressure from the European Union, bank debt has decreased in volume overall, from close to 1.6 trillion euros in 2007 to just over 1 trillion euros in 2018, according to the National Bank of Belgium, particularly in the risky derivative markets.
It remains to be seen how the economic fallout of the COVID-19 crisis will impact banks on a long-term basis in Belgium.
Belgian banks use modern, automated systems for domestic and international transactions. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is headquartered in Brussels. Euroclear, a clearing entity for transactions in stocks and other securities, is also located in Brussels.
Opening a bank account in the country is linked to residency status. The U.S. FATCA (Foreign Account Tax Compliance Act) requires Belgian banks to report information on U.S. account holders directly to the Belgian tax authorities, who then release the information to the IRS.
With regard to cryptocurrencies, the National Bank of Belgium has no central authority overseeing the network.
Unlike most other EU countries, there are no cryptocurrency ATMs, and the NBB has repeatedly warned about potential adverse consequences of the use of cryptocurrencies for financial stability.
Foreign Exchange and Remittances
Payments and transfers within Belgium and with foreign countries require no prior authorization. Transactions may be executed in euros as well as in other currencies.
Dividends may be remitted freely except in cases in which distribution would reduce net assets to less than paid-up capital. No further withholding tax or other tax is due on repatriation of the original investment or on the profits of a branch, either during active operations or upon the closing of the branch.
Sovereign Wealth Funds
Belgium has a sovereign wealth fund (SWF) in the form of the Federal Holding and Investment Company (FPIM-SFPI), a quasi-independent entity created in 2004 and now mainly used as a vehicle to manage the banking assets which were taken on board during the 2008 banking crisis. The SWF has a board whose members reflect the composition of the governing coalition and are regularly audited by the “Cour des Comptes” or national auditor. At the end of 2019, its total assets amounted to € 2.35 billion. The majority of the funds are invested domestically. Its role is to allow public entities to recoup their investments and support Belgian banks. The SWF is required by law to publish an annual report and is subject to the same domestic and international accounting standards and rules. The SWF routinely fulfills all legal obligations. However, it is not a member of the International Forum of Sovereign Wealth Funds.
7. State-Owned Enterprises
Belgium has approximately 80,000 employees working in SOEs, mainly in the railways, telecoms and general utility sectors. There are also several region-owned enterprises where the regions often have a controlling majority. Private enterprises are allowed to compete with SOEs under the same terms and conditions, but since the EU started to liberalize network industries such as electricity, gas, water, telecoms and railways, there have been regular complaints in Belgium about unfair competition from the former state monopolists. Complaints have ranged from lower salaries (railways) to lower VAT rates (gas and electricity) to regulators with a conflict of interest (telecom). Although these complaints have now largely subsided, many of these former monopolies are now market leaders in their sector, due mainly to their ability to charge high access costs to legacy networks that were fully amortized years ago.
Belgium currently has no scheduled privatizations. There are ongoing discussions about the relative merits of a possible privatization of the state-owned bank Belfius and the government share in telecom operator Proximus. There are no indications that foreign investors would be excluded from these eventual privatizations.
8. Responsible Business Conduct
The Belgian government encourages both foreign and local enterprises to follow generally accepted Corporate Social Responsibility principles such as the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights. The Belgian government also encourages adherence to the OECD Due Diligence guidance for responsible supply chains of minerals from conflict-affected areas.
When it comes to human rights, labor rights, consumer and environmental protection, or laws/regulations which would protect individuals from adverse business impacts, the Belgian government is generally considered to enforce domestic laws in a fair and effective manner.
There is a general awareness of corporate social responsibility among producers and consumers. Boards of directors are encouraged to pay attention to corporate social responsibility in the 2009 Belgian Code on corporate governance. This Code, also known as the “Code Buysse II” was drafted by a group of independent corporate experts and stresses the importance of sound entrepreneurship, good corporate governance, an active board of directors and an advisory council. It deals with unlisted companies and is complementary to existing Belgian legislation. However, adherence to the” Code Buysse II” is not factored into public procurement decisions. For listed companies, far stricter guidelines apply, which are monitored by the Financial Services and Markets Authority.
drafted by a group of independent corporate experts and stresses the importance of sound entrepreneurship, good corporate governance, an active board of directors and an advisory council. It deals with unlisted companies and is complementary to existing Belgian legislation. However, adherence to the” Code Buysse II” is not factored into public procurement decisions. For listed companies, far stricter guidelines apply, which are monitored by the Financial Services and Markets Authority.
Belgium is part of the Extractive Industries Transparency Initiative.
Department of State
- Country Reports on Human Rights Practices;
- Trafficking in Persons Report;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
- North Korea Sanctions & Enforcement Actions Advisory.
Department of Labor
Resources to Report Corruption
Belgian anti-bribery legislation was revised completely in March 1999, when the competence of Belgian courts was extended to extraterritorial bribery. Bribing foreign officials is a criminal offense in Belgium. Belgium has been a signatory to the OECD Anti-Bribery Convention since 1999, and is a participating member of the OECD Working Group on Bribery. The Working Group’s Phase 3 review of Belgium in 2013 called on Belgium to address the lack of resources available for fighting foreign bribery.
Under Article 3 of the Belgian criminal code, jurisdiction is established over offenses committed within Belgian territory by Belgian or foreign nationals. Act 99/808 added Article 10 related to the code of criminal procedure. This Article provides for jurisdiction in certain cases over persons (foreign as well as Belgian nationals) who commit bribery offenses outside the territory of Belgium. Various limitations apply, however. For example, if the bribe recipient exercises a public function in an EU member state, Belgian prosecution may not proceed without the formal consent of the other state.
Under a 1999 Belgian law, the definition of corruption was extended considerably. It is considered passive bribery if a government official or employer requests or accepts a benefit for him or herself or for somebody else in exchange for behaving in a certain way. Active bribery is defined as the proposal of a promise or benefit in exchange for undertaking a specific action. Until 1999, Belgian anti-corruption law did not cover attempts at passive bribery. The most controversial innovation of the 1999 law was the introduction of the concept of “private corruption,” or corruption among private individuals.
corruption,” or corruption among private individuals.
Corruption by public officials carries heavy fines and/or imprisonment between five and ten years. Private individuals face similar fines and slightly shorter prison terms (between six months and two years). The current law not only holds individuals accountable, but also the company for which they work. Contrary to earlier legislation, the 1999 law stipulates that payment of bribes to secure or maintain public procurement or administrative authorization through bribery in foreign countries is no longer tax deductible. Recent court cases in Belgium suggest that corruption is most serious in government procurement and public works contracting. American companies have not, however, identified corruption as a barrier to investment.
The responsibility for enforcing corruption laws is shared by the Ministry of Justice through investigating magistrates of the courts, and the Ministry of the Interior through the Belgian federal police, which has jurisdiction in all criminal cases. A special unit, the Central Service for Combating Corruption, has been created for enforcement purposes but continues to lack the necessary staff. Belgium is also an active participant in the Global Forum on Asset Recovery.
The Belgian Employers Federation encourages its members to establish internal codes of conduct aimed at prohibiting bribery. To date, U.S. firms have not identified corruption as an obstacle to FDI.
UN Anticorruption Convention, OECD Convention on Combatting Bribery
Belgium has signed and ratified the UN Anticorruption Convention of 1998, and is also party to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.
Office of the Federal Prosecutor of Belgium
Transparency International Belgium
Resources to Report Corruption
Wolstraat 66-1 – 1000 Brussels
T 02 55 777 64
Nijverheidsstraat 10, 1000 Brussels
Tel: +32 (0)2 893 2584
10. Political and Security Environment
Belgium is a peaceful, democratic nation comprising federal, regional, and municipal political units: the Belgian federal government, the regional governments of Flanders, Wallonia, the Brussels capital region, and 581 communes (municipalities). Political divisions do exist between the Flemish and the Walloons, but they are addressed in democratic institutions and generally resolved through compromise. The Federal Council of Ministers, headed by the prime minister, remains in office as long as it retains the confidence of the lower house (Chamber of Representatives) of the bicameral parliament.
11. Labor Policies and Practices
The Belgian labor force is generally well trained, highly motivated and very productive. Workers have an excellent command of foreign languages, particularly in Flanders. There is a low unemployment rate among skilled workers, such as local managers. Enlargement of the EU in May 2004 and January 2007 facilitated the entry of skilled workers into Belgium from new member states. Non-EU nationals must apply for work permits before they can be employed. Minimum wages vary according to the age and responsibility level of the employee and are adjusted for the cost of living.
Belgian workers are highly unionized and usually enjoy good salaries and benefits. Belgian wage and social security contributions, along with those in Germany, are among the highest in Western Europe. For 2019, Belgium’s harmonized unemployment figure was 5.4 percent, below the EU average of 6.4 percent (OECD). High wage levels and pockets of high unemployment coexist, reflecting both strong productivity in new technology sector investments and weak skills of Belgium’s long-term unemployed, whose overall education level is significantly lower than that of the general population. There are also significant differences in regional unemployment levels (2019 figures): 3.3 percent in Flanders, against 7.2 percent in Wallonia and 12.7 percent in Brussels. As a consequence of high wage costs, employers have tended to invest more in capital than in labor. At the same time, a shortage exists of workers with training in computer hardware and software, automation and marketing, increasing wage pressures in these sectors.
Belgium’s comprehensive social security package is composed of five major elements: family allowance, unemployment insurance, retirement, medical benefits and a sick leave program that guarantees salary in event of illness. Currently, average employer payments to the social security system stand at 25 percent of salary while employee contributions comprise 13 percent. In addition, many private companies offer supplemental programs for medical benefits and retirement.
Belgian labor unions, while maintaining a national superstructure, are, in effect, divided along linguistic lines. The two main confederations, the Confederation of Christian Unions and the General Labor Federation of Belgium, maintain close relationships with the Christian Democratic and Socialist political parties, respectively. They exert a strong influence in the country, politically and socially. A national bargaining process covers inter-professional agreements that the trade union confederations negotiate biennially with the government and the employers’ associations. In addition to these negotiations, bargaining on wages and working conditions takes place in the various industrial sectors and at the plant level. About 51 percent of employees from the public service and private sector are labor union members. A cause for concern in labor negotiation tactics is isolated cases where union members in Wallonia have resorted to physically forcing management to stay in their offices until an agreement can be reached.
Firing a Belgian employee can be very expensive. An employee may be dismissed immediately for cause, such as embezzlement or other illegal activity, but when a reduction in force occurs, the procedure is far more complicated. In those instances where the employer and employee cannot agree on the amount of severance pay or indemnity, the case is referred to the labor courts for a decision. To avoid these complications, some firms include a “trial period” (of up to one year) in any employer-employee contract. Belgium is a strict adherent to ILO labor conventions.
Belgium was one of the first countries in the EU to harmonize its legislation with the EU Works Council Directive of December 1994. Its flexible approach to the consultation and information requirements specified in the Directive compares favorably with that of other EU member states.
In 2015, the Belgian government increased the retirement age from the current age of 65 to 66 as of 2027 and 67 as of 2030. Under the 2015 retirement plan, various schemes for early retirement before the age of 65 will be gradually phased out, and unemployment benefits will decrease over time as an incentive for the unemployed to regain employment.
Wage increases are negotiated by sector within the parameters set by automatic wage indexation and the 1996 Law on Competitiveness. The purpose of automatic wage indexation is to establish a bottom margin that protects employees against inflation: for every increase in consumer price index above 2 percent, wages must be increased by (at least) 2 percent as well. The top margin is determined by the competitiveness law, which requires the Central Economic Council (CCE) to study wage projections in neighboring countries and make a recommendation on the maximum margin that will ensure Belgian competitiveness. The CCE is made up of civil society organizations, primarily representatives from employer and employee organizations, and its mission is to promote a socio-economic compromise in Belgium by providing informed recommendations to the government. The CCE’s projected increases in neighboring countries have historically been higher than their real increases, however, and have caused Belgium’s wages to increase more rapidly than its neighbors. Since 2016 however, that wage gap has decreased substantially.
Belgian labor law provides for dispute settlement procedures, with the labor minister appointing an official as mediator between the employers and employee representatives.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical source*||USG or international statistical source||USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other|
|Host Country Gross Domestic Product (GDP) ($M USD)||N/A||N/A||2019||$533.09||www.worldbank.org/en/country|
|Foreign Direct Investment||Host Country Statistical source*||USG or international statistical source||USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other|
|U.S. FDI in partner country ($M USD, stock positions)||N/A||N/A||2019||$63.2||BEA data available at https://apps.bea.gov/international/factsheet/|
|Host country’s FDI in the United States ($M USD, stock positions)||N/A||N/A||2019||$70.1||BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data|
|Total inbound stock of FDI as % host GDP||N/A||N/A||2019||1.8%||UNCTAD data available athttps://stats.unctad.org/handbook/EconomicTrends/Fdi.html|
* Source for Host Country Data:
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||577,139||100%||Total Outward||676,434||100%|
|The Netherlands||148,230||25.68%||The Netherlands||212,974||31.48%|
|“0” reflects amounts rounded to +/- USD 500,000.|
|Portfolio Investment Assets|
|Top Five Partners (Millions, current US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||625,416||100%||All Countries||150,319||100%||All Countries||474,534||100%|
|The Netherlands||65,240||10,43%||United Kingdom||8,644||5,75%||Luxembourg||39,958||8,42%|
|United States||55,022||8,79%||The Netherlands||6,830||4,54%||Japan||33,450||7,04%|
14. Contact for More Information
Pieter-Jan VAN STEENKISTE
Regentlaan, 27 – BE1000 Brussels
0032 475 706 529 email@example.com