Invest in Belgium

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Published on March 16, 2008

Author: Reva

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Invest in Belgium:  Invest in Belgium 2006 10 reasons to invest in Belgium:  10 reasons to invest in Belgium 1. Economic location: at the center of a large and prosperous EU customer base 2. Access to European centers of decision making 3. A tradition of trade: more than 85% of Belgian GDP exported 4. One of the most popular destinations for foreign investment 5. Access to high quality labor force 6. A center of knowledge 7. Modern & efficient business infrastructure 8. Low real estate costs 9. High quality of life 10. Attractive tax regime Economic location:  Economic location With an area the size of Maryland and a population similar to Michigan, Belgium lies at the very heart of an area where 60% of Europe’s purchasing power and 30% of EU consumers are concentrated. Outside the northeast corridor of the U.S., Belgium sits at the heart of the largest concentration of wealth in the world. Within a radius of 300 miles 140 million consumers can be reached (almost 50% of the U.S. population). Slide4:  Spain France Italy Germany Denmark United Kingdom Ireland The Netherlands Brussels London Belgium Switzerland Dublin Barcelona Rome Paris Frankfurt Milan Bern Luxembourg Amsterdam The economic power base of Europe Economic location :  Economic location Distances from Brussels: Luxembourg 134 miles Paris 184 miles Amsterdam 213 miles London 219 miles Frankfurt 245 miles Travel time by High Speed Train (HST) from Brussels London 2h40 Paris 1h25 Amsterdam 2h40 Cologne 2h30 Geneva 5h15 Brussels Airport: -73 airlines carry passengers to 131 destinations -40 cargo airlines fly to 81 destinations Easy access to decision makers :  Easy access to decision makers Home to EU, NATO, and 1400 governmental & non-governmental international organizations Brussels is: -second to New York for number of diplomats (3800) -second to Washington, DC for number of foreign journalists. The city hosts about 2400 lobbyists -the second international conference center in the world (number of meetings per year) A tradition of foreign trade :  A tradition of foreign trade Belgian exports in 2005 amounted to $ 333.5 billion in value, more than 85 % of Belgian GDP. According to the World Trade Organization (WTO), Belgium was the 10th exporter and the 9th importer of goods worldwide in 2005, and the 13th exporter of services. Belgium is the 4th exporter per capita in the world 80.4% of exports go to the EU, and 56 % to the neighboring countries UK, Germany, France and the Netherlands. The U.S. is Belgium’s 5th trading partner; Belgium is the 16th trading partner for the U.S. Bilateral trade is worth almost $ 30 billion. The U.S. exported $ 17.2 billion to Belgium in 2005, which is about 50% of U.S. exports to China. Because of the European orientation of its economy, the Belgian business cycle serves as a leading indicator to extrapolate developments in the European economy. A tradition of foreign trade :  A tradition of foreign trade Main Belgian Export Products, 2005 (%) 1. Chemical & Pharmaceutical 23.1 2. Transport Equipment 12.7 3. Machinery & Appliances 12.7 4. Metals 8.7 5. Plastics & Rubber 8.1 6. Mineral products 7.5 7. Precious Stones & Precious Metals 5.3 8. Textile & Textile articles 4.2 9. Foodstuffs & Beverages 4.0 10. Vegetable Products 2.2 Source: Agency for Foreign Trade, Belgium A tradition of foreign trade:  A tradition of foreign trade The U.S. is one of Belgium’s top trading partners A tradition of foreign trade :  A tradition of foreign trade Belgium and the U.S. have a diversified trade relationship A major recipient of foreign investment:  A major recipient of foreign investment Global FDI capital inflows in 2004 $ US billion 1. U.S. 95.9 2. U.K. 78.4 3. China 60.6 4. Luxembourg 57.0 5. Australia 42.6 6. Belgium 34.4 7. Hong Kong 34.0 8. France 24.3 9. Spain 18.4 10. Brazil 18.2 Source: UN World Investment Report 2005 Belgium is among the top 10 destinations for foreign direct investment (FDI) worldwide Slide12:  Global FDI inward investment stock, 2004 $ billion U.S. 1473.9 U.K. 771.9 France 535.2 Hong Kong 456.8 Netherlands 428.8 Germany 348.0 Spain 346.7 Canada 303.8 Belgium 258.9 Australia 253.6 Source: UN World Investment Report, 2005 A major recipient of foreign investment Belgium is among the top 10 destinations for direct investment worldwide A major recipient of foreign investment:  A major recipient of foreign investment U.S. direct investment in Belgium Investment by U.S. companies in the Belgian economy in 2004: over $ 1.3 billion In 2005, U.S. companies accounted for 27.2% of all foreign investment projects in Belgium, more than companies from any other country. In 2005, the cumulative value of U.S. direct investment in Belgium was 36.7 $ billion. This makes Belgium historically the 8th destination for U.S. investment in Europe. Proportionally most of the U.S. investment in Belgium (26.1%) is in finance and insurance companies (except banks), chemical manufacturing (18.1%), non-bank holdings (12.7%), services (12.0%), and wholesale trade ($ 10.6%). Belgium attracts 36.1% of all U.S. investment in chemical manufacturing in the EU, and 16% of all U.S. investment in services.   U.S. investment in professional, scientific and technical services has more than tripled since 2000. Companies in this category include law firms and accounting firms, advertising agencies, and computer and management (HR) services. Investments in finance and insurance have gained in importance as well, having more than doubled in nominal terms A major recipient of foreign investment:  A major recipient of foreign investment US investment stock in Belgium, 2005 ($ billion) Main sectors Data Bureau of Economic Analysis A major recipient of foreign investment:  A major recipient of foreign investment U.S. foreign direct investment in Belgium U.S affiliates in Belgium represent • 5.3% of GDP, 2.8% of total employment (145,900 jobs) • 11.3% of total assets, 11.2 % of sales • 14% of R&D expenditures, 15% of exports U.S. affiliates are the second most important foreign employer in Belgium. In the chemical sector, U.S. affiliates represent one third of value added, 27% of total employment. In the pharmaceutical sector, U.S. affiliates represent 61% of value added, 48% of total employment. U.S. manufacturing firms control about 30% of total assets of Belgian high-tech manufacturing, generated 44% of its added value, and created 24% of its employment . (AMCHAM Belgium, US Direct Investment in Belgium 2006). A major recipient of foreign investment :  A major recipient of foreign investment Belgian investments in the U.S. Belgian companies invested over $ 591 million in the U.S. in 2004, which is similar in size to the foreign investment from all Middle Eastern countries combined ($ 508 million, 2004). The total value of Belgian investment in the U.S. is estimated to be $ 11.3 billion. In 2003, Belgian majority-owned U.S. affiliates were responsible for $ 27.8 billion in sales, supporting about 133,000 American jobs. Businesses from EU countries spent $ 50.8 billion in 2005 to acquire or establish businesses in the U.S., 58.5% of the world total. 37% of all foreign direct investment in the U.S. in 2004 came from EU countries, compared to 33.2% for Canada and 16.8% for Japan. To date, EU countries represent 61.7% of all foreign direct investment in the U.S., compared to Canada’s 8.7% and Japan’s 11.6%. Source: Bureau of Economic Analysis, U.S. Department of Commerce High quality labor force:  High quality labor force Belgium’s workforce is highly productive, educated and multilingual Productivity: - The World Competitiveness Yearbook 2005 by the Institute for Management and Development (Lausanne) ranks Belgium’s workforce 6th in the world for productivity/hour. - The Conference Board’s 2005 report ranks Belgium’s workforce 5th for productivity/hour. Language skills and education: Belgium’s Ranking Global Competitiveness Yearbook 2006-2007, World Economic Forum World Competitiveness Yearbook, 2005 Slide18:  Belgium offers 16 university centers and an extensive community of scientific institutes, employing some 50,000 full-time researchers Two Belgian universities were ranked among the top 10 outside the U.S. in terms of research environment (The Scientist, 2003). According to the World Competitiveness Yearbook 2005, Belgium ranks as follows in the world: Number of patents per 100,000 persons 6th Business expenditure on R&D per capita 8th R&D personnel employed in businesses (per capita) 10th Belgium spent 2.17% of its GDP on research and development in 2004, higher than the EU average of 1.94% 1.54% came from the private sector, compared to the EU average of 1.08% A center of knowledge A center of knowledge:  A center of knowledge Locations of R&D operations of multinational groups 1. U.S. 58.8% 2. U.K. 47.1% 3. China 35.3% 4. France 35.3% 5. Japan 29.4% 6. India 25.0% 7. Canada 19.1% 13. Belgium 11.8% Survey, UN World Investment Report 2005 A center of knowledge:  A center of knowledge Case study: pharmaceuticals Belgium employs more than 26,000 in the pharmaceutical sector, in over 150 pharmaceutical companies Belgium is ranked 2nd for pharmaceutical exports per capita in Europe (European Federation of Pharmaceutical Industries Associations) 1.3 billion € was spent on pharmaceutical R&D in Belgium in 2003, which is 36% of all R&D in the private sector More than 5,000 researchers work in clinical testing, 80% financed by the pharma industry. Belgium has the largest number of clinical trials per capita in Europe, evidence of the close interaction between research labs and medical schools The OECD Study ‘ Innovation in Biopharmaceutical Technology’ (March 2006) ranks Belgium nr.1 in terms of innovation and industry development. Factors included: patent applications, drugs under development, venture capital, number of companies. Belgium produces more than 5% of all new medicines worldwide: New recent examples include: new drugs against epilepsy, bipolar disorder, allergies, obesity, reproductive medicine, tuberculosis vaccine against malaria new chemotherapy against blood cancer preventive molecule against AIDS Business infrastructure:  Business infrastructure 1. Belgium scores among the top 10 worldwide for World Competitiveness Yearbook, 2005/ Global Competitiveness Yearbook 2006-2007 2. Rail transport With 2,210 miles (3,536 km) of track, Belgium’s rail infrastructure is among the highest-density networks in the world, handling more than 60 million tons of freight and € 331milion turnover in 2005. The Belgian railway frieght system B-Cargo offers daily transport to Europe’s major economic zones, with no border stops and speeds op to 60 mph. Business infrastructure:  Business infrastructure 3. Water transportation 4 major seaports (Antwerp, Ghent, Zeebrugge, Ostend), and 2 major riverports (Liège and Brussels), provide the biggest port concentration in Europe With record cargo volume of 160 million tons and more than 15,000 vessels entering in 2005, Antwerp is the 5th port in the world (2nd in Europe), and the 2nd chemical cluster in the world. The port of Antwerp participates in the U.S. Container Security Initiative (CSI). More than 900 miles of inland waterways and canals provide the world’s densest inland waterway network, connecting to all major Belgian cities, France, the Netherlands, the Rhine-Main-Danube network and Central and Eastern Europe; Liège is the 2nd riverport in Europe. 4. Air transportation Brussels has the 5th cargo airport in Europe (Brucargo), only ten miles from the city Europe’s largest highway interchange is only 2 minutes from Brussels Airport Every 15 minute a passenger rail service provides services to the city center and the HST High Speed Train Network. Brussels was named best airport in Europe by Airport Council International (ACI) for 2005 Liège, Charleroi, Ostend, and Antwerp offer regional airports Low real estate costs:  Low real estate costs Belgium offers one of the lowest real estate costs in Europe In the world ranking of most expensive office locations, Brussels occupies only the 35th spot. London, Paris, Frankfurt, Dublin, and Luxembourg are all in the top 10 (2006 Global Office Occupancy Costs Survey, DTZ). Brussels occupied the 71th spot for cost of living in the 2006 ranking of 144 cities by Mercer Human Resources Consulting. London (5), Geneva (7), MIlan (13), Paris (15), Amsterdam (41), and Luxembourg (56), and Frankfurt (61) were all more expensive. Source: Jones Lang Lasalle, 2005 Quality of life:  Quality of life International studies constantly show that Belgium offers excellent quality of life outside the business environment. Belgium was ranked 9th in the UN Human Development Index (HDI) 2005, a comparative measure of wealth, literacy, education, life expectancy, and other quality of life factors for countries worldwide. In the World Competitiveness Yearbook 2005 Belgium was ranked among the top 10 for Ranking Pupil/teacher ratio (secondary education) 2th Health infrastructure 5th Education system 9th Quality of university education 10th A recent comparative study by KPMG in thirty European countries cites Belgium as having one of the best health care systems. Attractive tax regime :  Attractive tax regime Notional interest deduction (NID) Lower taxes, higher profits Expat regime Extensive network of double tax treaties Ruling practice: legal certainty for investors New tax measures to stimulate research Attractive tax regime:  Notional Interest Deduction (NID) the notional interest deduction is a new tax deduction for all Belgian companies and Belgian branches of foreign companies applicable since January 1, 2006 it introduces an annual deduction on taxable income equal to the interest that would have been paid on the aggregate equity amount in the case of long-term debt financing, reducing the taxable base of the company. the deduction is based on the ‘equity capital’ as stated in the company’s opening balance sheet of the taxable period. Increases or decreases of the equity during the taxable period will be taken into account on a pro rata basis. the notional interest rate will be set each year and will follow the average annual 10-year government bond rate. At this time, that rate is around 3.5%. The law sets a maximum deviation of 1% from one year to the next and a maximum percentage of 6.5%. to the extent that the interest deduction does not have a direct tax effect (e.g. in loss situations), the interest deduction can be carried forward for the next seven years. Attractive tax regime Attractive tax regime:  Notional interest deduction (continued) the NID is unique in the world in the area of corporate taxation. the NID encourages capital intensive investments, and provides an incentive for multinationals to allocate activities such as intra-group financing, central procurement and factoring, to a Belgian group entity. it is a viable alternative to the current Belgian coordination center regime, which will be phased out between 2006 and 2010. Belgium also abolished the 0.5% registration duty on capital contributions as of January 1, 2006, and, therefore, the equity of companies in Belgium can be increased without any further tax burden. Attractive tax regime Attractive tax regime:  Lower taxes lead to higher profits Estimates are that the notional interest deduction cuts the corporate income tax rate on average to around 25%, but this figure could be even lower for highly capitalized corporations. US tax magazines like Tax Notes have pointed out that for U.S. companies, the effective tax rate in Belgium was only 12% in 2002, only slightly higher than the rate in low-tax Ireland (8%). Reinvested earnings accounted for more than 80 % of the flow of U.S. investment capital to Belgium during the period of 1995-2004, reflecting the high profitability and positive performance of existing Belgian based US subsidiaries. Attractive tax regime Attractive tax regime:  Expatriate regime Foreign executives assigned temporarily to Belgium within an international group of companies may qualify for a special ‘expat’ taxation regime. The expatriate will be treated for tax purposes as a non-resident, liable to Belgian personal income tax only on income related to the activities in Belgium. Days spent outside Belgium will not be taxed in Belgium under the so-called ‘travel exclusion’. Non-taxable allowances apply, such as allowances or reimbursements made to cover the extra expenses caused by the assignment in Belgium. Attractive tax regime Attractive tax regime:  Extensive network of double tax treaties Belgium has a very extensive network of double taxation treaties, including the Double Taxation Convention between the United States and Belgium (1970). Negotiations about a renewal of this treaty are ongoing. The double tax treaties often provide for reduced or 0% withholding tax rates (for example on dividends and interests on company loans), and exempt (under certain conditions) foreign source profits Belgium was the first country to conclude a tax treaty (2004) with Hong Kong (0% dividend withholding tax under certain conditions) Attractive tax regime Attractive tax regime:  Upfront legal certainty for investors Since January 1, 2005 a new general ruling practice has been established Upon request, an independent ‘ruling commission’ of the Federal Public Service (FPS) Finance will inform investors about the tax implications of their investments prior to the start or the expansion of operations. Rulings can cover all matters under the jurisdiction of the FPS Finance, and will be given within three months of the ruling request, unless otherwise determined by mutual agreement. Ruling decisions will be binding for a maximum of five years and based on Belgian law, providing investors with maximum legal certainty. An elaborate pre-filing practice has been developed. Pre-filing meetings can be done on a ‘no name’ basis. Attractive tax regime Attractive tax regime:  R&D tax incentives Companies that recruit additional full-time R&D personnel employed benefit from a tax exemption of 12.780 € to 25.570 € (depending on the research level) for FY 2007. Partial exemption of payroll taxes (up to 50% and more) applies for R&D personnel employed in : -universities, institutions of higher education -scientific institutes -private companies Companies can receive a tax deduction or a tax credit for investments regarding patents, R&D for environmentally friendly or energy reducing new products and future technologies Attractive tax regime 10 reasons to invest in Belgium:  10 reasons to invest in Belgium 1. Economic location: at the center of a large and prosperous EU customer base 2. Access to European centers of decision making 3. A tradition of trade: more than 85% of Belgian GDP exported 4. One of the most popular destinations for foreign investment 5. Access to high quality labor force 6. A center of knowledge 7. Modern & efficient business infrastructure 8. Low real estate costs 9. High quality of life 10. Attractive tax regime

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