Belgium seeks more Korean investment
Biz-friendly tax regime is one of incentives
Belgium, a global hub for international government institutions, wants to attract more Korean investment with its business-friendly tax regime.
At the “Belgium: Gateway to Europe” seminar at the Koreana Hotel on Oct. 27, the event host, the Embassy of Belgium, invited Bart Adams, chairman at the Fiscal Department for Foreign Investments of the Ministry of Finance in Belgium, to give a presentation on Belgium’s corporate tax system. Marc De Vestle, counselor for trade and investment at the embassy, and Chief Financial Officer at Korean investment company NXMH Hong Jong-hyun also shared information and a case study on Belgium’s business environment.
“Belgium is a country full of small and medium-sized companies that produce chemicals, machinery, financial software, broadcasting technology and many more,” Belgian Ambassador to Korea Francois Bontemps said. “This network of SMEs is very connected, so what you are investing in Belgium not only increases your productivity, especially tax incentives, but also improves your creativity, which is important today.”
According to Invest in Belgium, the corporate tax rate is about 33 percent. But under certain conditions, a reduced progressive rate of 24.98 percent applies. Since 2006, the Belgium parliament has passed into law the notional interest deduction through which companies are allowed to deduct a fictitious interest calculated on the basis of their shareholders’ equity. The country also has investment deductions on certain types of investment, reduced salary costs and the carry forward of losses.
In terms of research and development, Belgium receives the third-highest amount of expenditure from foreign companies.
“We offer high-quality research facilities with unparalleled research and development incentives,” the chairman said. “For example, U.S. firms spend 10 times more in the EU than in China and India combined.”
Being a member of the European Union (EU) offers more benefits — no customs duties on trade between member states, no internal trade barriers and common external tariff and harmonized trade measures. Since the Free Trade Agreement between Korea and Europe in 2011, an increasing number of Korean firms have taken an interest in the European market — about 1,799 companies participated in 98 trade affairs in Germany last year, according to the embassy.
A taxation agreement between Korea and Belgium was signed in 1997, designed to avoid double taxation and prevent evasion.
“Belgium is a small country, but we are in a central location in Europe, which saves logistics and travelling costs,” the counselor said. “Also, the language plays an important role here, and Belgians speak French, Dutch and German as well as English.”
Housing costs and rents are lower than other European countries, especially the United Kingdom and France. According to Cushman & Wakefield, Brussels had the lowest office rent in 2014 with 393 euros per square meter while London’s West End topped the list with 2,122 euros, followed by Paris and Geneva with 895 and 718 euro, respectively.
Belgium also offers foreign companies the opportunity to test Brussels as a business location — free office, free secretariat and free consultancy for three months.
“Apart from all that, we boast great quality of living,” the counselor said. “We have the best health care system and international schools that offer many different language courses.”
NXMH, a global investment arm of the largest shareholder of the Korean game company Nexon, was based in the Netherlands in 2009. But the company decided to move to Belgium after a year for more tax benefits.
“There weren’t many cases of a Korean company entering the European market in the past, so we asked a law firm for candidates, which were the U.K., the Netherlands and Germany,” Hong said.
