Economic overview
In its new forecast, the Organization for Economic Co-operation and Development has sharply increased its growth forecast to 4.4 %% for 2022 (compared to 4% and 3.7%). Despite this vigorous recovery, the world economy still shows an income loss of $ 3 trillion compared to the pre-covid situation. It’s certainly huge, but it’s only half of what was feared in December 2020, the OECD says. However, the recovery will be irregular.
Expected growth this year is 8.5% in China and 6.9% in the United States, two countries that have already returned to pre-pandemic levels. On the other hand, the recovery was slower in Japan (2.6%) and Germany (3.3%). Halfway there, France (5.8%), as well as Belgium with an announced growth of 4.7% in 2021 and 3.5% in 2022. T
In May, the European Commission announced 4.5% growth for the Belgian economy this year and 3.7% next year. Belgian GDP is therefore not expected to return to pre-crisis levels until mid-2022.
Belgium has been hit hard by the coronavirus pandemic as evidenced by the fall in GDP and other indicators.
Main sectors of industry
Agriculture
Developed and highly specialized, it satisfies 80% of needs. They grow: sugar beet, potatoes, wheat, barley, corn, apples and tomatoes.
Farm
A thriving sector that makes the country self-sufficient for the consumption of milk, butter and eggs. GDP (Gross Domestic Product) = 1% together with agriculture. They raise: pigs, cattle, sheep and horses (especially in the Ardennes).
Energy Resources
Coal used to be the main mineral resource, but today it is expensive and not very productive. Therefore, more than half of the energy is of nuclear origin (7 reactors). The rest is produced by fuel-fired plants.
Industry / Secondary
One of the most industrialized countries in Europe. GDP = 24.3%. Industries: textile (famous for lace and damask), iron and steel, chemical, food, mechanical. 1st for diamond processing.
Trade / Transportation
Development of communications routes that yield in business. Imports: fuel, minerals, machinery, textiles, coal, petroleum, metals, food, electronic equipment and chemicals. Exports: iron, steel, textiles, chemicals, food, livestock and processed diamonds. Business partners: Germany, Luxembourg, the Netherlands (Holland), France, Great Britain and the U.S.A. Primacy in the railway field.
Fishing
In the North Sea, Antwerp is the country’s most important port.
Tertiary / Services
Service companies are highly developed. Financial sector developed with about 140 credit institutions, in addition to the Banque Nationale de Belgique. Tourism constitutes a conspicuous voice in the national economy, for the cities of art, the seaside resorts and the pristine valleys of the Ardennes, they attract millions of tourists every year.
Taxation for businesses
At the end of 2017, the government launched an important package of tax reforms which included, among other innovations, a gradual reduction in the corporate income tax rate and the introduction of the tax consolidation regime. The reform, which took effect over a three-year period (2018-2020), was based on three pillars: budget neutrality, simplification and fair taxation. The standard corporate income tax rate of 33% was reduced to 29% in 2018 and increased to 25% as of 2020. Small and medium-sized enterprises have seen a reduction in taxation to 20% since 2018 for the first 100 thousand euros of profit. Also starting from 2020 the surcharge on the crisis was abolished.
The tax on capital gains deriving from shares (of 0.412%) does not apply in the case of equity investments equal to at least 10% of the share capital or an acquisition value of at least 2.5 million euros.
30% of the tax base exceeding the first tranche of 1 million euro qualifies as the minimum effective tax base determined as follows:
the deductions of dividends received, the deductions of patent income, those for innovation costs and investments are deducted from the tax base;
if after these deductions, the remaining taxable income exceeds 1 million euros, the following deductions can only be applied to 70% of the taxable base exceeding one million euros: the deduction for the carry-over of dividends received, the deduction of the innovation costs carried carried forward, the carry-over of tax losses.
In Belgium the ordinary VAT rate is 21% and then there are those reduced to 6 and 12%. Value added tax must be paid by registered suppliers of goods and services unless such services are at zero rate, exempt or outside the scope of VAT. Since 2010, the VAT rate for food served in restaurants and catering services has been reduced from 21% to 12%. The reduced VAT rate of 6% on renovation works in residential homes has become permanent.
Investing in Belgium
The foreign investor in Belgium finds a very favorable environment. The major international rankings see Belgium at the top of bureaucratization, integration, fight against corruption. The Belgian economy is highly globalized and the country has implemented a series of devices to attract investment. These include: the deduction of nominal interest, which makes it possible to recover the effective corporate tax; the so-called “theoretical interest”, ie the partial exemption from the payment of interest on the profits reinvested in the company; the absence of wealth tax; deductions for investments in specific sectors; tax incentives for patent income; the inexistence of restrictions for activities owned by non-residents. The legislation on employment relationships and related tax issues is also interesting. With regard to commercial intermediaries, the provisions are more favorable than elsewhere.
Belgium is a federal state located in Western Europe, bordering the North Sea. Belgium shares borders with France (556 km), Germany (133 km), Luxembourg (130 km) and the Netherlands (478 km). Belgium is divided into three regions: Flanders, Wallonia and Brussels.