# How to reduce tax liability if moving to Belgium and working as 1099 in the USA?



## imme (Mar 20, 2013)

Hello all,

Currently I live/work in the USA as an independent consultant/contractor doing software consulting, and therefore when I file taxes I have a 1099 on my name, and do the quarterly filings, yearling filings, etc.

We are moving to Belgium and I understand that I will still declare/pay taxes in the USA and possibly qualify for the foreign exclusion, which sounds all good until I was told about the Belgian taxes. 

Once I become a Belgian resident, I'm told I will have to also declare/pay taxes to Belgium and their tax rate is quite high, at 50% but could be 10-15% less if you declare expenses, etc. 

In the past I've been told to incorporate, but haven't really given this idea much thought thus far.

However, given that if I live in Belgium I will have to declare my personal income, now I'm thinking that if I have some type of company/corporation, then the corporation will get taxed in the USA, but there wouldn't be a need to declare that income in Belgium as is not a Belgian entity, unless of course, I then choose to be paid by this corporation or something along those lines.

Therefore, the question is---does anybody have any suggestions or ideas how this might work so as to reduce the tax liability in another country?


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## Bevdeforges (Nov 16, 2007)

No, you can't get out of it that easily. And you don't get a choice of where you pay your taxes.

In Belgium you will need to set up some form of business entity to receive your income from the US. The general rule is that you are "working in" the country where you are resident while doing the work. I'm not familiar with the Belgian system for business entities, but chances are there is some form of business entity for a single "entrepreneur" doing consulting type work.

Depending on the type of business entity you set up for yourself, your business may pay its own taxes, and simply pay you a salary - or you basically continue like you are doing now, except that you'll have to make payments to the Belgian social insurances authority according to their rules and rates. Your income will be subject to the US foreign earned income exclusion - so no problem with double taxation there.

If you were to have a corporation in the US, you'd still have to set up a Belgian business entity in order to pay yourself, which doesn't really get you anywhere.

One thing to consider is that, most European countries allow you to deduct some or all of your social insurances from your income before you arrive at "taxable income" - and of course, your expenses involved with your consulting income would also be deductible.

One small caveat - depending on what sort of business entity you set up and the levels of income we're talking about here, you may be required to register with the VAT authority in Belgium, which means that you'd be required to charge your customers in the US VAT on all billings to them. For services, VAT is charged based on where the services are performed, which in your case would be in Belgium. (But, if you are required to charge your customers VAT, then all VAT you paid for expenses of your business would become deductible for the business.)

You may want to start out by contacting the American Chamber of Commerce in Belgium AmCham Belgium to see what information they can provide.
Cheers,
Bev


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