Finance and Banking in Belgium

Want to take the first step towards financial success in Belgium? Whether you are planning a move or setting up a business, this comprehensive guide will provide you with all the knowledge that you need to thrive in the Belgian financial landscape.

Are you thinking of starting your own business venture or seeing fresh opportunities in the vibrant European hub? If yes, then Belgium might just be on your radar. With its rich culture, beautiful landscapes, and a promising economic environment, Belgium attracts people from all around the world. 

However, navigating the complex world of finance and banking in a Belgium can be a bit daunting for foreigners. Tasks like opening bank accounts, managing currencies, and understanding complex tax systems, especially if you are trying to start a business, are pretty intimidating if you don’t know about it beforehand.

But, worry not! We have created this comprehensive guide that will help you navigate the financial and banking landscape in Belgium with confidence and ease. Keep on reading if you want to find out more.

Overview of Belgian Economy

Nestled in the heart of Europe, Belgium has consistently proven itself as a strong competitor in the world economy. Despite many setbacks and challenges, Belgium’s resilient and thriving economy attracts people from all over the world who are inclined to expand their businesses there.

GDP Contribution:

Belgium plays a very significant role in the economic landscape of the European Union. Despite its small size, contributes to approximately 10% of the country’s GDP, and is expected to reach an estimated 581.49 USD billon by the end of 2023, as per Trading Economics global macro models and analysts. This significant factor makes Belgium a key player in the financial stability and growth of Europe.

Economic Resilience:

One of the most notable characteristic of Belgium’s economy is its resilience, which was especially highlighted after the global COVID-19 pandemic when the nation emerged at a 6.1% annual growth rate in the GDP in 2021, according to World Bank

Exports:

Belgium’s highly efficient logistics infrastructure and strategic geographical location are among the reasons that make it a global export hub. In 2022, Belgium proudly ranked as the 20th largest exporter in the world, with its exports ranging from machinery and chemicals to pharmaceuticals and automobiles. 

The location of Belgium at the crossroads of Europe also allow for easy access to neighboring markets, making it an ideal place for companies that are seeking to expand their international reach.

Multinational Presence:

Another reason why Belgium is an attractive country for business corporations is because it is home to a lot of global giants, from various sectors. Among them are some pharmaceutical leaders like Pfizer and GlaxoSmithKline, automotive leaders including Audi and Volvo, and technological powerhouses like Microsoft and Google. The presence of these global companies only serves to reinforce Belgium’s reputation as a top business location.

Banking System in Belgium

The banking system in Belgium is a pillar of stability and innovation, adapting to the evolving financial landscape. Let’s take a look into the recent development and insights into the country’s banking system:

Banking Institutions:

Belgium offers a variety of banking solutions catering to both businesses and individuals. Some of the major banks in the country are: BNP Paribas Fortis, the largest bank in Belgium and holds a prominent position in the market. It provides a range of financial services to both retail and corporate customers.

ING Belgium, the second leading bank in the country, is a subsidiary of the global ING Group and is known for its innovative banking approach. It offers digital services and online banking options that appeal to today’s consumers.

The KBC group is another well-known ban in Belgium that mainly focuses on the retail and commercial banking side, insurance, and asset management. They also run their operations internationally. 

Regulatory Framework:

The banking industry in Belgium is strictly governed, and there are two important organizations that are in charge of that regulation:

National Bank of Belgium: Being the central bank of Belgium, NBB plays a very critical role in maintaining the financial stability and banking services in the country. It’s responsible for making sure that other bank comply with international standards and follow the regulatory reforms.

Financial Services and Markets Authority (FSMA): The FSMA is responsible for safeguarding the rights and interests of the consumers and participants in the financial market. They enforce the rules and regulations related to the financial products and services, and make sure to maintain transparency.

Digital Banking: Mobile banking and online services are becoming increasingly popular in Belgium’s, and people have embraced this digital transformation with open hands. 92% of Belgian adults have started using online banking services due to the convenience of making payments, managing account, and accessing financial information right from their smartphones. For to this reason, banks have significantly invested in user-friendly apps and online platforms. 

Opening a Bank Account in Belgium

If you’re thinking of moving to Belgium, you need to open your bank account here whether you’re going as a resident or a business entity. If you’re unsure of how to get this done, we have compiled this process in a simple way to help you out.

Requirements:

Although the process varies from bank to bank, there are a few things that are generally required:

  • A valid passport or identity card.
  • A proof of address (such as a utility bill).
  • A proof of income (such as a recent pay slip).
  • In some cases, you may also be required to provide a tax identification number or proof of residency.

Although non-residents can open their bank accounts in Belgium, having a local address greatly speeds up the process. 

Choosing the Bank:

Selecting the right bank when you want to open an account is really important as it sets the stage for your financial journey in Belgium. There are a lot of choices available, so you need to do a lot of research before you make your decision. These are some of the factors that you should consider:

Services: Check the range of services offered by different banks, including savings account, current account, loans, and investment options. Pick the bank that aligns well with your financial needs and objectives. 

Fees: Understand the fee structure associated with your chosen bank. Consider account maintenance fees, transaction charges, and ATM access costs to avoid any unpleasant surprises.

Accessibility: Evaluate the accessibility of the bank you choose. Check how many branches they have in your area and the number of ATMs, especially if you’re someone who prefers in-person banking. Additionally, also check if they have provide online banking and mobile apps for times when you can’t bother going to the bank in person. 

Digital Onboarding: After the pandemic, Belgium quickly witnessed the digitization of the banking process, considering the safety hazards. There are many banks there that have simplified the account opening process by offering digital onboarding. Customers can easily provide the necessary documentation and identity verification online and open their bank accounts from the comfort of their home.

Mobile Banking Apps: The use of banking apps has become increasingly prevalent in Belgium, and is increasing in popularity day by day. These apps come with many features, account balance tracking, fund transfer, bill payments, and even investment management. So, make sure that your chosen bank offers mobile banking services to make things more efficient.

Managing Currencies

Effectively managing your currencies is really important, especially for those who are involved in international transactions. Below is an in-depth analysis of currency management in Belgium and all the latest developments:

Currency Exchange:

Most of the Belgian banks offer the currency exchange service that allows you to convert your currency into another, which is very beneficial if you’re moving from another country. However, in the last few years, the landscape has evolved even further and there has been a rapid growth in the popularity of online currency exchange platforms.

They offer much more competitive rates and allow the users to execute these transactions from the comfort of their home. If you’re considering exchanging currency for trade or travel to Belgium, these platforms are worth a thought.

Foreign Currency Account:

For individuals and businesses frequently dealing with specific foreign currencies, some Belgian banks also offer foreign currency accounts. These accounts allow you to hold and conduct business in foreign currencies, without the need for frequent currency exchanges.

Currency Risk Mitigation:

To protect your financial interests in a fluctuating currency market, managing exchange rate risks is essential. Here are some strategies that might be useful.

Forward Contracts: These are a financial tool that allow you to set a specific exchange rate for a future date, protecting you from any unfavorable changes in the value of the currency. Many business use this tactic to secure their revenue and guarantee their earnings.

Options and Derivatives: They are some advances strategies that are used to reduce the risk associated with currency fluctuations. While they offer flexibility and customized risk reduction strategies, they also require a deep understanding of the financial market.

Consulting Financial Experts: Since currency markets are complex, they are influenced by multiple factors that might be difficult to understand. In this matter, there are many financial experts that you can consult, who’ll give you valuable insights and guide you how to manage and reduce the currency risk.

Taxation in Belgium

The tax system in Belgium is known for being intricate, which is why it’s really crucial to stay updated on the latest development and regulations. 

Personal Income Tax:

Belgium has a progressive tax system with varying rates depending on income levels, as shown below:

IncomeTax Rate
up to EUR 13,870 25%
over EUR 13,870 up to 24,48040%
over EUR 24,480 up to 42,37045%
over EUR 42,37050%

Corporate Tax:

To enhance the competitiveness of the country, and attract more business, Belgium has gradually reduced its corporate tax rate, aiming to reach 25% by the end of 2023. Thus, Belgium is a desirable location for all businesses that are looking to establish their presence in Europe. However, navigating the corporate tax environment requires a thorough knowledge of tax laws, incentives, and reporting obligations.

Value Added Tax (VAT):

Over the years, Belgium has maintained a stable standard VAT rate of 21%. However, there are certain goods and services that have a lower VAT rate, such as food, beverages, pharmaceutical products, books, etc. Staying updated on VAT regulations is vital for any business that are operating in Belgium, to avoid penalties and ensure smooth operations.

Tax Incentives:

Belgium offers various tax deductions and incentives designed to encourage economic activities, particularly in research and development (R&D) and innovation. These incentives can significantly impact your tax liability, so make sure to stay informed about available opportunities.

Sections include: