InvestinBelgium2011

Invest in Belgium Embassy of Belgium, Washington, DC www.diplobel.us May, 2011 www.invest.belgium.be

10 (good) reasons to invest in Belgium
Economic heart, at the center of a large and prosperous EU customer base
Access to European centers of decision making
Trading tradition of trade: more than 85% of Belgian GDP exported
One of the most popular destinations for foreign investment
Access to a highly qualified and productive labor force
Center of knowledge
Modern and efficient business infrastructure
Low real estate costs and low costs of living
Ease of starting up
Attractive tax regime

Reason #1 Economic Heart of Europe

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

Belgium is at the heart of an area with 60% of Europe’s purchasing power, 30% of EU consumers.
Outside the Northeast US corridor, Belgium sits at the heart of the world’s 2 nd largest concentration of wealth.
140 million consumers are located within a 300 mile radius of Brussels.
The international orientation of its economy and its diverse population on the border of Latin and Germanic influence in Europe make Belgium an ideal test market for U.S. companies

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
Direct flights to Brussels from New York, Newark, Washington DC, Atlanta, Chicago, Boston, and Philadelphia

Reason #2 Decision-Making Center
Belgium is home to EU, NATO, and 1400 governmental & non-governmental international organizations
Brussels is:
World n°2 location for number of diplomats (3800, behind New York )
World n°2 for number of foreign journalists (behind Washington, DC) and home of 2400 lobbyists
World n°2 international conference center for number of events per year

Reason #3 Foreign Trade Leader
Exports = €265 billion (2009), making Belgium the 8 th exporter of goods worldwide
( WTO International Trade Statistics 2009 )
BE= 13 th exporter of services worldwide
Destination of 77% of Belgian exports = the EU (84% of GDP exported)
U.S. = Belgium’s 5th trading partner, 5 th export market for Belgium
Belgium = the U.S.’s 18th trading partner
U.S. exports to Belgium = $ 25.5 billion (2010), i.e. almost 30% of U.S. exports to China
Belgium = 14 th market for export of U.S. goods (Nov. 2010)
Bilateral U.S.-Belgian trade = $ 41billion (2010), with a large U.S. trade surplus (US Census Bureau)
Antwerp is the leading port in the world for transport of goods to and from the United States.
Almost 3,000 Belgian companies currently export to the U.S. market.

Reason #3 Foreign Trade Leader

Major Trading Partner for the U.S.

Major Trading Partner for the U.S.
In states like Texas, Pennsylvania, Georgia and South Carolina, Belgium is among the top 10 export destinations.
Belgium is among the top 5 European export markets in more than half the U.S. states, including California, Texas, New York and Illinois.

Reason #4 Leading FDI Destination

Reason #4 Prime FDI Destination
Belgium’s regions rank among top 10 regions for FDI Strategy (European Cities and Regions of the Future 2010/2011, FDI Magazine).
11 of the top 15 global chemical companies have production plants in Belgium

Favorite U.S. Investment Partner

The U.S. is the largest foreign investor in Belgium
The value of foreign investment between the U.S. and Belgium exceeds $100 billion.
The value of U.S. investment in Belgium at the end of 2009 equaled U.S. investments in China and India combined .
Over the last decade, Belgium has been the 11th overseas market for U.S. foreign investment.
Belgium is among the top 10 foreign investors in Georgia, Ohio, Pennsylvania and South Carolina. In Georgia alone, 76 Belgian companies are present, employing about 5800 people. In Ohio, Belgian-owned companies employ over 6600 people. In Pennsylvania, there are 111 Belgian-owned companies.

Reason #5 High Quality Labor Force

Reason #6 Global Center of Knowledge
In an area the size of Maryland, Belgium offers 16 university centers and an extensive community of world-renowned scientific institutes such as IMEC (micro-electronics), the Institute for Tropical Medicine, or the Institute for Cellular Pathology (ICP) at the University of Louvain-la-Neuve
R&D activities employ about 80,000 people in the country, including some 50,000 researchers. 60% of R&D personnel works in the private sector, 33% in the education sector, 7% in the public sector
Close to all the leading university centers, innovation and incubation centers and science parks provide new innovative businesses, shared facilities, equipment and services
The World Competitiveness Yearbook ranks Belgium consistently among the top 10 countries worldwide for its scientific infrastructure, its educational system and the quality of education at university level
Belgium is the best country in the OECD for innovation performance and biotech industry development (OECD Science & Technology Outlook, 2008)
5 th place in the qualitative assessment of world scientific research institutes (WEF Global Competitiveness Report, 2008-2009)
Belgium, with its 200 biotech and pharmaceutical companies, is a biopharma concentration zone.

Reason #6 Global Center of Knowledge
Case Study: Pharmaceutical Industry
Belgium employs more than 28,000 in the pharmaceutical sector, in over 150 pharmaceutical companies and 31 R&D centers
Pharma represents 11% of Belgian exports
Belgium is ranked 2 nd in pharma exports worldwide (OECD, 2006)
More than 5,000 researchers work in clinical testing (100% increase since 1995)
Private pharmaceutical R&D investment has tripled since 1995, now representing 40% of all private R&D in Belgium
Belgium has the largest number of clinical trials per capita in Europe, between 2006 and mid-2009, almost 2000 clinical studies were approved
Belgium produces more than 5% of all new medicines worldwide
Innovative drug companies employ about 3400 full time researchers .
BE has the highest number of pharma drugs in development per capita in Europe
Over 40% of private investment in R&D is targeted at the pharma sector

Reason #7 Top Business Infrastructure Ranking of Major European Distribution Locations Cushman & Wakefield, 2008 Italy 10 Slovenia 9 Germany 8 Austria 7 France 6 Poland 5 Czech Republic 4 Hungary 3 Netherlands 2 Belgium 1

Reason #7 Top Business Infrastructure
Air
Brussels harbors the 5th cargo airport in Europe (Brucargo), ten miles from the city
Europe’s largest highway interchange is located 2 minutes from Brussels Airport
Every 15 minutes, a passenger rail service links Brussels Airport to the city center and the HST/TGV European high speed train network.
Liège, Charleroi, Ostend, and Antwerp provide fast-growing regional airports
Rail
The Belgian railway freight system B-Cargo offers daily links to Europe’s major economic zones, with no border stops and speeds of up to 60 mph
Sea and Waterways
4 major seaports (Antwerp, Ghent, Zeebrugge, Ostend), and 2 major riverports (Liège and Brussels) provide for the biggest port concentration in Europe
Antwerp is the 5th port in the world (and 2nd in Europe), hosting the 2nd largest chemical cluster in the world
The port of Antwerp participates in the U.S. Container Security Initiative (CSI)
Liège is the 2nd riverport in Europe and more than 900 miles of canals provide the world’s densest inland waterway network, connecting all major Belgian cities, France, the Netherlands, the Rhine-Main-Danube area and Central and Eastern Europe

Reason #8 Low Cost of Living and Realty

Low Effective Tax Rate
Widely available Tax Ruling
Notional Interest Deduction
“ Tax Shelter” System
Dividend Withholding Tax Exemptions
Holding regime
Reduced Wage Costs
R&D Tax Breaks
Double Taxation Treaties
Reason #9 Highly Attractive Tax Regime

Reason #9 Highly Attractive Tax Regime ( n.b. ) - Effective average corporate tax rate 2009 (based on asset and source of finance) - Especially in Belgium, the EATR is considerably below statutory tax rates (-9.3) Source : Report 2009, made by ZEW (Centre for European Economic Research) for the EU Commission (Project Taxud/2008/CC/099), Mannheim and Oxford, October 2009

Ruling: 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 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, with pre-filing meetings available on a ‘no name’ basis

Notional Interest Deduction
(NID)
The notional interest deduction is a 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 (assessment year 2011= income 2010), that rate is 3.8%% (4.3% for SME’s). The law sets forth 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

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 Belgian coordination-center regime, which was phased-out between 2006 and 2010
Belgium abolished the 0.5% registration duty on capital contributions as of January 1, 2006. Therefore, the equity of companies in Belgium can be increased without any further tax burden

Reason #9 Highly Attractive Tax Regime EXAMPLE NID : Assets Liabilities Group Financing 10,000 Share capital 10,000 P & L account Before notional interest deduction With notional interest deduction Profit before tax 400 400 Notional interest deduction (3.8 %) / - 380 Taxable 400 20 Corporate tax (33.99 %) 135.96 6.79 Effective tax rate 33.99 % 1.70 %

Reason #9 Highly Attractive Tax Regime EXAMPLE 2 NID : Assets Liabilities Business Assets 10,000 Share capital 10,000 1.70 % 4 % Net result (return on equity) Effective tax rate ≤ 3.8% 0 % 5 % 8.15 % 8 % 17.84 %

“ Tax Shelter”
The Belgian ‘Tax shelter’ is a tax incentive designed to encourage the production of audiovisual works and films
The system allows companies wishing to invest in the production of an audiovisual work to benefit from a tax exemption on retained profits worth up to 150% of the capital actually invested

Dividend Withholding Tax Exemption
This exemption extends the European Parent–Subsidiary Directive’s regime between the EU Member States and Switzerland to all countries that have a double taxation treaty with Belgium, such as Hong Kong and the U.S.
Using Belgium as their holding location for investments in Europe allows corporate investors from treaty countries to repatriate European profits without dividend withholding tax and without a limitation on profits

Attractive Tax Regime
Holding Regime
almost all net capital gains on shares are 100% exempt from tax
95% of qualifying dividend income is deductible from taxable base.

Reduced Salary Costs
The Belgian tax system includes lower salary costs for foreign executives and researchers
Foreign executives or researchers 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
There is a 75% exemption from payroll tax for researchers

R&D Tax Incentives
Partial exemption from payment of payroll tax for R&D personnel employed in:
- universities, institutions of higher education
- scientific institutes
- private companies
Tax credit for investments in new patents or investments related to R&D for environmentally friendly or energy-reducing new products and future technologies

R&D Tax Incentives:
New Law on Patent Income
A ‘patent income deduction’ is effective since 2008, allowing Belgian companies, or Belgian branches of foreign companies, to deduct 80% of patent royalties from their taxable income
Companies will deduct from their taxable income 80% of the patent income. The 20% left from the patent income (after deduction) remains taxable, in effect decreasing the maximum effective tax rate from 33.99% to 6.8% of the patent income. This rate is substantially lower than the rates available for patent income in most other European countries
The deduction has no cap, but if the patent royalties' deduction exceeds the company's taxable income, it cannot be carried forward to the following tax year
The tax deduction applies not only to patents owned - and developed, by the company or one of its branches, but also to patents or licenses acquired from a third party

R&D Tax Incentives:
New Law on Patent Income
(continued)
For patents or licenses acquired from a third party, the company or the Belgian branch of a foreign company has to improve the patent in one of its own research centers, in Belgium or abroad, in order to benefit from this incentive
For patents used by the Belgian company or establishment for the manufacture of patented products, the tax deduction will amount to 80% of the license fee that the Belgian company would have received if it had licensed the patents used in the manufacturing process to an unrelated party
Companies can combine this measure with the other already existing tax incentives
The system significantly improves the prospects for patent development and holding companies in Belgium, licensing patents to U.S. affiliates

Extensive Network of Double Taxation Treaties
Belgium has a very extensive network of double taxation treaties, including the Double Taxation Convention between the United States and Belgium of 2007, that went into effect on December 28, 2007
The double taxation 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 taxation treaty with Hong Kong in 2004 (0% dividend withholding tax under certain conditions)

The US-Belgian DTC contains very interesting features for U.S. companies with business plans in Europe:
0% withholding tax on dividend payments from a Belgian subsidiary to its U.S. parent, provided the U.S. parent owns 10% or more of the Belgian company. This 10% ownership threshold is significantly lower than the threshold in other treaties recently concluded by the U.S. Combined with other general features of Belgium’s domestic tax system for holding companies, this may attract holding companies for holding the shares of U.S. affiliates
The exemption from withholding tax also applies to pension funds, provided the dividends are not the result of business activities by the fund
0 % withholding tax on interest. Together with the Notional Interest Deduction, this makes direct loans between the U.S. and Belgian affiliated companies more attractive, and increases possibilities for companies in Belgium to finance U.S. affiliates.
New categories of taxpayers such as qualified charities or pension trusts will now be able to claim benefits, and strengthened anti-abuse provisions designed to deny inappropriate use of the treaty will bring them into closer conformity with current U.S. treaty policy
The Convention extends the benefits to companies owned by so-called “equivalent beneficiaries”, which may provide opportunities for multinational groups that are based in the EU, Switzerland or NAFTA
Other changes in the new Treaty include a more tax friendly treatment of pension plan contributions and an extended information exchange provision
The U.S. and Belgium will also, upon request by either government, exchange information held by a bank or other financial institution
Reason #9 U.S.-Belgium Tax Convention

Reason #10 Tailor made solutions

Belgium
A federal state … made of 3 Regions, with additional regional business incentives

Regional Investment Offices in the U.S.
Flanders Investment & Trade
www.investinflanders.com
Wallonia Trade & Investment Agency
www.investinwallonia.com
333 North Michigan Avenue, Suite 905
Chicago, IL. 60601-4186
Tel. (312) 357-6349
[email_address]
Economic & Commercial Office of the Brussels Capital Region
www.brussels-usa.com
1065 Avenue of the Americas - 22nd floor
New York, NY 10018
Tel. (212) 399-8522
[email_address]
150 North Wacker Drive, Suite 2100 Chicago, IL. 60606 Tel. (312) 251-0622 [email_address] 6100 Wilshire Blvd., Suite 1200 Los Angeles, CA. 90048 Tel. (323) 857-0842 ext. 14 [email_address] 620 8th Avenue, 44th Floor New York, NY 10018 –USA Tel. (212) 664-0930 [email_address]

10 (good) reasons to invest in Belgium
Economic heart, at the center of a large and prosperous EU customer base
Access to European centers of decision making
Trading tradition of trade: more than 85% of Belgian GDP exported
One of the most popular destinations for foreign investment
Access to a highly qualified and productive labor force
Center of knowledge
Modern and efficient business infrastructure
Low real estate costs and low costs of living
Ease of starting up
Attractive tax regime

THANK YOU www.invest.belgium.be … and many, many others !

InvestinBelgium2011

by bdeelen

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