Hiring Freelancers in Belgium: a Simple Compliance Guide

Belgium has one of the most talented workforces, with a very high level of employee satisfaction and workplace happiness. A big part of this are the many benefits employees get from their employer, such as a 13th (and even 14th) salary, generous sick pay, annual leave, maternity and paternity leave, additional benefits and more. These bonuses are great for employees but can be a challenge for small businesses, who need to cover all of those costs for their employees, on top of paying high employer tax (27% of gross salary), social security, health insurance, pensions and more.

It is not surprising many businesses look for alternatives to their hiring needs. Freelancers and contract workers can be a great solution for their needs. Not only do they allow employers to cut costs and administration (which is also a cost in itself), but also benefit from a flexible and highly-skilled workforce which brings in value from day one.

If you want to tap into that resource, we have partnered with CXC Global to give you the necessary information to update your hiring strategy and benefit from the growing power of the independent workforce in Belgium.

You need to be aware of the following to ensure full compliance when hiring a freelancer:

1. Avoid fake independency status
2. Have a contract
3. Establish regular pay
4. Check the freelancer's background
5. Consider GDPR and protect IP
6. LIMOSA declaration for non-Belgian workers

A freelancer can operate as a sole proprietor (eenmanszaak/ entreprise individuelle). In this case there is no legal separation between the person and the business. This is popular for professionals who have just started or who operate under a low revenue threshold.

The worker may also have formed a limited company, which is a separate legal entity from them. This is done mostly for a better tax optimization or in case the person's business has grown to allow them to hire their own sub-contractors.

Freelancers can also work with a partner and have formed a general partnership (VOF) or a limited partnership (CommV).

It is also possible for the freelancer to use an umbrella company which takes care of the invoicing for them, such as Tentoo, Smart and Xolo. In this case, the umbrella company will send you the invoice and you – the client – will pay to the company, which will then take a fee and pay the freelancer, who retains employee status for the umbrella company.

You can find more information about legal status of freelancers in our article here.

You need to make sure the contractors you work with will not be considered as "fake independents" by the social authorities. This is an issue when some companies force their full-time employees to register as self-employed, so the employer saves expenses from benefits, social security and tax. If you hire an independent worker and exert too much control over their work and their schedule, then they might be considered a fake independent.

The simplest way to avoid the risk is to include a clause in the contract which clearly states that the contractor has the freedom to work with other clients. When they work with more than one client, it is much less likely that they will be considered a fake independent. Furthermore, a fixed employee cannot be switched to a freelancer within the same company that easily.

A freelancer may also get in trouble if he/she works full time for one organisation only. A solution for a freelancer could be that they find additional smaller clients to perform their services for.

Signing a contract with the contractor will solidify the terms of the work relationship between you and them. This should include important information like the company details, general terms and conditions, the assignment description (including the scope and time-frame of the project), the fee or rate of the contractor, the invoice and payment terms and more. If you are in doubt, we advise referring to a lawyer to make sure you are not missing out on any clauses which may make you or your clients liable to the authorities.

To learn more about what you can add to your contract, such as a non-compete clause or a confidentiality clause see CXC's article here.

GDPR and privacy regulations are something you need to keep in mind when creating your contract, as you can become liable if you share inappropriate information with the contractor, or if their work leads to a leak of personal data. What is more, during the hiring process the data of the contractor needs to be treated with the same caution as the information of your employees.

Depending on your field of work, intellectual property may become a matter of discussion. Don't assume that you automatically own the work of the contractor! Instead, agree with your clients who will retain the IP rights on the content they produce for you – this is important, as it may have a reflection on their rates.

When you introduce a new person to your company, especially if they will have access to private and sensitive information (IT freelancers, for example, can have access to large databases, while creative professionals may have access to your IP and branded assets or social media accounts), there are a number of checks you can make to be sure the person is reliable. Research shows that 86% of employers had ran a background check on freelancers for one-off assignments. This can be difficult, especially if the person is from a different country.

There are a few steps you can take:

• You can require them to provide documents confirming their identity, as well as a declaration confirming they don't have a criminal record.
• Some professions in Belgium are regulated, so confirming the authenticity of their diplomas and certificates is advisable too. See a list of regulated professions here.
• You may also ask for references from their past jobs.
• For a more thorough check, you can use a private background check provider based in the country of your contractor.
• Keep in mind that you may not be allowed to ask questions or require checks that are not directly relevant for the vacancy. You can find more information on background checks in Belgium here.

If you are planning to hire a contractor from abroad to work in Belgium, you need to make sure they have completed and filed their LIMOSA declaration. This is a document which confirms that foreign workers are making social security contributions in their home country. If they are paying into the Belgian system, then they are exempt from having to provide it. They are also exempt if they work less than five days a month in Belgium.

If the worker does not provide you with a filled LIMOSA declaration, you are obliged to report them to the authorities, or you risk being sanctioned.

You can find out more here.

How you pay your contractor will depend a lot on their business structure and legal status. Use metrics based on either time-frames (daily, hourly, etc.) or project milestones. Have a way to verify that the work has been completed (such as using timesheets). Then, the contractor will send you an invoice which you can remit.

If they have formed a limited company or partnership, you will pay the invoices of their business. You can find out more about the best ways to pay contractors from abroad in our article.

Be aware that payment terms of 70 or 90 days may cause a great financial burden on freelancers, who ought to pay taxes from issued invoices even if they are not yet paid. As a matter of fact Belgian legislation fixes the standard payment term of 30 days and it is not even legal to extend this term (see the Belgian Law of 2 August 2002 on late payments in commercial transactions).

With the rising costs of living and the increased financial strain on your business, now is the perfect time to explore new options and update your hiring and recruitment strategy to help your business succeed. With the rising popularity of freelancers, even in corporate teams, updating your HR strategy to accommodate contingent workers might be a strong step in preparing your business for the future of work and you can find a strong partner in this mission in CXC Global. Find out more about their solutions and how they can make the process of hiring contingent workers simpler and less stressful here, or if you want to follow their work, visit them on LinkedIn.