By: Geert Criel, Consul General, Consulate General of Belgium Issue: Global Trade Section: Collaborator Profile
At the Heart of Europe
Belgium is well known in the U.S. for its excellent cuisine, and its chocolate, waffles, and beer in particular. Others know the small country for its diamond industry or the role of Brussels as the host to the EU institutions and NATO.
But Belgium also has a broader story to tell of economic success.
WTO data show that the country is the 20th economy in the world, and the 10th exporter of goods globally.
It attracted $40 billion in foreign investment in 2007, according to the latest World Investment Report by the UN, making a country the size of Maryland, the 11th destination for foreign investment. The Financial Times recently ranked two of its regions, Flanders and Wallonia, among the top five of Europe’s most important destinations for foreign investment.
The U.S. is the main foreign investor in Belgium, measured in number of investment projects as well as in capital investment. The total value of U.S. investment in Belgium topped $55 billion in 2008. Most of the investment has been in the finance and insurance sector, and in chemical manufacturing. But investment in the service industry, including law firms, accounting firms, advertising agencies, and computer and management services, has more than tripled since 2000.
Belgium’s major appeal for foreign companies is its central location in Europe. Within a radius of 300 miles, 140 million European consumers can be reached. Eighty percent of the country’s GDP is exported, mostly to neighboring Germany, France, the Netherlands and the UK. And as host of the EU, Belgium is a popular spot for companies with a special interest in access to European decision-making.
Other factors contribute to Belgium’s economic successes. Belgium’s status as the top car exporter per capita in the world, for example, is also the result of its excellent business infrastructure and the second most productive workforce per hour worldwide. Low real estate costs contribute to Belgium’s appeal for distribution and logistical activities. Belgium attracts more than 10% of all logistical foreign investments in Europe, according to Ernst & Young’s latest Barometer of Belgian Attractiveness.
Belgium is also a major player in the life sciences. Over 140 biotech companies in Belgium employ over 10,000 people, predominantly focused on healthcare applications. Belgium is the second exporter of pharmaceutical products per capita in Europe. As a matter of fact, the country hosts one of Pfizer’s largest non-U.S. production sites. Belgium holds more clinical trials per capita than any other country in the world. And GlaxoSmithKline has located almost its entire production of vaccines in Belgium.
In a globalized world, Belgium is of course confronted with a fierce competition for its share of foreign investment. Over the last 5 years, the Belgian government has taken an increasingly proactive approach in creating a business friendly environment.
Over the last 5 years, the Belgian government has taken an increasingly proactive approach in creating a business friendly environment.They are summarized on the investment website of the Belgian government, www.invest.belgium.be.
In an effort to reduce red tape, it has become possible to set up a company in Belgium via a single office in three days. The government has especially focused on reducing the tax burden for companies. Two years after a reduction of corporate tax rates in 2003, the government launched the Notional Interest Deduction, which allows Belgian tax-resident companies and Belgian branches of non-resident companies to deduct in their corporate income tax return a deemed interest cost for the equity invested in the Belgian company of branch. Estimates are that the NID has reduced the effective corporate tax rate in many cases to less than 25%.
Belgium has also implemented a series of tax incentives for locating R&D activities in Belgium. One of the most recent ones is the Patent Income Deduction, allowing Belgian companies and branches engaged in patent development - in a research center in Belgium or abroad - a special reduction of 80% in taxation of royalties. Belgium is also targeting the niche market of pension funds with a new tax regime for locating cross border pension funds in Belgium in a tax-neutral manner.
The U.S. business community in Belgium very much welcomed the recent reforms. “We are proud that Belgium has become more attractive for U.S. investment”, Denise Rutherford, president of AMCHAM Belgium said during the release of the organization’s 2007 Investment report.
For additional information, please contact:
Consulate General of Belgium in Los Angeles - www.diplomatie.be/losangeles/
Brussels Export – Flanders Investment and Trade
Stephen Esbin, Director Investment
Barbara Bruneel, Director Trade
c/o Consulate General of Belgium
6100 Wilshire Blvd., Suite 1200,
Los Angeles, CA 90048
Tel: +1-323-857 0842
Fax: +1-323-938 4024
Wallonia Export and Investment Office
Frederic Delbart, Trade and Investment Commissioner
155 Montgomery Street - suite 207
San Francisco, 94104 CA - USA