Should I Start My Business In The US Or In Belgium?

expat network

Should I Start My Business In The US Or In Belgium?

I’m an expat who has been living abroad for seven years. As I’m married to a Belgian citizen, I’m also a Belgian resident with right to work in the EU. I would like to start my own business as a freelance copywriter but am wondering if it’s more beneficial to start a business in the US or Belgium from a tax perspective.

Ines Zemelman, Founder and President, Taxes For Expats, replied:

From a U.S. tax perspective, if you work as a freelancer (without incorporating a business), provided that you pay into the Belgian Social Security system, you will be able to exclude your self-employment earnings in the U.S. as Belgium and the U.S. have signed a totalization agreement. Prior to the tax reform of 2017, there were US tax benefits to incorporating your business outside of the U.S; these mostly went away with the forced repatriation of foreign untaxed earnings.

If you obtain a Eenmanszaak or Entreprise individuelle – this will require the filing of Schedule C. If you have a SPRL or EBVBA or BVBA – this would require Form 5471 (a foreign corporation by the IRS classification). If you have a VOF or SEP or SCS, this would entail filing of Form 8865 (foreign partnership, more complex filing than under Entreprise individuelle – same US tax consequences as described above).

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.