Because of its central location in Europe and its logistics infrastructure, Flanders is a major player in importing goods for distribution within the wider European market. Consequently, the region has developed a flexible system of law and tax treatments relating to imported goods, whether they are ultimately destined for other EU countries or for countries outside the EU.

This section provides an overview of the laws and taxes for the foreign investor involved in importing goods to Flanders.

Import duties and procedures

Flanders is part of the European Union (EU), whose member states form a customs union. This means that: 1) within the customs union no duties or other trade-restrictive regulations apply and 2) in relation to trade with other countries there is one common duty tariff. Trade between member states is named intra-community trade and is not subject to duties. Trade with non-member states is import/export and is subject to import duties.
In addition to import duties, national taxes are also levied upon the importation of goods. These taxes vary from one EU member state to another and include VAT (value-added tax), excise duties etc.
The customs authorities and the police departments are responsible for supervising the import and export of goods, as well as for collecting duties. In Flanders, this task is performed by the Federal Public Service
- Finance - Customs and Excise Administration (see www.belgium.fgov.be).

How are duties levied upon the importation of goods?

Duties are levied according to an EU-harmonized scale (this is the so-called Combined Nomenclature or CN). Belgium is a member state of the EU customs union. At the time of importation into the EU, goods are subject to customs control and duties are imposed (as well as specific national taxes). The customs duty is based on the nature, the value and the origin of the imported goods. The EU Combined Nomenclature determines the applicable rate for each category of goods. In addition, a series of exemptions, suspensions and reduced tariffs - which may or may not be linked to quotas - are applicable.
The applicable customs duties and national taxes are listed per product type, along with the various legal and accessory provisions, in the "Applied Customs Tariff Database" issued by the Belgian Government, which is a freely accessible web application of the Ministry of Finance.

What is the advantage of importing your goods through Belgium into the EU?

Belgium is a gateway for the wider distribution of goods in Germany, France, the Netherlands, Luxembourg and other EU countries. This has resulted in a flexible set of rules applicable to importing and distributing goods. In addition, because Belgium is a member of the EU, you can obtain European-wide import and distribution rulings linked to customs legislation from the Belgian Customs Authorities. Rulings can be obtained regarding the tariff classification (the nature) of the goods, their value and their origin, as well as regarding simplified declaration procedures and (European-wide) customs warehousing and other duty suspension arrangements.

How is the customs value of goods determined?

The basis for determining the customs value of imported goods is their transaction value. The customs valuation rules are EU rules which are in line with the World Trade Organization customs valuation agreement. If such a transaction value is not available, or if not all required conditions are satisfied, then the regulations prescribe which other valuation method should be used. In some cases, such as agricultural goods and excise duty goods, fixed amount duties are applied to the imported quantity of the goods.

What is the initial customs treatment for goods entering Belgium?

From the moment goods are introduced into the customs territory of the EU they are subject to customs supervision and must be taken to a customs office or to a customs-approved location to be submitted to customs authorities. The goods, when being transported by sea, can be kept in storage for 45 days in a customs-approved location.
When shipped by other means (airfreight, truck etc) they can be kept in storage for 20 days. Then the goods must be declared for a customs-approved treatment - i.e. importing the goods or their entry into (taxexempted) customs procedures.

What are customs procedures for importing goods into Belgium?

Customs procedures include:

1. Release for consumption
2. Transit or temporary admission
3. Customs warehousing
4. Inward processing
5. Processing under customs control

Each of these procedures is discussed below. With the exception of release for consumption, the above mentioned customs procedures provide for options to suspend the payment of import duties.

- Release for consumption

Where is the import declaration to be made?

The declaration is made at an official EU customs frontier office - at a seaport, an airport or at an office in Belgium. If one applies for the status of authorized consignee, the import declaration can be made out at the company's premises.
Import duties and VAT are paid at the office of importation. If the import declaration is made by a licensed customs broker appointed by the importing company, the broker can pre-pay the duties and VAT to the Customs Authorities. Provided that certain conditions are met, deferred payment of duties can be allowed.
Provided certain conditions are met (goods should not be altered and must return within a period of three years), exported goods that are re-imported can benefit from duty exemption.

Under what circumstances are simplified procedures applied?

Upon customs authorization, simplified procedures may be applied at the time of importation. Simplified procedures allow the release of the goods without physical checks by the customs authorities.

Where can a foreign company obtain a valid binding ruling on import issues?
It is important to note that a foreign company can obtain binding European rulings (regarding such issues as the tariff code of the imported goods, the origin of the goods, customs warehouses and other customs economic procedures) from the Belgian Central Customs Administration. These rulings apply to the entire
EU.

How are goods released for consumption?

Goods are released into the EU for consumption when the import declaration of the goods has been accepted by the customs authorities. The declaration will be accepted provided that the duties (and other national taxes such as VAT and excise duties) are paid and all other import requirements (e.g. non-tariff measures such as quotas or public health requirements) are fulfilled.

What are the VAT consequences when goods are released for consumption?

When goods are released for consumption, VAT becomes due. Pursuant to the rules of trade in Belgium, exemption of import VAT is granted if the goods are immediately supplied to another EU country.
Exemption of import VAT also applies if the goods are placed under a warehousing procedure known as VAT warehousing.
Products subject to excise duties can be released for consumption without the immediate payment of the excise duties by entering them in an excise warehouse.

Under what circumstances can import VAT be exempt, refunded, or remitted?

Companies can be exempt from import VAT payment at the time of importation. This is true even if the goods remain in Belgium. Indeed, a special authorization granted to companies (including non-resident companies with a Belgian VAT number) allows those companies to declare the import VAT in their Belgian VAT return and to declare the same VAT amount as deductible VAT (= virtual payment with no cash flow effect). In order to apply this system, a limited pre-payment of import VAT is requested by the VAT authori-ties.
In some particular cases, a refund or remission of import duties and import VAT is possible. This applies, for example, to defected goods at the time of importation or to goods refused because they do not conform to the purchase contract.

What other types of import taxes are levied on goods entering Belgium?

Several other import taxes are levied at the time goods are imported into the EU via Belgium.

These taxes might include excise duties, energy taxes etc. Warehousing facilities can be used to avoid or defer payment of these import taxes.

- Transit and temporary admission

How are goods transported under customs supervision?

The transit system allows goods to be transported across the EU and the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland) with suspension of all taxes upon importation.
Such transport requires a community transit declaration. The goods, together with a so-called MRNdocument, must be presented at the office of departure and then taken to the office of destination. A deposit equal to the import taxes involved covering the entire itinerary must be paid (this might be reduced to 50 or 30% of the amount at stake if certain conditions are met). The deposit is refunded when the transportation is completed. Depending on the customs status of the goods, a distinction is made between non-community goods - T1 (external transit procedure) - and community goods - T2 (internal transit procedure).

How can goods be imported for trade fairs without being subject to import taxes?

Provided the goods are subsequently re-exported without having undergone any transformation, goods can be granted total or partial exemption from import taxes.
An "ATA carnet" issued in the country of dispatch can replace EU customs documents for the temporary admission.

- Customs warehousing

What is a customs warehouse?

A customs warehouse is a facility where imported goods can be stored without being subjected to import duties, VAT and other import taxes and non-tariff trade policy measures. Private bonded warehouses are operated by companies and are located around the country. Public bonded warehouses are operated by customs authorities or public bodies and are available to businesses in the main cities.

What types of private bonded warehouses are there and under what circumstances are they used for the storage of goods?

Bonded warehouses facilitate the storage of goods while payment of import taxes is suspended. This means that no import taxes are due as long as the goods are not released for consumption in the EU. If the goods are immediately exported to destinations outside the EU, no taxes are paid.
There are three types of private bonded warehouses: C (standard), D (allowing customs valuation upon entry of the goods) and E (non-physical warehouses, in which bonded goods can be stored in any of the storage facilities of the warehouse keeper and not just in the one customs-approved warehouse). The customs authorities will focus on the warehouse keeper's stock movement records for their controls, rather than perform physical inspections of the goods.

What types of public bonded warehouses are there and under what circumstances are they used for the storage of goods?

There are three types of public bonded warehouses: type A, type B and type F.
In type A bonded warehouses, monitoring by the customs authorities is based on the warehouse keeper's stock records.
In type B bonded warehouses, monitoring is based on entry and clearance documents.
Type F bonded warehouses are managed directly by the customs authorities themselves.

What other types of warehouses are there and under what circumstances are they used for the storage of goods?

Non-EU goods can also be stored in a VAT warehouse or excise warehouse at the time the goods are released for free circulation (payment of import duties, if any). This makes it possible to store the free goods without payment of import VAT or excise duties.

- Inward processing

What is the inward processing procedure?

The inward processing procedure is a customs procedure which allows the import of goods for processing operations performed on EU customs territory with the purpose of exporting the processed goods outside the EU. Processing operations can be an industrial upgrade or alteration of an imported product that increases its value. However, it can also involve smaller operations such as fine-tuning, repairs or other improvements where the economic impact is negligible.

What types of goods are subject to the inward processing procedure?

Goods subject to this procedure are as follows:

• All non-EU goods (restrictions only apply to some agricultural products) intended for export from the customs territory of the EU in the form of processed products, without them being subjected to tariff and non-tariff import measures. This procedure is referred to as the "suspension system".
• Goods already released for consumption, whereby the import duties paid at the time of import are refunded at the time the goods are exported from the EU in the form of processed products. This system is referred to as the "draw-back system". This customs procedure also applies when the contractor remains the owner of the imported goods.

- Processing under customs control

Under what circumstances are goods subject to processing under customs control?

Processing under customs control is a procedure which allows non-EU goods to be imported within the EU customs territory without them being subjected to import duties or non-tariff import measures. The goods can be subjected to operations to change their nature or state, with the new product being released for consumption at the customs rate applicable to the new product - a rate lower than that applicable to
the imported goods.

Intra-community supplies and exports

Why is importing goods so appealing if the goods are supplied to other member states (intracommunity trade)?

Goods imported into Belgium which are destined to another EU member state as their destination are not subject to national import taxes (VAT, excise duties etc).

What are the advantages of exporting goods from Belgium?

There are several advantages to exporting goods from Belgium to countries outside the EU. Exporters can obtain exemption from excise duty, exemption from VAT and refunds for certain EU-origin agricultural products.

What are Belgium's export regulations?

The export procedure regulates the exporting of EU goods out of the customs territory of the EU. Pursuant to EU provisions, an export declaration must, in principle, be submitted to the customs office responsible for control at the place where the exporter is established or where the goods are packed and loaded onto the outward-bound vehicle. The exporter is the person on whose behalf the declaration is made and who is the owner of the goods or has a similar right over the goods.
The formalities are generally completed by means of a customs declaration accompanied by appendices such as a copy of the invoice and possibly an export license or an export certificate.

Are goods that have been temporarily exported subjected to import taxes upon their return?

Goods can be temporarily exported - e.g. in order to be exhibited or delivered abroad on a trial basis. Provided the export declaration is filed correctly, an exemption of import duties can be granted upon re-importation.
In particular situations, the "ATA carnet" can replace the customs temporary export declaration.

How are agricultural exports treated?

Agricultural export funds are granted to exporters of European agricultural goods and European-processed agricultural goods (even if the processed goods contain non-EU goods).

What are the outward processing procedures for exported goods?

The outward processing procedure allows a partial or total exemption from import taxes upon importation of goods in the following situation: EU goods are exported temporarily from the EU for processing purposes, after which the processed goods will be released for consumption within the EU.

Options for sales operations

What are the options for setting up sales operations in Belgium?

Several options for setting up sales operations through third parties are available in Belgium. The most important middleman options are: the agency agreement, the distribution agreement and the franchise agreement.

What is an agency agreement?

An agency agreement is a contract between an agent and a principal. The agent is an independent commercial intermediary who acts, on a permanent basis, for a principal to promote and sell the principal's products. A disclosed agent reveals that he acts on behalf of the principal. He merely passes orders to the supplier of the goods and is not the contracting sales entity. He cannot act as importer of the goods. In the case of a disclosed agent the principal/owner of the goods will have to act as importer of the goods. An undisclosed agent does not reveal his principal - he acts in his own name, but on behalf of the principal/ owner of the goods. He contacts with the customers and can act as an importer of the goods.

How is the agency agreement regulated?

The status of the agency agreement is regulated in a flexible manner by European legislation. The law sets out the rules and duties of the agent and the principal.
In particular, it covers the rules that govern the right to have a commission, how the amount of the commission is to be determined and how an agency agreement is terminated.

What is a distribution agreement?

A distribution agreement is a contract between a distributor of goods and a manufacturer or supplier. A distributor is a commercial intermediary who sells (in his own name and on his own behalf), products acquired from the manufacturer or a supplier to customers.
The distributor can act as importer of the goods. Distributors with limited functions and risks are entitled to small sales margins

How does Belgian law regulate distribution contracts?

Belgian law does not regulate distribution contracts as such, but provides several very specific rules with regard to their termination. Parties are still entitled, as they deem appropriate, to agree the terms and conditions of their relationship within the usual limits of the general principles of law and public order.
The law grants distributors specific protection from termination of the contract by the principal only when the distribution agreements are exclusive, semi-exclusive or impose such substantial obligations on the distributor that he would suffer considerable hardship in the event of termination. The law specifies that either a reasonable notice period be given or adequate compensation be paid to the distributor.
To ensure that distributors benefit from this protection, a specific set of rules has been incorporated into law.

What are the rules in Belgium with regard to franchise agreements?

Under Belgian law, there are no specific rules governing franchising. Parties are thus free, within the framework of the general principles of contract law and public policy, to enter into contracts as they wish.