Running a small business in Belgium: key findings
Updated: Jan 13
Belgium is sometimes referred to as the Heart of Europe. Many European capitals and other important cities are located within 400 km of the capital Brussels (London, Paris, Amsterdam, Frankfurt and Bonn) and Brussels is the seat of many European institutions, such as the European Commission, the Council of the European Union, the European Council and the European Parliament. NATO is also headquartered in Brussels. According to various estimates, such as from Transparency International and from EU Factcheck, between 25.000 and 30.000 EU-focused lobbyists work in Brussels, such is the importance of the city to European decision-making. Considering that Belgium is therefore such an important member of the EU, how well is it actually living up to the Small Business Act and how easy is it to do business there? Starting at a holistic level, Belgium is only ranked as a “Moderately Free” economy with a global ranking of 48, according to the Heritage Foundation ranking system of economic freedom. This is the lowest ranking of the three BENELUX countries but higher than France (ranked as 64th). In order for Belgium to be brought into the “Mostly Free” countries, it would need to rein in it’s “chronically high and unsustainable government spending”.
At this point we should mention that Belgium is climbing in the ranks and seem to have recognised that it needs to implement reform. One of the key findings, that we find interesting, is that the Access to Finance has been strengthen by, for example, a 2018 Pledge Law as well as the establishment of a modern collateral registry. It is also interesting to note that employment regulations have been loosening gradually since 2015 from a previous burdensome level, according to the Heritage Foundation. According to the SBA Factsheet, which is an annual review performed in all countries of the European Union, Belgium is broadly in line with the EU average. It´s main positives, as mentioned before, are Access to Finance, where it is one of the best performers, as well as the general skills of its population. However, one of the main negatives is related to government administration, entrepreneurship and public procurement, as in these areas Belgium is performing below the EU average. In particular, and related to the day-to-day operation of Belgian companies, the following can be mentioned:
Belgian companies usually get paid after 40 days from the day of invoicing, in B2B situations, which can be compared to the EU average of 33 days.
Willingness of banks to provide loans is slightly below the EU average
The cost of small loans compared to large ones is lower in Belgium compared to the EU average
The amount of business angel funding for new firms is higher in Belgium compared to the EU average.
The percentage of SMEs that are purchasing goods is slightly below the EU average
The percentage of SMEs with a turnover share of more than 50% generated by green products is lower than the EU average
It is also worth mentioning that Belgian law specifies a payment period of 30 days for B2B payments, from the day of receiving the invoice, the receipt of the goods or the delivery of the services. The deadline can be extended upon mutual agreement as long as it is agreed by both of the parties. In case of a late payment, the creditor can legally claim a compensation of EUR 40 for recovery costs.
All in all, Belgium continues to climb the rankings and create an environment that benefits small businesses. By making it easier to run a small business and deleting obstacles, the entrepreneurial spirit of the population will also increase.