Belgium :

gateway to Europe

An overview of the Belgian economy

By Philippe Donnay,Economic advisor Federation of Enterprises in Belgium

Belgium : Gateway to Europe

1. Belgium, at the heart of Europe

2. “State of the art”-infrastructure

3. A multilingual, well-educated and motivated workforce

4. An open and attractive economy

Belgium: at the heart of Europe

UnitedKingdom

France

Germany

Netherlands

Luxembourg

Belgium: at the heart of Europe

Brussels

• capital of Belgium

• capital of the EU

• headquarters of NATO

• 1,700 European headquarters of MNOs

• world’s fourth international meetings and conferences center

• second largest concentration of journalists in the world

Belgium is Belgium is at the heartat the heart of : of :

three cultures,three cultures,

the Europe of the 15,the Europe of the 15,

a 370 million Consumers Market.a 370 million Consumers Market.

Do you know that Do you know that 60% of the 60% of the European European market is located market is located at less then one at less then one driving day ?driving day ?

Belgium: at the heart of Europe

Belgium : Gateway to Europe

1. Belgium, at the heart of Europe

2. “State of the art”-infrastructure

3. A multilingual, well-educated and motivated workforce

4. An open and attractive economy

0,52

0,65

1,31

1,32

1,62

1,62

1,77

3,07

4.0

4,86

0 1 2 3 4 5

Sweden

USA

Spain

Ireland

United Kingdom

France

Germany

J apan

The Netherlands

Belgium

Source: Competitiveness Yearbook 2003

Road Infrastructure

Density Km/sq.Km

A Highly Developped Road Network

100

104

117

117227

227285

288430

474

0 100 200 300 400 500

USA

Sweden

Spain

Ireland

J apan

France

United Kingdom

The Netherlands

Germany

Belgium

USA= base 100

Source: Competitiveness Yearbook 2003

Railway network

Density /sq.km

A Dense Railway network

Air Infrastructure

Numerous intra-European and inter-continental air connections

• Brussels Airport – Zaventem worldwide passenger and cargo services

• Ostend – Bruges Airport mainly cargo services

• Deurne Airport European passenger services (e.g. London, Berlin, Dublin, Geneva)

• Liege Airport top ten European air freight hub (380 000 T handled in 2003)

• Charleroi Airport passenger terminal; hub a.o. to Ryan Air

Water Infrastructure

• Antwerp2nd largest port in Europe, 4th largest worldwide (140 mln. tonnes of cargo/year)

Largest petrochemical complex in Europe, 2nd largest worldwide

• Zeebruges Leading port in the car sector (1 577 618 cars)

• Ghent23,9 mln. tonnes seaborne cargo traffic (wide variety of cargo)

• OstendHandling goods and passenger services

• LiègeSecond largest European River Port (27 mio T loaded/unloaded

2002)• Brussels

Maritime harbour with ships up to 4,500 Tons• Strepy-Thieu

Most advanced boat lift - 1.1350 t

Water Infrastructure

Belgium : Gateway to Europe

1. Belgium, at the heart of Europe

2. “State of the art”-infrastructure

3. A multilingual, well-educated and motivated workforce

4. An open and attractive economy

90 9073

3825

8070

4428

16

55

14 12 10 50

20

40

60

80

100

Quadrilingual

Trilingual

Bilingual

Anglo-saxon German

ic

Romanic

Source: OCDE 2000

Multilingual Workforce

Is it easy to have access to a skilled labor force in your region ?Is it easy to have access to a skilled labor force in your region ?

Source: Competitiveness Yearbook 2003

5,276,16

6,37

6,586,83

7.00

7,03

7,087,19

7,29

0 1 2 3 4 5 6 7 8

United Kingdom

The Netherlands

Spain

Sweden

France

Belgium

Japan

Germany

Ireland

USA

(Out of 10)

Ability to Recruit New Talents

0,9

1,2

1,6

1,8

1,9

2,1

2,6

4

0 1 2 3 4 5

Belgium

Italy

Germany

Spain

Portugal

France

United Kingdom

The Netherlands

Absenteeism rate in % of hours normally worked

Source:Eurostat

Absenteeism

Belgium : Gateway to Europe

1. Belgium, at the heart of Europe

2. “State of the art”-infrastructure

3. A multilingual, well-educated and motivated workforce

4. An open and attractive economy

Exports Imports

Belgium: hub of Europe

Belgium

EU

Importance of foreign trade

25

35

45

55

65

75

85

95

1995 1996 1997 1998 1999 2000 2001

% o

f GD

P

Exports of Belgium

Top five export nations in 2003 (bn EUR)

17,78

21,95

26,61

37,16

42,451. Germany

2. France

3. Netherlands

4. UK

5. U.S.A.

Top five export products in 2003 (in %)

10,7

13,4

13,54

14,41

22,181. Chemicals andpharmaceuticals

2. Transportequipment

3. Machinery andequipment

4. Plastics

5. Diamonds andprecious metals

Belgium : A wealthy country

70

75

80

85

90

95

100

105

110

GDP per capita (EU-15 = 100)

BelgiumFranceGermanyItalyEU-15EU-25

… ON ALL LEVELS OF YOUR INVESTMENT

The Corporation Real estate and equipment

depreciation system Special tax agreements:

fiscal rulings Low effective corporate tax rate:

many tax rebates applicable and as from 1-1-2006 : notional interest deduction

The Shareholder no taxation on capital gain

The Management attractive fiscal system for

expatriates

0 5 10 15 20 25 30 35

Italy

Sweden

Denmark

Belgium

Luxemburg

Ireland

Netherlands

United Kingdom

Germany

France

Effective tax rates

2001

Effective tax rates

2001

Source : The Effective Tax Burden of Companies in the Member states of EU Source : Baker & MçKenzie 2000

Many Fiscal Opportunities For Foreign Investors

Notional interest deduction

• A new innovative tax feature in international tax low

• What is it ?– A notional interest calculated and deducted yearly

from the taxable basis– Used to off-set operational or financial income

(lower effective tax rate)– Automatically applicable to all Belgian companies

and branches of foreign companies

Notional interest deduction

• Reduce the tax discrimination between debt-financing and equity-financing

• Lower the effective corporate tax rate for all companies (higher after-tax return on investment)

• Strenghthen the financial position of companies and branches by increasing their equity

Notional interest deduction

• How does it work ?

Annual Tax Deduction

=

Equity x Rate

Made in BelgiumProducer of the largest number of cars per capita in

the EU.

The world's second largest petrochemical centre.

One third of all dredging work in the world done by

Belgian companies.

The world's leading exporter of synthetic carpets.

By far the world's largest diamond centre.

Belgian fashion is recognized on the

international scene.

Renowned all over the world for chocolates,

biscuits, beer and endives.