However, at a certain point this activity may create a tax presence.
A tax presence means that the local tax authorities consider your business as local enough to tax you — even if you have no legal entity, branch, or registration. In tax treaties this is called a permanent estabishment, but the concept is broader.
If your activities create a tax presence, this can trigger obligations such as:
corporate income tax on locally attributable profits
local bookkeeping and reporting requirements
registration with tax authorities
penalties or retroactive tax assessments if risks are missed
The difficulty is that tax presence is not always obvious.
Many companies assume that “no company” automatically means “no tax”, which is not always correct.
Tax presence risks often arise when a company:
has employees or directors working from another country
uses local sales agents or representatives
carries out long-term projects or on-site activities
operates warehouses or fixed facilities
manages local operations from a home office
Whether these activities create a tax presence depends on how authorities apply these tax rules in practice.
Tax presence questions in Belgium are typically handled through the federal tax administration and, where certainty is needed in advance, through the advance ruling process.
Audits and assessments are carried out by the Belgian FPS Finance (SPF Finances / FOD Financiën) (link).
For upfront certainty, Belgium has an advance ruling body, the Service des Décisions Anticipées (SDA). This is the main channel to obtain a binding position on how a planned structure or operating model will be treated (link).
The SDA also operates the ruling portal, which is commonly referenced in cross-border structuring work (link).
A practical and highly relevant development is the bilateral agreement between Belgium and the Netherlands signed on 23 November 2023 on the interpretation of the permanent establishment concept for cross-border telework. It provides additional guidance on when an employee’s home office can be considered to be “at the disposal” of the employer, and therefore potentially create a home office permanent establishment (link).
This agreement was also summarised by practitioners as explicitly addressing the (non-)recognition of a home office PE in the Belgium–Netherlands treaty context and aiming to provide more certainty to employers (link).
Belgium is notable for the way the ruling practice has approached home working in certain scenarios. Professional commentary has pointed out that the Belgian Ruling Commission has, on several occasions, taken the position that home-based employees of a foreign company do not create a permanent establishment when the employer has no power of disposal over the private working space. An example referenced is ruling number 2011.432, where the lack of disposal over the employee’s home office was treated as a decisive element (link).
In practical terms, this means that Belgian analysis in remote work scenarios often turns on whether the home office is merely tolerated for convenience, or whether the business is effectively designed to rely on that location as an operating base.
Where business is conducted through people in Belgium, the dependent agent analysis becomes central. A dependent agent permanent establishment risk typically increases when a Belgium-based person has, and habitually exercises, authority to conclude contracts on behalf of the foreign enterprise, while independent agents acting in the ordinary course of their business are generally treated differently (link).
In audits, scrutiny tends to rise where the Belgian role is commercially decisive in practice, even if formal contract signature happens outside Belgium.
Scrutiny typically increases where Belgian-based staff work on a permanent basis, where telework arrangements become structural and business-driven, where Belgian personnel are involved in sales negotiation or customer management, or where activities carried out in Belgium are essential to the business model rather than auxiliary.
Belgian risk assessment often becomes much easier if the operational facts are documented early, especially the extent of employer control over premises and the commercial authority of Belgium-based personnel.
If tax presence is established, Belgium may assess corporate income tax on profits attributable to Belgian activities, supported by profit attribution analysis and documentation. Retroactive assessments are possible, and compliance obligations may arise even where the business initially assumed it was operating purely cross-border.
In Belgium, incorporation often becomes the cleaner option once Belgian-based people are permanently embedded in core operations, when commercial authority is exercised locally, or when ongoing uncertainty around home office and dependent agent factors becomes operationally inefficient. At that stage, incorporation typically provides clearer boundaries, more predictable compliance, and reduced audit risk.
Across tax systems, the assessment of tax presence typically follows a consistent set of underlying principles:
Substance over legal form
Actual business activities and economic reality carry more weight than contractual labels or formal structures.
People and decision-making
Where key individuals work, negotiate, manage operations or make decisions is often decisive.
Continuity and regularity
Ongoing or recurring activities are treated differently from occasional or incidental involvement.
Economic value creation
Where value is created, managed or controlled is a central factor in tax attribution.
These principles explain why the absence of a legal entity does not automatically eliminate tax exposure.
Tax presence risk is most commonly associated with the following types of activities:
Employees or directors working structurally from another jurisdiction
Sales personnel or agents with decision-making authority
Long-term or recurring on-site projects
Fixed places of business such as offices, warehouses or workshops
Home offices used as a regular base for business operations
The decisive factor is rarely a single activity, but rather the combination, duration and functional role of these activities.
Certain activities are widely regarded as preparatory or auxiliary and typically do not, on their own, create tax presence:
Occasional business travel
Pure marketing or promotional activities
Independent agents acting in the ordinary course of their business
Short-term presence without operational continuity
Supporting functions without decision-making authority
Risk may still arise when these activities evolve or are combined with more substantive functions.