Belgium offers a sweet tax deal for U.S. investors: eager to position itself as the "gateway to Europe" for U.S. and other global businesses, Belgium has instituted sweeping economic reforms in efforts to challenge such rivals as Ireland and Switzerland as countries of choice for corporate relocations.

• Author: Heffes, Ellen M.
• Position: International tax

Belgium's two top elected officials--Prime Minister Guy Verhofstadt and Deputy Prime Minister and Minister of Finance Didier Reynders--donned their salesmen's hats in January and took their "roadshow" extolling their country's benefits to select business audiences in Washington, D.C., New York and Chicago. The two dignitaries were also welcomed at the White House by President George Bush.

Belgium wants to be known for more than chocolate and beer, so it's offering businesses a reformed tax regime--among other enhancements--all aimed at attracting foreign investment by U.S. and other global companies seeking sites for their European operations. Belgium aims to compete with other countries offering favorable tax treatment, such as Switzerland, Ireland or Poland.

Its capital, Brussels, is known as the "gateway to Europe and its 450 million consumers, [and] the reason why more than 2,000 international companies already have their European headquarters or a representative office in our capital," said Verhofstadt in a speech to a group assembled by the New York Tax Institute in New York. The European Union (EU) is also headquartered in Brussels, and Antwerp, about a 25-30 minute drive west, provides the second largest port in Western Europe.

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The U.S. has "always been a major investor in Belgium," added Verhofstadt, with about 1,600 American companies already investing more than $1 billion dollars annually, and employing more than 130,000 people. For a rather small country of 11 million inhabitants, he said, "these are significant figures." However, he sees the potential of Belgium "much higher." And, he lists his country's attributes.

Besides location, it's also got: quality of life (healthcare and education); a highly-educated, multilingual workforce (the second most-productive workers in the world, with a gross domestic product (GDP) 11 percent higher than in the U.S, 40 percent higher than in Japan and 30 percent higher than the average of the EU); and an attractive expatriate "fiscal status" that substantially limits individual income tax for the more than 20,000 Belgium-based Americans.

And, if those attributes aren't persuasive enough, over the past six years, Belgium has made "major efforts to eliminate problems for businesses," said Verhofstadt. It has instituted a new tax regime for expatriate companies to locate within its borders, and eliminated much of "the administrative burden of red tape" with several...