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Setting up e-commerce activities in Flanders
Central location in a major market
Flanders is located in the heart of Europe—the world’s 2nd-largest market for e-commerce—with 60% of the continent’s purchasing power situated within just 500 km around it. The region is also surrounded by the most important e-markets of Europe and even the world. The UK, Germany, France and the Netherlands are only a hop away.
This means that Flanders is right in the middle of a whopping 72% of the EU’s internet sales activity, which continues to grow year after year. With cross-border sales on the rise in Europe and growing by around 21% per year, this opens up vast potential for your e-commerce business.
The e-commerce market in Belgium – including Flanders as a region – is growing by the day, particularly in the food, textile and electronics industries. Consequently, its market is considered one of the most attractive for e-commerce activities, growth potential and infrastructure. In the 2015 Global Retail E-Commerce Index, for instance, Belgium ranks 9th worldwide.
Top 10 - The 2015 Global Retail E-Commerce Index™
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Some additional facts and figures about Belgium’s e-commerce market:
- out of a total population of 11.2 million people, there are no fewer than 6.9 million online shoppers (62%);
- on average, Belgian e-shoppers spend EUR 1,234 per person per year;
- the total share of e-commerce in retail is 4.5%.
(Figures for 2015, provided by Ecommerce Europe.)
Excellent logistics and distribution are crucial to getting e-purchases to their destinations as quickly and cost-effectively as possible. Flanders has always been top of the league in this regard. Low transport costs and short time-to-e-market can thank our central location as well as a tightly-packed network of both global distribution players and the world’s major package delivery firms—think of FedEx, DPD, DHL and UPS. In addition, the skyrocketing number of warehouses in Flanders are available at some of the lowest rental prices in Europe.
But wait! There’s more. While overseas e-commerce delivery continues to grow at the expense of airfreight, we’ve got you covered too: Flanders’ four seaports are not only highly accessible but also offer the cutting-edge infrastructure required to connect your business to the world.
Flanders offers access to the necessary business and knowledge partners e-fulfilment, from web order and warehouse management to order picking, packaging, shipping, returns and reporting. This enables you to set up multi-, cross- or omni-channel supply chains with ease.
Consistently featuring in the global top 5, Flanders’ education system endows our workforce with skills and know-how relevant to e-commerce and logistics, including supply chain management, value-added services and more. Additionally, people in Flanders top the rankings for language skills and have a multicultural mindset.
This not only makes them an ideal workforce in light of the growing trend of cross-border sales, but also enables them to ensure personal support for e-market segments that continue to value offline advice and customer service.
Available tax incentives
In Flanders, your e-commerce business gains access to a business-favorable tax system. A variety of deduction schemes and financial grants are available to (foreign) companies, reducing the tax burden to an effective corporate tax rate of as low as 26.3%. Some of the available options include:
Special tax status for foreign executives
Belgium offers an attractive tax status for executives and researchers who are hired abroad to work temporarily in Belgium. This tax status reduces the cost of attracting and hiring foreign specialized personnel.
Tax exemption of regional grants
If your company receives grants from Flanders, these grants will not be considered as taxable income.
Notional interest deduction
Companies in Belgium receive a notional interest deduction (NID) for invested risk capital. This means they can deduct from their taxable income a percentage calculated on the basis of their shareholder’s equity (net assets).
If your company decides to only locate its distribution activities in Flanders, a fiscal ruling can be applied to compensate for these activities using the cost-plus method. Depending on the activity and the risk profile, the cost-plus percentage can climb from 3 to 8% of the operational costs.
By setting up a bonded warehouse in Flanders, your company can benefit from several measures. As such, license-holding importers may:
- postpone the payment of import duties until the final destination of the goods is known;
- carry out specific customs-approved, value-adding ‘forms of handling’, including repackaging, conservation, testing and marking;
- make import declaration on a weekly or monthly basis;
- supply certain types of goods from the warehouse without customs intervention.
Does your firm have several warehouses in different EU member states? In that case, a single European authorization can be applied for the various locations, through which all imported goods are customs-cleared upon discharge from the suspensive customs arrangement.
- Type A – public bonded warehouse where the inspection of the customs authorities is based on the reports of the stock management;
- Type B – public warehouse where inspection is based on the import and clearance document;
- Type C – standard private bonded warehouse;
- Type D – private warehouse that allows customs taxation at the moment when the goods arrive;
- Type E – non-physical private warehouse where ‘bonded’ goods can be stored in each of the storage facilities of the warehouse manager, instead of just in the customs-approved warehouses. Inspection will focus on the stock movement reports of the warehouse manager;
- Type F – public warehouse that is directly administered by the customs authorities.
In addition, goods that do not originate from the EU can be stored in a VAT or customs warehouse once they are cleared for transportation. The advantage? You can store the goods without having to pay import VAT.