Being an open economy, Belgium offers investment opportunities for residents and non-residents alike. The economic freedom that an investor enjoys in Belgium is matched by very few economies in the world. In this article, we will discuss various options for long, short, and mid-term investment options.
Saving accounts investment
As a matter of fact; the riskier the investment is, the higher will be the yield, and vice versa. Saving accounts are considered to be the safest form of investment. Banks in Belgium offer a variety of saving accounts to investors. These accounts vary in terms of yields, duration of maturity, and minimum deposit requirements. The current interest rate in Belgium is around 0.35% annually.
A few Belgian banks that are popular among investors are:
- Belfius Bank
- ING Belgium
- KBC Brussels
Pension investments
There are three types of pension systems running parallel to each other in Belgium. First, the state runs a mandatory pension, which is deducted as a tax paid by residents. The second and third options are through banks and life insurance companies respectively. The return on investment from the private pension options is almost 30% annually. The state of Belgium protects these investments of up to 100,00 Euros in case the company goes bankrupt. It is totally at the investor’s discretion on how much he/she wants to pay and when into the plan. The government also offers tax credits of up to 30% on an investment of 980 Euros and 25% on an investment of up to 1200 Euros per annum.
Property investments
The initial years of the 21st century witnessed a surge in the real estate sector of Belgium. The market has somewhat slowed down in recent years, however. The prices of properties in Belgium as well as the mortgage rates are comparatively lower than in its neighboring countries, this works for the benefit of the investors. Profits can be made through either sales and purchases or rentals of the properties. Belgium allows expats and foreigners to purchase property in Belgium which adds attractiveness for the investors.
Investment funds
Investing in investment funds falls in the high-risk high-yield category. A private or government entity takes in investments from investors and invests that pool into a range of profit-making businesses. Each investor holds a portfolio and enjoys dividends from multiple avenues and suffers losses if any from the companies in his/her portfolio. Energy, construction, real estate, bonds, stocks, commodities, etc., and exchange are some of the areas that are often included in the portfolio
Stocks and shares
Whether it’s earning through trading or dividends from shares, all stock-related activity is done through the national stock exchange of the country. The primary stock exchange of Belgium is Euronext Brussels. Currently, the Belgian stock market is experiencing a rise of almost 19%; you can set up your stock portfolio with the help of a local investment bank to reap the benefits of the bullish trend.
Banks such as MeDirect, KBC, and others can help you through the process and advise on the most lucrative shares at the time.
Offshore investment & saving certificates
Expatriates as well as the companies based out of Belgium can invest in offshore banking opportunities which offer a high yield at low risks. The catch is that these investments require large sums and are subject to a higher rate of taxation.
Another area where stable profits can be made is the saving bonds issued by the Government of Belgium. The bonds can be purchased by Belgian residents only and offer a fixed interest rate on their maturity.
Tax on savings & investments
Broadly speaking, the extent of tax liability depends on whether the investor is considered a resident for tax purposes or not. A foreigner is considered a tax resident if his/her primary residence or income is in Belgium. Such residents are taxed for their income anywhere in the world. However, a non-resident for tax purposes is only taxed for the income generated inside the country, while the income generated elsewhere in the world is subject to tax in that part alone.
Wise way of investing
Experience and market study shows that the safest and most beneficial way of investing in Belgium is to be diversified. In theory, diversification means that you invest a small sum of money in various areas, that are essentially unrelated to each other. For instance, the construction sector and farming business do not directly affect each other; a rise in construction material does not directly increase the cost of farming. Compare to investing in the construction sector and property; where the rise in property prices will increase the cost of construction thus affecting both investments.
If all this is too much to consume and handle, there are professional financial institutions in Belgium that you can contact for advice. The services are paid and offer personalized advice on how, when, and what to invest in. Usually, a dedicated investment advisor is allotted to each investor who is responsible to handle all kinds of paperwork and ensure compliance with Belgian laws along the way.
