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Making Belgium Attractive (Again)

Belgium is the 8th most attractive investment location in Europe, according to EY’s 2017 Barometer on Belgium’s Attractiveness. The US remains the largest source of foreign direct investment (FDI), but businesses are troubled by persistent concerns, most notably about Belgium’s high corporate taxes.

With 200 new projects, 2016 was the second best year yet for foreign investment in Belgium, coming after the record high set in 2015 (211 projects). The US was, once again, the largest foreign investor in Belgium last year, accounting for 31 projects or 15.5% of the total, but whereas the US was the runaway leader in the past, France is now clipping at its heels with 28 projects. While the total number of jobs created by foreign investment projects increased slightly year-on-year to 3,309, or an average of 17 jobs per project, this is still a sore point, with Belgium ranking 18th in Europe in terms of job creation.

In addition to its country and regional analysis, EY also evaluated the most attractive cities in Europe for foreign investment. Here, Brussels was ranked a respectable 8th, ahead of Madrid and Budapest, but behind London, Paris and Amsterdam. This result is comparable to previous years, even though Brussels still falls short when it comes to innovation, according to the report.

Despite these encouraging results, several concerns remain, which broadly echo the policy priorities of AmCham Belgium. Of the business leaders surveyed by EY, 46% said that Belgium should focus on lowering taxes to remain competitive, while 33% put the emphasis on reducing labor costs. Other priorities included supporting innovation and technology, providing incentives to SMEs and improving mobility.

Although the US remains the largest contributor of FDI to Belgium, these figures have declined in recent years, both in absolute and relative terms – US investment peaked in 2010 with 50 new projects, which was nearly one-third of that year’s total. This stagnation can be explained, in part, by the lack of progress on corporate tax reform. US companies are “very sensitive” to the nominal corporate tax rate, Marie-Laure Moreau, Partner at EY, told L’Echo. AmCham Belgium urges the Belgian Government to reduce the corporate income tax rate from 33.99% today to 20% or even less by 2020, as part of the promised and long-awaited corporate tax reform.

Only 26% of respondents expect Belgium’s attractiveness for foreign investment to improve in the next three years, its lowest level in a decade. AmCham Belgium believes the country can do better. We look forward to working together with all levels of government to improve Belgium’s competitiveness and ensure the country continues to attract investment.

Photo credit: flickr / Pictures of Money