Foreign direct investment (FDI) in Belgium

FDI in Figures

The Belgian economy has traditionally been characterised by high foreign direct investment (FDI). According to the 2022 World Investment Report published by UNCTAD, FDI inflows have risen considerably to reach USD 11.5 billion in 2021 (compared with USD 6.8 billion a year earlier), despite the volatility caused by the COVID-19 pandemic. In 2022 the country recorded negative FDI flows estimated at USD -1.7 billion, while FDI stocks fell slightly to almost USD 524 billion, compared with USD 555 billion the previous year. The main investing countries remain France, the U.S., Germany, the United Kingdom and Italy (by ultimate investing country - data OECD). Investments continue to be mainly oriented towards financial and insurance activities, manufacturing, professional, scientific and technical services, and administrative and support service activities. According to the latest data from OECD, FDI inflows reached in the first half of 2022 were negative by USD 7.8 billion, a similar trend to the one recorded in the same period one year earlier (USD -7.5 billion).

Belgium's investment attractiveness can be attributed to its strategic geographic position at the crossroads of the main European markets, the quality of transport, logistics and telecommunications infrastructure, its trade specialised in semi-processed and semi-finished goods, a multilingual and qualified labour force and high levels of purchasing power. The stability of society, the quality of the labour and the infrastructures have been attracting projects. There are currently no limits on foreign ownership or control in Belgium and there are no distinctions between Belgian and foreign companies. However, in June 2022 the government agreed on the text of a cooperation agreement implementing a single, uniform screening mechanism to be applied to foreign direct investments into Belgium (in line with EU Regulation 2019/452). The law would introduce an ex ante screening mechanism for non-EU investors intending to invest in a number of strategic sectors (including health, energy, transport, artificial intelligence, and the aerospace industry, media, etc.). Finally, Belgium ranked 18th out of 82 countries in terms of business environment in the latest Economist Business Environment ranking; recording the same position in the Corruption Perception Index.

Foreign Direct Investment	2020	2021	2022
FDI Inward Flow (million USD)	6,805	11,587	-1,710
FDI Stock (million USD)	604,255	555,736	523,855
Number of Greenfield Investments*	215	271	281
Value of Greenfield Investments (million USD)	5,017	7,577	7,288

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors	Belgium	OECD	United States	Germany
Index of Transaction Transparency*	8.0	6.5	7.0	5.0
Index of Manager’s Responsibility**	6.0	5.3	9.0	5.0
Index of Shareholders’ Power***	7.0	7.3	9.0	5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

What to consider if you invest in Belgium

Strong Points

Belgium's strengths in term of FDI attraction include:

A highly educated, productive, multilingual and flexible workforce
Quality business infrastructure, logistics and telecommunications (with the second largest European harbour, Anvers)
Strategic geographical location at the crossroads of some of the main European markets
A tradition of openness to international trade
Businesses specialised in the supply of intermediate and semi-finished goods
Strong purchasing power
Good quality of life.

Weak Points

Belgium's weak points include:

High cost of salaries
High level of corporate tax
Complex procedures of dismissal
Dependence to the economic situation of Euro Zone
Multilingual consumers create a need to focus heavily on labelling and marketing strategy
High level of public debt
Tensions between Flander and Wallonia.

Government Measures to Motivate or Restrict FDI

Investment incentives and subsidies are generally managed separately by the three Belgian regions of Brussels, Flanders, and Wallonia. In their investment policies, the regional governments emphasize innovation promotion, research and development, energy savings, environmental protection, exports, and most of all, employment. In general, all regional and national incentives are available to foreign and domestic investors with the same conditions.
Companies investing in Belgium may benefit from various tax reductions and exemptions:

an exemption of 85% of net income for innovation income from patents, copyrighted software, plant breeders' rights. This means that companies conducting their own R&D activities can benefit from a tax deduction of up to 85% on future profits generated by intellectual property rights (resulting in an effective tax rate of 5.1% on qualifying profits).
investment deduction for investments in new assets
a federal tax exemption for a number of subsidies granted by the Regions
an 80% tax exemption on wages relating to the employment of qualifying researchers. To benefit from this exemption, the R&D project must be reported to and approved by the Public Federal Administration for Scientific Policy (Belspo).

For further information consult the website Business.Belgium.

Bilateral investment conventions signed by Belgium

To consult the list of investment agreements signed by Belgium, refer to UNCTAD's International Investment Agreements Navigator.

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