Winds of change in foreign direct investment control in Europe and the Middle East (8) -Belgium

By King & Wood Mallesons

Status of foreign direct investment control law in Belgium

Belgium does not have a specific legislative framework for controlling foreign direct investments. Far from being problematic, this absence of state control over foreign direct investments promotes Belgium to 21^st place worldwide based on the FDI Index. This ranking is explained in the context of strong economic recovery as well as key advantages highlighted by foreign investors (such as the proximity of numerous international institutions, connectivity to the rest of Europe and a productive and educated workforce).

Hot topics: intended changes /discussions

Belgium is in a pre-election context. The next federal and regional polls are scheduled for May 2019, and as a result there are no ongoing political discussions to adopt a legal framework for the control of FDI in Belgium. On the contrary, FDI is frequently positively quoted by Belgian institutions, such as the National Bank of Belgium. In September 2016, the National Bank of Belgium stated that “In Belgium, the Federal Government has introduced various fiscal measures to attract FDI, such as the notional interest deduction, tax rulings, dividend withholding tax exemption, etc.”

However, in response to the EC’s proposal for a regulation on this subject in September 2017, the four Belgian employers’ federations (FEB, Voka, Beci and UWE) confirmed in a published common position in April 2018 that they “welcome in a constructive way the establishment of a European framework for the screening of certain FDI. However, particular attention must be paid to the balance between maintaining openness to international investment and protecting the essential interests of the Union and its Member States”.

Although there exists no general legal framework requiring prior authorisation to invest in Belgium, in certain sectors such as the TMT sector, the market is very closed in Belgium. Only P company and the cable operators T company have a fixed telecom infrastructure which required billions of Euros in investment. To stimulate competition, regulations allow “mobile only” operators to rent access to the two fixed networks in order to operate its own network.

Currently, nearly 95% of the mobile telephone market is dominated by three Mobile Network Operators. These companies have invested in spectrum frequency licences and infrastructure. New frequency bands access will be granted through auctions which is seen as an extremely important matter. Initially approved at the Federal Government level, the text is still under discussion by Regional authorities which are discussing the emission standards.

This article is excerpted from “Accessing Europe and the Middle East: Foreign Direct Investment Control Considerations”. For the full publication, please scan QR code to read.