Some years back, Belgium wanted to bring the Horeca (food services industry) into full legality by encouraging a greater formalisation of its employees and a more accurate declaration of profits. Despite the many shortcomings of Belgian governments, they seem to have managed to get it mostly right. The basis was a broad consultation with the Horeca sector to put in place specific measures that would allow restaurants to transition to a more sustainable business model. The consultation was made through the Belgian Restaurant Association (BRA), which aims to encourage excellence in the sector while maintaining its economic viability. This consultation was particularly important for the employees who did not get any benefit from formal work, most of them being hired informally – so not paying any social security or taxes.
The informality of the Horeca sector clashed with the government’s tax collection and transparency objectives. It was necessary to provide procedures that would be flexible enough to formalise employment while retaining some flexibility and not raising costs too steeply. Starting in 2016, several measures were put in place and the results seem to show that they have been successful.
Formal employment is already up 12.5% from 2016, with the total payroll increasing by 150 million Euros. While carrots where presented (lower VAT for restaurants, special social security arrangements, greater flexibility of workforce), sticks were also used: the non-use of the “black box” (which records all financial transactions in a restaurant) was an infraction in 70% of controlled restaurants. To increase the use of this “black box” BRA promotes the Fair Play Restaurant label to make the restaurants that do play by the rules stand out.
According to BRA, it is ultimately an issue of restaurants better managing their costs through existing tools. For example, there is a 125 million Euros provision for social security discounts for restaurant employees (500 Euros per worker per quarter), but only 10 million Euros worth is claimed. Considering that controls and fines are likely to increase, it is sensible for the Horeca sector to encourage greater transparency while lobbying the government to put in place appropriate measures to allow for a smooth transition to a more transparent sector.
If you want to know more about it or see how the BRA can accompany your restaurant, visit their website and consider becoming a member.