The new eligibility criteria for the issuance of professional cards to foreign entrepreneurs in Flanders
Together with Nivard Bronckaers, Evelyne Van der Elst contributed to the latest edition of the Belgian Journal on Immigration Law. The authors made a critical analysis of the Flemish professional card legislation which entered into force in 2022. This legislation sets forth the eligibility criteria for the acquisition of a professional card by foreign entrepreneurs who wish to set-up activities in Flanders. Evelyne made a summary for her English speaking colleagues to be consulted below, Dutch speakers can turn to the latest edition of the journal for the full version of the text.
The essence of the “new” Flemish legislation is that the conditions for obtaining a professional card in Flanders have changed drastically. Neither the former federal and regional legislation nor its implementing decrees contained specific entry conditions for the foreign entrepreneur or his activities to qualify for the professional card. As a result, an application could be submitted for any professional activity as long as the foreign national managed to convince the authorities of the economic benefit/advantage of the professional activity for Flanders and the company's chances of survival. How to interpret the economic benefit or added value for the region was not legally determined. Consequently, the applicant could submit any possible argument to support his case. However, the legislator considers that this lack of conditions leads to legal uncertainty for foreign nationals wishing to start an independent activity in Belgium. This, combined with the wide discretion of the Department of Work and Economy, would result in the foreign national being unable to correctly assess the chances of success of his application.
To end the uncertainty, new conditions were thus provided for in the Flemish Decree on the exercise of self-employed professional activities by foreign nationals. According to the explanatory memorandum, the enshrining of these admission conditions in the decree is intended to remedy three shortcomings of the old legislation: first of all, the abuse of the old rules must be eliminated, a clear framework must be created which enhances legal certainty, and start-ups and innovative entrepreneurial talent must be more easily attracted to Flanders.
There are now four separate categories of activities that qualify for obtaining a professional card, namely those professional activities with an innovative, economic, athletic, cultural or artistic added value for Flanders.
Innovation is automatically present when the self-employed person collaborates with an incubator or accelerator or a research and notification organization recognized by the Flemish authorities.
In the absence of such collaboration, it is required to develop new products, services or processes and convert them into added value for the business or consumers, or to apply new or improved technologies to existing products, services or processes and transform them into added value.
2. Economic added value (the traditional company)
There is economic added value for Flanders when the following cumulative conditions are met:
- The foreign self-employed person has an initial capital of EUR 18,60 available.
- The activity creates jobs. Indirect job creation can also be taken into account if the company cannot recruit itself. This condition can be waived if it is demonstrated that the self-employed professional activity has a favorable effect on the existing economic market in Flanders.
- The activity should also lead to investments. This condition can be waived if it is demonstrated that the independent professional activity has a favorable effect on the existing economic market in Flanders.
In practice, this subcategory seems to correspond most to the previously existing flexible rules on professional cards and the traditional company.
3. There are also separate categories for self-employed activities which create a cultural or artistic added value for Flanders or those activities that create added value in the athletic field.
Apart from the business activities, the foreign entrepreneur must also meet certain criteria. Among others, the applicant must have at least an educational or professional qualification corresponding to level 4 of the Flemish Qualifications Structure. This implies that at least a secondary education diploma must have been obtained.
The applicant must also have stable, sufficient and regular resources to avoid becoming a burden on the Belgian social security system. The Flemish government's website states that proof must be provided through pay slips and proof of deposit of sufficient income in a bank account. In addition, proof of the reimbursements that will be paid to the self-employed person is also requested.
With this new legislation Flanders aims to focus on attracting startups and innovative entrepreneurial talent. All this with a view to enriching Flanders' competitive knowledge economy. Apart from the relaxed admission conditions, the aim is also to keep administrative obligations as minimal as possible for this specific category of innovative entrepreneurs and start-ups.
Flanders is thus primarily pursuing an economic goal. But is this done in the right way?
The Flemish government has undoubtedly taken some major steps forward. The 1965 law had been in need of renewal for several years. The law was outdated, no longer adapted to the needs of today's labor market and also simply no longer in line with reality, as a result of which certain passages of the law had become useless. These problems are -or were- not unique to Flanders, but also play out in Brussels and Wallonia. Although the shortcomings are similar, Flanders is the first and, for the time being, the only region to take the necessary steps to bring its regulations into the 21st century and thus use its legislation to contribute to an active policy on innovation and immigration.
Given the limited time that has elapsed since the new regulations came into force, it is not possible to assess the exact impact of the new policy in practice. Any analysis of the system is therefore limited to discussing the regulations themselves and the information received from the competent authorities.
Setting clear admission conditions for obtaining a professional card, as well as legally stipulating a maximum processing time, is to be welcomed. It goes without saying that this will enhance legal certainty. For certain applicants, these conditions will also certainly mean easier access to the Flemish economy.
However, reading the new regulations and preparatory works, one cannot help but wonder whether the new policy was not written primarily with a view to a particular group of entrepreneurs, namely startups. Attracting startups and scale-ups is a very good intention from an economic point of view. Moreover, there is a great need to focus on this. Indeed, according to the report of the European Migration Network, Flanders lags behind neighboring countries and other European member states in attracting this talent. A focus on this target group is therefore not bad in itself, but by focusing solely or mainly on this target group, Flanders seems to further close its market to other top foreign talent.
The qualification requirements for the other target groups are demanding. For instance, the new requirement for the "classic company" to provide start-up capital of EUR 18,600. Whereas in corporate law it was recently decided to abolish this capital condition, Flanders is now going to introduce it, but only for foreign nationals who want to start a "traditional company" in Belgium. The aforementioned starting capital was introduced as a buffer against abuses and should put an end to the misuse of the professional card to circumvent the higher pay scales of the work permit. In addition, according to the Flemish government, this start-up capital provides additional protection vis-à-vis future creditors of the (starting) company. However, to say the least, it is extraordinary that only the future creditors of foreign entrepreneurs with a "classic company" are to be protected. If one follows the logic behind this new condition, one should foresee similar protection for the creditors of other categories of entrepreneurs.
Furthermore, the new policy places enormous emphasis on the alleged abuse of the old regulations when this is not necessarily evident from the figures provided. For instance, the old regulations are said to have been frequently abused by employers using the professional card to employ persons for whom they cannot obtain a work permit or a single permit. But when looking at the figures from the Flemish Social Inspectorate, it appears that 36% of the files in which an inspection has taken place reveal infringements in which the foreign national concerned does not have a professional card or valid residence at all. While such practices should certainly not go unpunished, this does not point to abuses of the old regulation professional cards. We can even argue that the new labor market policy will not necessarily solve these abuses as the new legislation ignores the sectors in which the abuse seems to take place.
A final point of concern is the appointment of foreign directors in existing Flemish companies. Indeed, the new policy makes it extremely difficult for existing companies to appoint directors with a non-EU nationality and this while in today's society it is not extraordinary to find the right profiles across national borders. Indeed, as a director of an existing company, one qualifies as a "classic company". Thus, one must provide an initial capital of EUR 18,600 and prove that this appointment as director will lead to job creation and investments or that there is a favorable impact on the existing economic fabric. The underlying reason for the condition to provide start-up capital - creditor protection - is not relevant here, yet it is a condition for these profiles. In this way, one restricts the normal operation of established companies, which goes against the purpose of the new regulations. Flanders wants to pursue a policy of attraction but makes it more difficult for traditional companies to carry out their day-to-day activities.
While these criticisms are, in our view, extremely important, we should not lose sight of the very positive aspects of the new policy. In doing so, a flexible interpretation of the new conditions could meet many of our concerns.
Several members of the Committee on Economy, Labor, Social Economy, Science and Innovation have already indicated that an evaluation of the new policy should be scheduled. We concur with this. After all, it would be useful to check the impact of the new policy in practice and thus to see whether the proposed objectives were or can be effectively achieved.