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Our tips on social contributions for self-employed workers 🙌

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Social contributions are yet another payment: as a self-employed, you are expected to pay these every quarter. In this article, we’ll tell you all about them: why these are in fact useful to self-employed, why you should pay exactly the right amount at the right time and how to do it all fast and easily. 

Start with the beginning: why do you pay social contributions 😱?

You pay social contributions every quarter in order to get financial support at key moments of your private life. In other words, your social contributions guarantee your social protection, which translates to: e.g. child benefits, incapacity benefits. Note that you still have to be affiliated to a health insurance fund.   

Your social insurance fund may also intervene if you take care of a child with a disability or assist a loved one at the end of their life. You’re bankrupt or have to stop working? Thanks to a specific right that exists in Belgium you can receive a fixed compensation for up to twelve months. You also invest in your pension through every social contribution that you pay.  

In short, social contributions ensure your social rights. Still, you may consider extending your coverage with e.g. a guaranteed income supplement or a free supplementary pension. These solutions are interesting from a tax standpoint. They can strengthen your financial situation in difficult times.

How much social contributions do you need to pay 💵 ?

The calculation of your social contributions is based on what you earn.

Keep in mind, as a general rule, that social contributions amount to 20,5% of your revenue between 0€ and 59795.61€ of yearly revenue. Between 59 795.61€ and 88119.80€, social contributions represent 14.16% of your revenue. Above, you owe the maximal social contributions, 4 231.92€.

As a starter, it is hard to guess your yearly revenue. In the first three years, freelancers are allowed to pay minimal provisional social contributions. In 2019, these amount to 738,42 €, calculated on yearly revenues of 13 847.42€. If you are earning more than that, you should ask your social insurance fund for regularisation and make sure that you pay the appropriate proportion of your earnings as social contributions. 

Indeed, tax authorities will communicate to your social insurance fund your actual revenues. Based on that calculation, the social insurance fund will ask you to pay extra or reimburse part of what you paid, if your payments did not match the required threshold.

That calculation happens two to three years later. You may then face a (potentially bad) surprise. Best is to check in real-time whether you are paying the adequate amount. You can do so within Accountable: go to the taxes screen, social contributions part. After answering a couple of questions, you’ll see the amount you should pay now, based on your actual revenues. Concretely:

2016: You start working as a self-employed person and pay at least the minimum required.

2019: You now pay a provisional contribution based on your 2016 income.

2021: The tax authorities will pass on your income from 2019 to the social insurance fund. It will calculate your final contribution for 2019. If it is higher than the provisional contribution that you already paid, you must pay a regularization. If you have contributed more than necessary, you will be reimbursed the difference.

Even if you are not the type to pay bills on time, make sure you pay at least your social contributions on time. If you don’t, your contributions will keep on rising:

–       +3% at the end of every trimester if you don’t pay your social contributions on time (at the end of the trimester)

–       +7% on all unpaid amounts on the 1st January of the year following the year in which you have not paid all your social contributions.

It adds up real quick, be careful! 

In life, it’s all about timing and that also applies to social contributions ⏳

– Only the years where you worked two quarters or more count towards your pension. 

– If you register three days before the end of the quarter, you still pay social security contributions for that entire quarter.

Our conclusion? Keep an eye on the calendar to know when to register and when to pay your social security contributions.

You are…

… a self-employed in a secondary activity

In the first years of activity, you pay a provisional minimum of 81,85€ per quarter, calculated on yearly revenues of 1531.99€. If you earn more, you should ask for a regularisation. If you earn less, you can ask for a waiver.

As a self-employed in a secondary occupation, 20.5% of your income goes towards the payment of your social security contributions.  You retain all the social rights that you have as an employee. Your contribution is actually a “solidarity contribution” for the benefit of all self-employed people.

Still, you will receive certain benefits if your income as a self-employed person in a complementary occupation is higher than 13,550.50. If you become a mother, you are entitled to 105 “service cheques”.

If you have worked as an employee for less than 45 years, you will receive a pension supplement thanks to your contributions as a self-employed person in a secondary occupation.

… a student

As a student and self-employed, you also have to pay social contributions. These are reduced though, while you still retain your social rights. 

  • Is your yearly revenue under 6923.69€? As a student and self-employed, you do not pay social contributions.
  • Is your yearly revenue between 6923.69€ and 13 847.39€? You pay social contributions amounting to 20,5% of your revenue above 6923.69€ and under 13 847.39€.
  • Is your yearly revenue above 13 847.39€? Welcome to real life. You have to pay social contributions amounting to 20,5% of your entire revenue. Same as any self-employed.

When starting, it is not easy to estimate future revenues. As a student and self-employed, you have to pay provisional social contributions amounting to 78.51€ per quarter. If you can prove that your revenues will not exceed 6923.69€, you can ask an exemption to your social security fund. 

 … retired

You will normally already receive a pension: the amount of your social security contributions (which serve to pay the pension you receive today) will be deducted from this. The applicable rate is 14.7%. It is the payment of the final contributions that opens your rights. 

… an assisting spouse

If you help your partner in his / her activity, you must join a social insurance fund and take part in the social contributions’ system. If you are already paying social security (because you work and pay social contributions as a result, for example), you do not need to join. Otherwise, the fixed amount is € 325,01 per trimester. 

… living abroad

If Belgium has concluded a social convention with the country in which you reside, the two countries determine where you have to pay your social security contributions. If no social convention has been concluded with this country, you must join (and pay) in both countries.

 

 

 

 

Hassan Ayed, Certified Accountant & Mindful Tax Adviser
Hassan Ayed, Certified Accountant & Mindful Tax Adviser

Hassan is Chartered Accountant. Ex-PWC, he built his own multi-million fiduciary from the ground up.
When Hassan is not running numbers, doing tax optimizations or digitizing accounting processes, he loves to run around and play with his 2 kids

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