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Our tips on social contributions for self-employed workers 🙌

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When you hear “social security contributions”, is “paying, paying and paying again” the only thing that comes to your mind ? Fair enough. Still, social contributions are a key part of the Belgian social security system. In this article, we will highlight what you absolutely need to know about them and how these contributions are good for you, in the longer term.

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

Every quarter, you pay social contributions. In return, you are covered at specific times of your professional and private life. For instance, you benefit from childbirth and family allowances.

Other advantages include reimbursement of medical expenses, provided that you are affiliated with a health insurance fund – just like a random employee. If you are unfit to work for health reasons, you are entitled to an allowance and might be exempted from the payment of your social security contributions without losing your entitlement to social security.

Your social insurance fund may even intervene if you take care of a child with a disability or of a loved one at the end of their life. You are bankrupt or have to stop your activity? There is a specific indemnity in that case as well.

Step by step, payment after payment, you also build your rights to a pension.

In short, social contributions ensure your social rights.

Of course, as a self-employed person, at the end of the day, you are the one in charge of your social coverage. Social contributions provide you with the basics. You might want to consider subscribing to a guaranteed income insurance and/or an additional voluntary pension scheme.

These solutions are interesting from a fiscal standpoint, and you are better protected with them.

How much social contributions do you need to pay 💵 ?

Your social contributions are calculated on the basis of what you earn.

Social contributions amount to approximately 20.5% of your taxable income, up to 59,759.61 € and above that amount, 14.16% of your taxable income. The maximum to pay each quarter is 4.191,25 euros. (in 2019)

Belgian tax authorities will communicate your income to your social insurance fund, which in turn calculates how much you have to pay.

The issue is that this computation happens up to 3 years after you have captured the revenue on which you will pay social contributions.

That makes things especially complicated when you start as a self-employed: you don’t know yet how much money you will earn that year but you still have to pay social contributions based on your revenue.

You can make provisional payments, as a lump sum. During the first three years of your self-employed activity, you pay at least € 731.33 per per quarter, an amount that is calculated on an annual income of € 13,847,39 (numbers of 2019).

If you think that you will earn more than €13,847,39 annually, you should ask to re-evaluate your contributions and pay a higher amount.

Otherwise, you will have to pay the difference three years later – not necessarily the best surprise ever.

Accountable allows you to calculate what social contributions you should be paying, based on your income.  Try out this feature and avoid bad surprises !

Concretely, how does it actually work 👇 ?

Let’s make it all more comprehensible by making it a bit more concrete:

  • 2016: you start working as a self-employed person and pay the amount of your choosing, amounting to, at least, the minimum required.
  • 2019: by now it is the fourth year of our working as a self-employed person. You 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 have 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 one to pay bills on time, make sure that you pay at least your social contributions on time.

If you do not, 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 of) your social contributions.

Believe us, it becomes quickly expensive…

An exemption, also something for me 🤔 ?

Maybe you’ve already heard of this before: some self-employed people (complementary or student) can get an exemption for the payment of their social security contributions.

The exemption is not a myth, it is an existing vehicle that helps certain self-employed people to get through difficult times.

Although this might sound ideal (who doesn’t want to skip on paying social security contributions?), you need to think carefully before asking for an exemption.

The only way to get this exemption is to prove that you actually need it. If you do, you apply for this exemption for the payment of your social contributions via your social insurance fund. The moment you receive the exemption, it also applies to the regularization contributions for these quarters.

The moment you start fulltime as a self-employed person, or in being self-employed as your main occupation, your income might be a bit low. After all, you still need to build your client base!

At this moment, you can also ask to pay reduced contributions for a maximum period of four trimesters. You then pay a contribution of 377.66 euros (calculated on an income of 7,150.87 euros) or a contribution of 487.55 euros (calculated on an income of 9,231.59 euros).

Please note, as with everything discussed earlier if your income grows during this period and you don’t alert the authorities on time, you still owe the corresponding contributions in year three!

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

  • Only the years during which you have worked at least two quarters matter when calculating your pension.
  • The social security contributions are happening every quarter: if you register three days before the end of a quarter, you still pay the social security contributions for the entire quarter.

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

Quick summary per legal status

You are…

… a self-employed as a complementary activity

If the (taxable) income of your complementary activities is below 1531.99 euros per year, you do not have to pay social security contributions. Above that, you pay at least a flat rate of 80.90 euros per trimester.

These rates correspond to those of self-employed people in primary employment: 20.5% of your income goes towards the payment of your social security contributions

As a self-employed person in a complementary occupation, you retain all social rights that you have as an employee. Your contribution is actually a “solidarity contribution” for the benefit of all self-employed people.

You will receive certain benefits if your income as a self-employed person in a complementary occupation is higher than 13,847.39 (figures for 2019). 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

You can be a student and entrepreneur at the same time. Of course, you also have to pay social security contributions, but the rules are favourable in this case.

  • If you have less than 6,923.69 euro taxable annual income, you may ask to be exempted from paying your social security contributions. If your income is higher, you can ask for your social contributions to be adjusted accordingly. (be careful, if you’re going above this limit, your parents might lose the right to child benefit)
  • If your income is between 6,923.69 euros and 13.847.39 euros, you pay a reduced contribution that is calculated on the amount that exceeds the threshold of 6,923.69 euros.
  • Above the 13.847.39 euros, your contributions are similar to those of a full-time self-employed person.

… retired

You will normally already receive a pension: the amount of your social security contributions (which built the pension you receive today) will be deducted from this. The applicable rate is 14.7%.

… an assisting spouse

If you help your partner in his / her activity, you must join a social insurance fund and a special system of social contributions. If you are already paying social security (because you work as an employee and pay social contributions as a result, for example), you do not need to join. Otherwise, the fixed amount is € 321.27 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 - Chief Accounting & Mindful Tax Adviser

A word about the author

Hassan Ayed - Chief Accounting & 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 within Accountable, he loves to run around and play with his 2 kids

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Andrea Handl
Guest

Hi there, I just read through your explanations on social contributions. There, it says. “During the first three years of you starting as a self-employed, you pay at least € 731.33 per month, an amount that is calculated on an annual income of € 13,847,39 (numbers of 2019).”

Could there be a mistake here? I think it should say 731.33 per quarter?

All the best,
Andrea

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[…] To enjoy these (mandatory) benefits, you need to start paying your social security contributions every trimester. In most cases, the amount of the contributions will be around 20.5% of your annual income. Looking for ways to get an exemption or reduction on your payments? Or why it is important to pay on time? All the details can be found here. […]

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