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Our tips on social contributions for self-employed workers 🙌

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You heard about social contributions and you are wondering what to do about them and properly manage those bloody quarterly payments?

No worries, you’ve come to the right place: social contributions are an important part of the Belgian social system after all, and, in this article, we’re going to give you a heads-up about what you absolutely need to know about them.

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

Every quarter you are paying social contributions for social security, this financial boost you might need during those important and difficult moments in your professional life.

Social security enables you to get some extra money after you’ve become a father or mother, a maternity allowance and even child benefits.

Other advantages include reimbursement of medical expenses when you’re sick, provided you’re affiliated with a health insurance fund – just like a random employee. If you’re unfit to work for health reasons, you can receive benefits and even 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 assisting a loved one at the end of their life. You’re bankrupt or have to stop your working activities?

Thanks to the “bridging right” that exists in Belgium you can receive a financial benefit for up to twelve months!

And lastly, because you pay social contributions, you also accrue entitlement to a pension with those payments every quarter.

In short, social contributions ensure your social rights.

Of course, as a self-employed person, you are responsible of making sure this coverage is sufficient. Social security provides you with the basics, if you need more, we can only advise you take on an additional income protection insurance and/or take out a free supplementary pension.

The advantage is that these solutions are interesting from a tax standpoint, and they can strengthen your financial situation in case of difficult times.

How much social contributions do you need to pay 💵 ?

When it comes to paying social contributions there is a basic rule you need to take into account: your social contributions are calculated on the basis of what you earn.

Social contributions amount to 20.5% of your taxable income (capped at 59,759.61 € and above that amount they are 14.16% of your taxable income). The maximum you may have to pay each quarter, as a result, is 4.191,25 euros. (numbers of 2019)

Don’t worry, you don’t have to figure out the exact amount yourself: Belgian tax authorities will pass on the amount of 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.

It gets complicated when you are just starting as a self-employed: you don’t know yet how much money you will be earning but you still have to pay social contributions based on how much you will be earning….

You can do this by paying provisional contributions, as a lump sum. 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).

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.

This is something we strongly recommend, and of course using Accountable we can make a real-time calculation on what your annual income will be, and as a result what social contributions you should be paying.

You don’t want to repay a surprised debt from 3 years ago… Little surprises like this are always arriving at a moment when you least expect it, so better to pay a more realistic amount straight from the beginning!

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 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.

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 the more difficult periods.

Although this sounds like something ideal (who doesn’t want to skip on paying social security contributions?), you need to think carefully before submitting your application: if you have revenues while you’re exempt, the difference you will need to pay later on will be extremely high…

The only way to get this exemption is to prove that you are “in a state of need”. If you are, you can 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 service checks.

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 be asked to be exempt 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 geared 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 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 a special system of social contributions. If you are already okay with 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 € 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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