Will I pay taxes for the Corona replacement income and the regional compensations?
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The economic crisis following the outbreak of the Coronavirus, hit Belgian self-employed professionals incredibly hard. Fortunately, both the federal and regional authorities intervened quickly with support measures. You can find out which measures you qualify for, by filling in these questions!
These measures, however, are not all taxable in the same way. There are a number of important differences between the regional and federal measures that are best taken into account. In this article we give you all the answers.
Is the crisis replacement income taxable?
One of the first measures the Belgian government took to help self-employed professionals, was to transform the traditional replacement income (Droit Passerelle or Overbruggingsrecht) into a crisis replacement income. As a result, the conditions to apply for the replacement income have been made more flexible. This means that, for example, starters and some complementary self-employed professionals can now also apply.
Since the replacement income is still a form of income, this unfortunately means that it is not tax-free. The replacement income is considered a separate taxable income and needs to be included in your 2020 tax return.
You will receive a tax sheet 281.18 later this year, which you can include in your income tax return for the tax year 2020, which needs to be submitted in June 2021.
🎉 Good news, you do not have to pay any social contributions on this replacement income
Are the regional Corona compensations taxable?
In addition to the replacement income, the three Belgian regions also announced their own measures for self-employed professionals during the Corona crisis. Among these, in each of the three Regions, self-employed professionals can benefit from a one off compensation of between 3,000 and 5,000 euros depending on their Region, their Nacebel code and/or the complete or partial closure of their activity.
These compensations are not taxable: a preliminary law has been drafted to this effect and approved by the Council of Ministers at the beginning of April.
🚀 You can now apply for these measures Flanders, Walloni and Brussels. How? find out here!
As you can see, tax rules on regional and federal support measures are not completely the same. The main point you need to remember? The (crisis) replacement income is a form of income and is therefore taxed as such. The region-specific compensations, on the other hand, are completely untaxable.
Accountable helps you with all your admin associated with your taxes: your VAT return is generated in our app and you always see how much VAT and social security contributions you’ll have to keep aside for later. Judge for yourself!