Starting your freelance career as a side activity is a good way to test the waters without taking risks. But how do you become self-employed in a secondary occupation? What do you need to know about taxes, VAT, and social security contributions? And what are the advantages and disadvantages of being a freelancer on the side? You’ll find answers to all these questions in this article.
Self-employed in a secondary activity: what does that mean?
Being ‘self-employed in a secondary occupation’ is the legal status of someone who is an employee as their main occupation and who has a self-employed activity on the side.
You probably know someone in this situation. For example, Charlotte, who has a full-time office job and is a photographer on weekends.
Many freelancers choose this option because they want the security of salaried employment while also being able to expand their client base and income. For other, it’s simply because they enjoy the variety of the work. 😉
Conditions for being self-employed in a secondary occupation
Who can become self-employed in a secondary occupation? To start a side activity, you need to have at least a part-time job.
Concretely, your situation needs to fall into one of the following:
- You’re an employee and you work at least part-time;
- You’re a teacher with at least 6/10 of a full schedule if you’ve been appointed a permanent position (i.e. are ‘nommé(e)’/‘benoemd’) or with at least 5/10 if you are not (yet) appointed;
- You’re legally retired;
- You’re looking for a job and have been authorised by the National Employment Office (ONEM/RVA) (site in French/Dutch) to carry out a secondary activity. You maintain the right to unemployment benefits for 12 months while carrying out a secondary, self-employed activity thanks to the Tremplin-indépendants (page in French)/‘Springplank naar zelfstandige’ (page in Dutch) scheme (which translates roughly as ‘springboard to self-employment’).
- You receive an indemnity from your health insurance fund (‘mutuelle/ziekenfonds’), based on the salaried activity you carried out before your incapacity for work.
In all other cases, for example, if you are on unpaid leave, you need to become self-employed as your main occupation.
Taxes when you’re self-employed in a secondary occupation
You’ve launched your secondary, self-employed activity because you dream of supplementing your income by pursuing your passion. But you don’t want to give everything to the taxman! In reality, there’s a real risk that you’ll pay even more in tax.
Just like your salary, the income from your side hustle is taxed under the progressive personal income tax system. In other words, the more you earn, the more you pay in tax.
Your taxes are calculated based on your net taxable income. This is your total income minus all your business expenses, for example, a new laptop, (part of) your telephone and internet subscription, your accounting software, your work equipment, etc.
- Let’s say you earn €4,000 in one year from your side activity and have expenses of €1,000. Your net taxable income is then €3,000. This amount is added to your salary, and you are taxed on the total amount.
- Now let’s imagine your gross annual salary is €46,000, and you add the €3,000 from your side hustle. You’re now in the highest tax bracket, which is 50%.
There’s no limit to how much you can earn from your side business, but the golden rule is to foresee enough business expenses. This is the only way to reduce your tax burden. Are your business expenses not sufficient? Then opt for flat-rate expenses.
VAT exemption for small businesses
Even when you’re self-employed in a secondary occupation, you’re required to charge VAT on your products or services and pay that VAT back to the state.
However, if your annual turnover is less than €25,000, you can claim the VAT exemption for small businesses. Thanks to this exemption, you don’t need to charge VAT to your clients or pay VAT to the government. Naturally, you don’t need to submit a VAT return, but this exemption also means that you can’t deduct the VAT your suppliers charge you.
Social security contributions when you’re self-employed in a secondary occupation
Just like those who are self-employed in a main occupation, you also pay quarterly social security contributions when you’re self-employed in a secondary occupation. However, you don’t benefit from any additional social security rights in return; you already have all these rights thanks to your main activity.
Is your net taxable income from your secondary activity less than €1,865.45 (in 2024)? In this case, you’re exempt from social security contributions. If you earn more, you’ll pay at least €98.52 per quarter.
The good news: your social security contributions are 100% deductible as business expenses.
The advantages and disadvantages of a secondary activity
Being self-employed in a secondary occupation has its pros and cons. For example, you can pursue your passion and cultivate an extra revenue stream. But you also risk paying a lot of tax on your earnings from that activity. In addition, you’ll find yourself with more administrative obligations. However, when you have a secondary, self-employed activity, you can, in many cases, claim the VAT exemption for small businesses and be exempt from paying social security contributions.
So, is being self-employed in a secondary occupation the right choice for you? Only you can make that decision. To help you, we’ve compiled a list of pros and cons.
Starting a side business: how to officially register
You’ve decided to go for it, so now’s the time to make your side business official. Here are the steps to follow:
- Open a business bank account. In theory, this isn’t mandatory for individuals, but we highly recommend it.
- Join a social insurance fund. This step is mandatory, as it’s this fund that collects your social security contributions.
- Apply for your business number from the Crossroads Bank for Enterprises (cost: €109). You can do this quickly and easily via Accountable.
- Activate your VAT number. Your VAT number is your business number preceded by ‘BE’. Don’t skip this step, even if you opt for the VAT exemption for small businesses. You’ll need your VAT number to submit your annual client listing. You can also activate your VAT number through Accountable’s registration tool.
Receive a voucher worth €109: equivalent to the cost of registering with the CBE
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Accountable is here for you
Becoming self-employed is a big step. Not to mention the fact that you also have to keep accurate accounts and file your tax returns on time. Leave these tasks to Accountable and focus on what really matters: growing your side business.
