Belgium offers extensive social security. This ensures you get child benefit, healthcare, sickness allowance and pension benefits when you need them. You won’t get the financial support just like that, however: every quarter you have to pay social security contributions. Here’s what you must know.
An employee’s social status is simple: every month, an amount (= the social security contributions) is automatically deducted from the salary. In exchange, he or she gets a number of social entitlements.
For self-employed people, the situation is different: before starting your business, you need to join a social security fund. If you don’t it, you will automatically be registered with the Caisse nationale auxilaire/Nationale Hulpkas voor Zelfstandigen. The fund will then calculate your quarterly social contributions.
How much will you pay in social contributions?
Every quarter, you must cough up 20.5% of your taxable income. That is the net income that you retain after deducting professional expenses. However, it will take your social security fund quite some time to assess your definitive taxable income for the current year. That is why you start by paying a provisional contribution based on your income three years prior.
Note: in addition to the 20.5%, your social security fund will charge administration fees, ranging from 3.05 to 4.25%.
Two years down the road, once the actual income from your business can be determined, your social security contributions are regularised: if you’ve paid too much, you’ll get a refund; in most cases, however, entrepreneurs have to pay extra. If you suspect that you will earn more than three years ago, you can adjust your provisional contributions.
What if being self-employed is your first job? Obviously, you won’t have any income on which to base the calculation of the advance on your social security contributions. You will therefore pay the minimum contribution for the first three years. In addition, you may apply for a starting entrepreneur’s discount for the first four quarters, under certain conditions.
Your social contributions payments will be proportional to your taxable income. But even if don’t earn much from your business, you will still have to pay a minimum contribution:
If you earn less than 14.042,57 euros in 2021, you will pay a minimum quarterly contribution of 748,11 euros.
If you earn more than 89.361,89 euros in 2021, you will pay a maximum quarterly contribution of 4.287,45 euros.
If you start your own business in a secondary occupation, other rules apply. And companies also pay social contributions, based on yet other rates. Your accountant will be happy to explain this to you.
What do you get in return?
Even though social contributions take a big chunk out of your income, in return you enjoy a number of essential entitlements. Here’s a summary.
1. Sickness and disability benefits
A self-employed professional has the same entitlements as a wage-earner when it comes to the reimbursement of healthcare costs. These would include purchasing medicines or hospitalisation, for instance. Even if you become incapacitated for work, you will receive a benefit via your health insurance fund from the second month onwards.
2. Financial assistance when you start a family
A new mother is entitled to 12 weeks of maternity leave, with a weekly allowance. Paternity leave for the self-employed is also in the pipeline, even though the exact details have yet to be ironed out. Expanding families can also count on maternity assistance, a maternity allowance (birth premium) and child benefit.
3. A (meagre) pension
You also accrue your pension with your social security contributions, even though you will receive less than employees at the end of your career. Many entrepreneurs therefore add to their pension savings through the Voluntary Supplementary Pension for the Self-Employed (VSPSE/VAPZ).
4. Protection in the event of a setback or bankruptcy
A burglary, flooding or a balance sheet deep in the red: sometimes, the only option is to close the business. If that happens, you will receive a monthly allowance and enjoy another year of your social entitlements.
Need more info on the necessary formalities to start as a self-employed professional?
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