Belgium has a very comprehensive social security system. You are entitled to family benefits, health care reimbursement, sick pay and a pension. But this support is not free, as you have to pay social contributions to receive them. In this article, we give you an overview of your obligations and rights as a self-employed person.
While for employees, social security contributions are deducted directly from the salary every month, self-employed people, whether sole proprietors or companies, have to take care of paying their social security contributions themselves every quarter. As soon as you start your activity, you must join a social security fund to pay your contributions.
How much social security contribution do you pay?
Each quarter, you must pay 20.5% of your taxable income (net income after deduction of business expenses). However, you must wait until your social insurance fund has calculated your final taxable income for the current year. You will therefore be asked to pay an interim contribution based on your income from the previous three years.
For people who are self-employed as main activity, a rate of
- 20.5% per year applies to the income bracket from €0 to €70,857.99 and 14.
- 16% to the bracket from €70,858 to €104,422.24.
- Beyond that, the maximum contribution is €4,819.65.
For a self-employed person starting out, the social insurance fund will ask you to pay minimum contributions for the first three years because there is no income on which to base the 20.5% social security contributions. In addition, you can, under certain conditions, apply for the starter discount for the first four quarters. If you are interested in this benefit, please discuss it with your insurance company. This minimum contribution for people starting out as self-employed on a main basis is approximately €870 (this amount may vary depending on the administrative fees).
Your social security contributions will be adjusted when the social insurance fund receives the information on your actual turnover. Do you think you earned more? You can decide for yourself to increase your provisional contributions for prevention.
Please note: in addition to the 20.5%, your social insurance fund will charge you an administration fee of between 3.05 and 4.25%.
Who pays social security contributions?
All independent contractors pay social security contributions, regardless of their status. Whether you are a sole proprietor or a corporation, self-employed as a main or secondary activity, or an assisting spouse or caregiver.
The calculation of your social contributions will depend on your status.
Self-employed as secondary activity
If you are self-employed as a secondary activity, you are already building up social rights as an employee through your employer. Nevertheless, if you are self-employed on a secondary basis, you must pay what are called "solidarity contributions". This contribution is so called because it does not provide you with any additional rights to those accumulated through your main activity as an employee or civil servant.
Just like someone who is self-employed as a main occupation, you also pay 20.5% of your annual net taxable income in social security contributions. But the legal minimum is much lower for someone who is self-employed on a secondary basis. Your provisional contributions will be calculated on an annual income of 1,815.41 euros. If you are starting out, you pay a quarterly contribution of approximately 96 euros (this amount may vary depending on the administrative fees).
When do you have to pay social security contributions?
You pay your social security contributions to your social insurance fund every quarter. At the beginning of each quarter, the social insurance fund will send you a statement in the form of an interim contribution. You have until the end of the current quarter to pay the full amount. Tax quarters begin on 1 January, 1 April, 1 July and 1 October each year.
If you pay late, you will be charged a 3% surcharge at the end of each quarter. If you have not paid the quarterly contribution by the end of the calendar year, you will be charged an additional 7%.
If you find yourself in a difficult financial situation, contact your accountant and your social insurance fund as soon as possible. Solutions can be considered together for your situation, such as a temporary exemption.
What are your rights?
Social security contributions are certainly a very heavy burden for some self-employed people. However, they entitle you to certain rights in terms of contributions if you are self-employed on a primary basis.
1. Reimbursement of medical care
As a self-employed person, you have the same rights as employees for health care reimbursements, whether for the purchase of medication, a visit to a doctor or hospitalisation.
2. Sickness and incapacity to work benefit
Your mutual insurance company will pay you an indemnity in the event of illness or incapacity to work. Since 1 July 2019, you receive an indemnity from the first day of illness, as long as it lasts at least eight days. The eight-day period begins on the date the incapacity is reported, which will be indicated on the medical certificate.
3. Family benefits
As a young mother who is self-employed on a primary basis, you are entitled to 12 weeks of maternity leave and receive a weekly lump sum benefit. Self-employed persons are also entitled to take 20 days of paternity leave. You can also receive maternity aid, a birth bonus and family allowances.
4. A (meagre) pension
Your social security contributions also build up your pension entitlement. As is the case for employees, this pension will start at the legal age of 65. You will have access to an early pension under certain conditions.
The pension is granted in accordance with the number of years of activity as a self-employed person or a main carer. Only quarters covered by fully paid contributions will be considered. Years of inactivity (e.g. due to illness) are also taken into consideration. Let's be honest, in Belgium the pension received by self-employed people is still quite low compared to that of employees, which is why many entrepreneurs save for their pension through a supplementary pension fund.
5. Protection in the event of a setback or bankruptcy
Natural disasters, debts or bankruptcy sometimes mean that you have to stop your self-employed activity. If you find yourself in this situation, you will, under certain conditions, receive a monthly indemnity and you will continue to enjoy your social rights for 12 months.
The annual contribution payable by companies is a flat-rate social contribution used to perpetuate the social security system for self-employed workers.
If you have a company, you must pay an annual contribution through your company in addition to your social security contributions as a self-employed person. The amount of the contribution depends on the total balance sheet. You pay a maximum of 20.5% of your annual net taxable income. Since your actual income will not be known for two or three years, you pay provisional contributions for the current year, which will be calculated definitively later.
This contribution does not confer any rights either for the company or for the self-employed persons working in this company. It is a legal obligation for the company and has no bearing on the status of the managers or directors of the company, who have their own legal obligations.
Deductibility of social security contributions
Your social security contributions are considered professional expenses, which means that they are fully tax deductible. They are calculated on your annual net taxable income, which is your gross annual self-employed income minus business expenses, but before tax.
The social status of the self-employed has many exceptions. In addition, the rules are updated regularly. This article gives you an overview of the social security contributions system and the rights and obligations that arise from it for all self-employed people. Ask your accountant or social security fund if you have any questions on a case-by-case basis. They are always aware of the latest legislative developments and will provide you with more detailed information.