Changes to social security contributions for self-employed
New rules will change the way self-employed workers living in Belgium must calculate their Belgian social security contributions as of 2015.
It has also been announced that the rules for calculating the Belgian social security contributions applicable to self-employed workers in Belgium will change as of 2015.
Actual net income
Currently, social security contributions due by self-employed individuals are calculated based on the income of the third year that precedes the year they are due. Meaning that the income the freelancer has acquired in 2011 serves as a base to calculate the social security contributions that are due in 2014 (indexed income N-3).
In the first three years, a freelancer could only pay a minimum quarterly contribution as there would be no N-3 income to refer to. This calculation method was generally more favourable for self-employed people that were at the beginning of their career.
However in the new reform, the social security contributions for self-employed people will be calculated on the basis of the actual net taxable income from the current income year.
Evidently, as the actual net taxable income from the corresponding year is not yet known at the beginning of the new year, provisional social security contributions will still be calculated based on the net taxable income from the third year preceding the current income year (this is similar to the current system in place).
In practice, the provisional contributions – calculated based on the indexed income of N-3 – will be due every quarter. However the social security fund will send out a statement to the freelancer as soon as it has received the definitive taxable income as determined by the tax authorities.
After this statement, the self-employed freelancer will need to pay a supplement or will be refunded the amount that they overpaid.
Additionally, one of the new system’s advantages is that self-employed people can voluntarily request to decrease or increase their social security contributions in order to avoid eventual overpayment or a large regularisation afterwards, in cases where a significant decrease or increase of income is expected.
The current method often leads to inconvenient situations, whereby for instance a significant income reduction occurs in a given year, whereas the self-employed person still needs to continue paying high social security contributions due to higher taxable income from three years ago.
The purpose of these new rules therefore is to avoid such anomalies. The new method will more closely match the fluctuations of the income of self-employed freelancers over the years. It is expected to be in place as of 2015.
Taxpatria / Expatica
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