Calculating your tax burden in Belgium
Determine your net salary or net income after calculating your taxes in Belgium.
What is your net salary or net income when working in Belgium?
One of the questions we often get from our readers who just started working in Belgium or who have the intention to come to Belgium in the near future, is: "How much will I receive net per month?". They usually only send us the gross salary set out in their employment contract and hope to get an exact number in response.
In fact, there is a lot more to it than meets the eye. We need to emphasize that there is an essential difference between "what you take home every month" and the overall Belgian tax burden on your income. Quite a few factors need to be taken into consideration when making an estimate of your "take-home pay" and/or your eventual net income after taxation.
First of all, it is important to determine whether the taxpayer is working as an employee or as a self-employed individual. This distinction is the main factor in employment status.
A self-employed individual submits invoices for fees, is paid gross and is responsible for paying his own (advance on) income taxes and social security contributions. An employee, on the other hand, receives a monthly net salary where the payroll tax and social security contributions have already been deducted from at source by the employer.
The net income received after tax and social security deductions will still need to be reported in the annual income tax return. Income from activities other than the taxpayer’s professional occupation, such as rent or real estate income, profit from the sale of certain assets, investment interest and so on, will evidently determine the taxable basis and will therefore additionally need to be reported in the tax return.
Certain allowances, credits and personal deductions may be taken against the aggregate net income with further exemptions for dependent children and spouse. For this it is necessary to keep in mind the composition of your family and other relevant aspects that can have an influence on your tax situation (e.g. real estate, child support, secondary profession…).
Gross salary or income
The gross salary is the salary that the employee and the employer agreed upon. This figure is set out in the employment contract. The gross income is comparable to what self-employed individuals receive as a result of submitting invoices for fees.
In the private sector, salaries are not fixed by law, but are generally agreed upon in a so-called 'Collective Labour Agreement' (CLA). A CLA may be applicable in the company or within the sector in which the employee works. Every CLA establishes the basic scale, the conditions for salary indexation and any benefits such as the year-end bonus, meal vouchers, bonuses for shift work, night work, weekend work and so on.
The gross salary is the sum that the employee earns before any deduction is made. The two most important deductions are:
(i) The social security contributions paid to the National Office of Social Security (NOSS).
These contributions make it possible to pay substitute allowances (e.g. pensions, unemployment benefits, etc.) and supplementary allowances (e.g. child benefit, the refund of health care, etc.).
In the private sector, social contributions amount to 13.07 per cent of the gross salary received by the employee. In addition, the employer himself pays a social security contribution on the salary paid out to the employee (currently 32.38 per cent).
When self-employed, the taxpayer is responsible for personally taking the necessary mandatory initiatives. Self-employed individuals have to register with a Social Security Fund and pay quarterly social security contributions depending on the height of their net income. However, during the first three years of their registration, they are allowed to pay a minimum contribution of approx. EUR 715.00 per quarter.
In Belgium, self-employed individuals who pay contributions on their actual income can never pay more than EUR 4,023.14 per quarter.
ii) The 'professional withholding tax' or payroll tax (Article 270 of the Belgian Income Tax Code of 1992 – BITC92):
This is part of the employee’s personal income taxation already deducted «at source» from his monthly salary and forwarded to the Belgian Tax Administration by his employer. The amount of this deduction depends on the taxable gross salary (i.e. the gross salary mentioned in the employment contract minus the social security contributions), the composition of the employee’s family and other relevant aspects (Article 275 BITC92).
This monthly withholding is a (refundable) pre-payment of the final income tax due by the beneficiary. Depending on the taxable basis for a given income year and the eventual income tax due, the employee will be allowed a refund of the tax initially withheld or will be required to pay an additional sum.
Self-employed individuals have to pay a quarterly advance on the income tax themselves (Article 157-168 BITC92). If they do not meet this requirement, their income tax due will be subject to a (limited) tax increase (Article 159 BITC92). However, during the first three years, self-employed individuals are also exempt from this requirement (Article 164 BITC92).
Net salary or income
The net salary (or net income) is the amount that you keep after the deduction of (the advance on) income tax, the NOSS contribution and other permitted deductions. This income will still need to be reported in your annual income tax return.
Your business expenses can be deducted from the gross amount earned, as taxes are only due on the balance.
The individual income tax rates for the assessment year 2013 (income year 2012) climb from 25 percent up to 50 percent and work with progressive scales (Article 130 BITC92):
Taxable net income Income tax due
25 percent: EUR 0.01 – EUR 8,350 EUR 2,087.50
30 percent: EUR 8,350 – EUR 11,890 EUR 1,062.00
40 percent: EUR 11,890 – EUR 19,810 EUR 3,168.00
45 percent: EUR 19,810 – EUR 36,300 EUR 7,420.50
50 percent: EUR 36,300 and more
These tax rates apply to all resident and non-resident taxpayers (Article 243 BITC92).
For an annual net income of EUR 36,300, a tax of EUR 13,738.00 will be due. This tax burden does not take the basic tax exemption into consideration (which can be increased under certain conditions – Article 132 BITC92), nor does it take into account the different allowances, credits and personal deductions since they are different for each individual situation.
The basic tax exemption for fiscal year 2013 (income year 2012) is EUR 6,800 regardless of marital status with further exemptions for dependent children and spouse (Article 131 BITC92).
The income tax due is furthermore increased by a municipal surcharge depending on the location where the taxpayer lives. For Brussels, for example, this surcharge is 7 per cent.
Gross-net salary calculator
There is a number of calculators available on the internet that allow you to calculate your net earnings when working in Belgium. This tool calculates tax paid and social security contributions, taking into consideration your different benefits, working hours and so on.
While every employee situation is different, a gross monthly salary of EUR 3,000 will normally result in a net salary of around EUR 1,700.
This includes: (i) social security contribution (13.07 pct. or EUR 392); (ii) professional withholding tax (33 pct. or EUR 860); and (iii) special social security contribution (EUR 30).
It does not take into account: (i) personal contribution for meal vouchers; (ii) personal contribution for company car; (iii) unemployment contribution (1.60 pct.); (iv) personal contributions for extra-legal pension, and so on.
Updated in cooperation with Taxpatria.
Feel free to contact Taxpatria if you would like us to assist you with calculating your Belgian income taxes or determining your take-home pay.