How to calculate your tax burden in Belgium
Belgian taxes can take a chunk out of your salary – calculate how much you have to pay in Belgian taxes and social security to find your net salary or net income.
Working out how much in Belgian taxes you have to pay requires some careful calculation considering the number of deductions and benefits applicable in certain situations, particularly for foreign workers in Belgium. Belgian taxes are relatively high, so it is important to find out your taxable income level and which expenses you can claim to reduce your tax bill. This guide explains how to calculate your income and taxes in Belgium.
What is your net salary or net income when working in Belgium?
One of the questions we often get from 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?'. Sometimes they 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 emphasise 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 paying your Belgian taxes.
How to calculate your 'taxable income'
First of all, it is important to determine whether the taxpayer is working as an employee or as a self-employed or freelancer worker in Belgium.
Self-employed workers submit invoices for fees, are paid gross and are responsible for paying their own income taxes and social security contributions in advance. An employee, on the other hand, receives a monthly net salary where the payroll tax and social security contributions have already been deducted by the employer.
The net income received after tax and social security deductions still needs to be reported in your annual income tax return. Income from activities other than the taxpayer’s professional occupation, such as rent or other real estate income, profit from the sale of certain assets, investment income and so on, will evidently determine the taxable basis and also needs to be reported in your tax return.
Certain allowances, credits and personal deductions may be subtracted from your total net income, plus additional exemptions for dependent children and spouse. To take advantage of this, it is necessary to keep in mind your family situation and other relevant aspects that can influence your tax situation in Belgium (eg. real estate, child support, secondary profession etc.). There are many items it consider that are not reflected in your monthly take home pay. Read what expenses you can deduct from your Belgian tax return.
Gross salary and Belgian tax deductions
An employee's gross salary is the wage agreed between with their employeer, and is set out in your employment contract. A self-employed worker's gross income is the total amount from all submitted invoices.
In the private sector, salaries are not fixed by law but are generally agreed upon via unions under a so-called 'Collective Labour Agreement' (CLA). A CLA may be applicable in the company or within the sector in which you work, and therefore the basics of your employment contract will depend on that; 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, normally divided and paid out in 13.92 parts, is the sum that the employee earns before any deduction is made. The two most important deductions are:
1. The social security contributions paid to the National Office of Social Security (NOSS)
These contributions make it possible to pay substitute allowances (eg. pensions, unemployment benefits, etc.) and supplementary allowances (eg. child benefit, the refund of health care, etc.).
In the private sector, an employee pays a personal share to social contributions of some 13.07 percent of their gross salary received by the employee. In addition, the employer pays a social security contribution on the salary paid out to the employee (currently 30 per cent). Since the sixth state reform, the aim has been to shift tax from labour to wealth and consumption. Several measures were introduced to increase the professional net income for employees in Belgium. One of these was a decrease of the employer social security contributions to 25 percent over the next few years.
When self-employed, the taxpayer is responsible for personally taking the necessary mandatory initiatives. Self-employed workers have to register themselves with a social security fund for self-employment and pay quarterly social security contributions depending on the level of their net income. However, during the first three years of their registration, they are allowed to pay a minimum contribution of approximately EUR 700 per quarter.
In Belgium, self-employed individuals who pay social security on their actual income can never pay more than a maximum EUR 4,118.40 per quarter (2016).
2) The 'professional withholding tax' or payroll tax
This is the part of employees' personal income taxation already deducted 'at source' from their monthly salary and forwarded to the Belgian Tax Administration by their employer. The amount of this deduction depends on the taxable gross salary (ie. the gross salary in your job contract minus the social security contributions), the composition of the employee’s family and other relevant aspects.
This monthly withholding is your (refundable) pre-payment towards the final income tax payable after the tax-year ends. Depending on the eventual income tax due, the employee will either receive 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. If they do not meet this requirement, their income tax due will be subject to a (limited) tax increase. However, during the first three years, self-employed workers are also exempt from this requirement.
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 needs to be reported in your annual income tax return.
Your business expenses can be deducted from the gross amount earned, and taxes are only due on the balance. Read what expenses you can deduct from your Belgian tax return.
Tax rates in Belgium
Belgium's individual income tax rates for the assessment year 2017 (income year 2016) climb from 25 percent up to 50 percent based on a progressive tax scale.
Based on the Tax Shift Law 2016, the marginal income tax rates will be gradually decreased. The new measures include a gradual abolition of the 30 percent rate and expanding the 40 percent tax bracket into two steps; the first implementations start from tax income year 2016 with full implementation expected by tax income year 2018.
Below is an overview of Belgium's tax rates for fiscal year 2017 (revenue of 2016).
Taxable net income 2017
EUR 0.01 – EUR 10,860: 25 percent
EUR 10,860 – EUR 12,470: 30 percent
EUR 12,470 – EUR 20,780: 40 percent
EUR 20,780 – EUR 38,080: 45 percent:
EUR 38,080+: 50 percent
These tax rates apply to all resident and non-resident taxpayers. Besides personal income tax, residents also pay a municipal tax that typically ranges between 0 and 9 percent. For non-residents, an average 7 percent municipal tax is taken into account, irrespective of whether the municipal taxes are levied in the commune.
If you have an annual net income of EUR 38,080 (after business expense deductions), a tax sum of EUR 14,307 will be due. Above that amount, everything will be taxed at 50 percent. This tax burden does not take the basic tax exemption into consideration (which can be increased under certain conditions), nor does it take into account the different allowances, credits and personal deductions allowed in certain situations, which can influence your individual tax amount. Read what expenses you can deduct from your Belgian tax return.
The basic tax exemption for fiscal year 2017 (income year 2016) is EUR 7,130 regardless of marital status, with further exemptions allowed for dependent children and spouse.
Belgian salary and tax calculators
There are a number of calculators available on the internet that allow you to calculate your net earnings (take-home pay) when working in Belgium, although most of them are in Dutch or French. You can use these tools to calculate tax paid and social security contributions, taking into consideration your different benefits, working hours and so on.
They do not take into account personal contribution for meal vouchers, personal contribution for company car, unemployment contribution, personal contributions for extra-legal pension, and so on.
If you are also interested to also know your annual net income, we can refer you to the following pages:
- Taxes in Belgium and filing your Belgian tax return
- What expenses can I deduct from my Belgian taxes?
- Tax benefits for buying a house in Belgium
- Taxes and charges for freelancers and the self-employed in Belgium
Expatica / Updated by Taxpatria
You can contact Taxpatria's tax lawyer Gregory Goosens on Expatica's free Ask the Expert service if you have related questions or contact Taxpatria if you would like help calculating your Belgian income taxes and take-home pay.
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