To close what had been an ongoing discussion over the years concerning the social status of artists in Belgium, the former Belgian government has adopted a new legislation, which was put into practice on 1 July 2003. Wim De Buyser of Loyens gives the details.

Until now, Artists in Belgium were deemed to be employees, even if they were not bound by an employment contract. This assumption was irrefutable, and consequently 'independent' artists could not have the social status of 'self-employed'.

Employee status

Under the new legislation, artists are deemed to be employees for social security purposes, unless the artist certifies that their activities are performed on a self-employed basis.

An independent artist can now prove that they are not economically dependent on the person or organisation that hires their services. Please note that in order to be considered an employee, it is not required that a relationship of subordination exist between the artist and the client.

The (Belgian) person/organisation hiring the artist will be deemed to be the employer and will have to fulfil several obligations. Artists performing services for several clients can, however, appoint a designated social insurance body ('Sociaal Bureau voor Kunstenaars') - still to be established - to act as the artist’s regular employer. In the latter case, the person who hires the artist does not have to fulfil any legal obligations.

Under employee status, the artist will be subject to Belgian social security charges applicable to employees, i.e. 13.07 percent employee’s charges to be deducted from gross income earned and about 35 percent employer’s charges (under certain conditions, (partial) exemptions can be claimed with respect to employer's contributions up to EUR 35 per day or EUR 4.50 per hour) payable on top of the (gross) income received by the person or company that hired the artist's services.

Under employee status, the artist and their family will be entitled to its benefits and broad coverage.

Self-employed status

Under the new legislation, the artist can choose their preferred social status and opt to be self-employed. Therefore, an artist must make a formal request to a special – still to be established – commission (‘Commissie Kunstenaars’) to receive a certificate stating that they are not an employee but actually self-employed. This certificate is granted for a definite period and during this period the artist is irrefutably presumed to be self-employed.

Artists who set up their own company and who are appointed director of this company through which they perform their activities, will, as in the past, not be deemed employees but will be considered self-employed.

If the artist opts for self-employed status (see above), they will be subject to Belgian social security charges for self-employed (up to a maximum of about EUR 12,000 per year).

The charges are computed on the professional income less professional charges and professional losses. Furthermore, the charges are computed on the professional income earned three years prior to the year in which the services are rendered (an index is applied. For the 2002 income year, the index amounted to 1.0688).

This reference professional income, after indexation, is assumed to amount to a minimum of EUR 8,924.25 (the minimum contribution per quarter amounts to EUR 452.43). After the third full year, a rectification is performed, which results in a refund or a balance due (starters are also entitled to a limited deduction in the fourth full year).

The self-employed social security charges are calculated as follows: · 19.65 percent of the professional income up to EUR 43,587.20 · 14.16 percent of the professional income between EUR 43,587.20 and EUR 64,238.84 · no charges due on professional income exceeding EUR 64,238.84

The benefits covered under the self-employed social security system are significantly lower than for employees. Indeed, self-employed persons are not covered for so-called small risks (such as doctors and dentists fees). Supplementary private insurance is therefore typically contracted, the costs of which also qualify as deductible professional expenses.

In order to pay the self-employed social security charges, the artist should register with a payroll office, i.e. social insurance fund for self-employed (so-called 'social secretariat/secretariat social').

The artist will also have to be affiliated with a health fund ( ‘Mutualiteit/Mutualité’) for supplementary private insurance.

Performance of activities outside Belgium

Whilst the new status of the employee will not cause too many problems if limited to activities performed in Belgium, it may lead to conflicts if work is done outside of Belgium.

The social status in Belgium will also determine the applicable social security system. To determine the applicable social security legislation if the artist performs activities in, as well as outside Belgium, EU-regulation 1408/71 will have to be applied. As a general rule, this regulation designates one applicable social security rule for all services rendered throughout the European Union. The status in Belgium and the other countries of performance is important here.

Certainly, in the case of a different social status in Belgium and other countries of performance of activities, the artist might end up paying both Belgian social security for employees and Belgian social security for self-employed.

Therefore, an artist performing both in and outside Belgium should carefully consider their social status in advance.

January 2004

Wim De Buyser is an attorney-at-law for Loyens in Belgium. He can be contacted at wim.de.buyser@loyens.com