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. Gregory Goossens of Taxpatria explains how to calculate your income and taxes in Belgium.
Finding your way around the many tax codes, exemptions and deductions available can be a challenge for foreigners who need to file in Belgium, especially as most information is only available in French, Dutch or German. To assist you, Taxpatria provides expat-focused financial services, including an updated (unofficial) English version of the tax return.
What is your net salary or net income when working in Belgium?
“One of the questions I often get from readers who just started working in Belgium or who have the intention to come to Belgium, is: ‘How much will I receive net per month?’,” says Gregory. “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,” adds Gregory. “I need to stress that there is an essential difference between “what you take home every month” and the overall Belgian tax burden on your income,” he explains. 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 you are working as an employee or as a self-employed entrepreneur or freelancer 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 on a quarterly basis.
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 rents perceived (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,” advises Gregory, “it is necessary to declare your family situation and other relevant aspects that can influence your tax situation in Belgium” (e.g., real estate, child support, secondary profession). “There are many items to consider that are not reflected in your monthly take home pay.” Read what expenses you can deduct from your Belgian tax return.
Gregory emphasizes, “even if your Belgian salary is your single source of income and payroll tax has been withheld from it during the year, you are still required to file a tax return.”
Filing US taxes from Belgium
Despite the fact that every US citizen and Green Card holder is required to file a tax return with the IRS even when living abroad, many expatriates still fail to do so. Many are unaware of these obligations, thinking that as an expat they do not need to pay or file tax returns in the US. You do! For more information and help filing your US tax returns from Belgium, contact Taxes for Expats and see our guide to taxes for American expats.
Gross salary and Belgian tax deductions
An employee’s gross salary is the wage agreed between with their employer, and is set out in your employment contract. A self-employed worker’s gross income is the total amount from all submitted invoices to his clients.
In the private sector, salaries are not fixed by law but are generally agreed upon via unions under a collective labor 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 the social security contributions and the payroll tax.
1. Social security contributions
The social security contributions are paid to the National Office of Social Security (NOSS). These contributions make it possible to pay substitute allowances (e.g., pensions, unemployment benefits) and supplementary allowances (e.g., child benefit, health care).
In the private sector, an employee pays a personal share to social contributions of some 13.07 percent of his gross salary. In addition, the employer pays a social security contribution on the salary paid out to the employee (currently 25%).
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 €700 per quarter – or decide to pay a higher amount,” Gregory explains. He adds that the maximum quarterly contribution is approximately €4,000.
In general, for a principal activity as a self-employed you pay around 20% social security on your net earnings, after deducting your income tax and business expenses.
2. The professional withholding tax or payroll tax
This is the part of employees’ personal income taxation already deducted at the 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 (i.e., 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. Gregory warns that “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 tax return,” reminds Gregory.
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 tax year 2019 (income year 2018) climb from 25% up to 50% based on a progressive tax scale.
The basic tax exemption for tax year 2019 (income year 2018) is €7,430 regardless of marital status, with further exemptions allowed for dependent children and spouse.
Below is an overview of Belgium’s tax rates for tax year 2019 (revenue of 2018).
Taxable net income
- €0.01–€12,990: 25%
- €12,990–€22,290: 40%
- €22,290–€39,660: 45%
- €39,660+: 50%
“These tax rates apply to all resident and non-resident taxpayers,” says Gregory. Besides personal income tax, residents also pay a municipal tax that typically ranges between zero and 9%. For non-residents, an average 7% 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 €39,660 (after business expense deductions), a tax sum of €14,784 will be due. Above that amount, everything will be taxed at 50%. “This tax burden does not take the basic tax exemption into consideration (which can be increased under certain conditions),” adds Gregory, “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.
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,” advises Gregory (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.
But Gregory warns that 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.
Founder of Taxpatria, obtained his Law Degree in 2004 and graduated in 2005 with a Master’s degree in Tax Law (University of Antwerp). After a brief career as a tax advisor with a Big Four company, he moved to the legal profession in September 2006. A member of the Brussels Bar as well as the Antwerp Bar, his main focus has been on increasingly important global mobility, but he also specialises in the prevention and resolution of tax disputes. He is a native Dutch speaker but is also fluent in English and French.Explore tax tips in English