Social contributions for people starting out in self-employment

How do social contributions work?

As an independent entrepreneur you pay social contributions like an employee in paid employment, to build up your social entitlements:

• Family Benefit (birth premium and child benefit included)
• Pension
• Reimbursement of medical care
• Sickness or incapacity benefits
• Benefits in the case of bankruptcy

The tax authorities consider social contributions as a tax-deductible professional expense. Therefore, be certain to include them as a professional expense under your tax optimisation.

You pay your social contributions every 3 months to your social insurance fund, which then pays the money to the government.

A social insurance fund of this type calculates the social contributions for you from your income and is ready with advice when you need it.

When do you pay your social contributions?

You pay your social contributions quarterly. The fiscal quarters begin each year on 1 January, 1 April, 1 July and 1 October.

The process is as follows:

• At the beginning of each quarter, the social insurance fund sends you a statement based on your provisional calculation.
• As an entrepreneur, you have until the end of the current quarter to transfer the full amount to your social insurance fund account.
• You also have the option to set up automatic payments by direct debit.
• If you do not pay the social contributions on time, the social insurance fund is legally required to charge an additional 3% at the end of the quarter.
• If your payment has not been received by the end of the calendar year in question, an additional 7% charge is added.

How does it work for starters?

As a starter, you do not yet have a demonstrable income from which your social insurance fund can calculate your contributions. You will pay provisional contributions, a legal minimum contribution calculated from a fixed annual income of €16,861.46.

After 2 years your actual income will be known, and your social insurance fund will recalculate your social contributions.  

• Have you paid too much? The difference will, of course, be refunded to you.
• What if your income is higher than the base calculation? You will be asked to pay the additional amount.

You can also have the amount of your provisional social contributions adjusted to suit your expected income if it is higher than the fixed annual income. This helps you avoid unpleasant surprises later in the form of a high bill.

Lower minimum contributions for starters (starter discount)

The starter discount is a government support measure through which some starter entrepreneurs qualify for reduced social contributions.

You qualify for this starter discount as a so-called 'primostarter' if you fall under one of the following situations:

• You start as self-employed in a main profession and were not, in any capacity, self-employed in a main profession for the 20 months prior to starting.
• You move over to a main profession from a sideline or student self-employment
• You resume your main profession after a period of incapacity for work or disability of at least two quarters or the equivalent due to sickness.
• If you are a primostarter, you pay lower contributions for the first four quarters after you start. These contributions are calculated by your social insurance fund on an estimated income of € 8,707.35: a quarterly contribution of € 464.55 (instead of € 899.58)
• 20.5% of income over the estimated € 8,707.35

Be sure, therefore, to talk to your social insurance fund if you think you are a primostarter. What if you didn't apply for the starter discount? Then you still receive it automatically once your definitive income is known, but only after a fairly long delay. So don't wait.

As a self-employed person in a sideline, you won't have to pay contributions if your annual net income is below €1,865.45. You are also exempt from minimum social contributions.

Who pays social contributions?

In essence, anyone who works as an independent entrepreneur pays social contributions. The actual calculation depends on your status as a self-employed person:

Postponement, exemption or reduced contributions due to financial difficulty

Are circumstances preventing you from paying your social contributions? In that case it is best to contact your social insurance fund as soon as possible. Depending on your situation, there are several possible solutions:

• Reduced provisional contributions through lower income than expected.
• An agreed repayment plan to pay off outstanding amounts in instalments, in consultation with the National Social Security Institute for the Self-Employed (RSVZ).
• Exemption from contributions in the case of unexpected events such as serious illness, fire on the company premises, or an economic crisis.