Why do you pay social security contributions?
In Belgium, everyone who works contributes to social security. As a self-employed person, you therefore pay social security contributions, just like a salaried employee.
The most important thing you get in return is a raft of social rights, such as:
- Family allowances (including birth grant and child allowances)
- Pension
- Reimbursement of medical care
- Allowance in the event of sickness or work incapacity
- Bankruptcy pay-out
How do social security contributions work?
Self-employed persons pay their social security contributions every three months to their social insurance fund, which in turn transfers the amount to the government. This is a simple principle that assures you of the right follow-up and correct calculation by a partner who is on your side and thinks along with you.
Who pays social security contributions?
In principle, everyone who is self-employed pays social security contributions. This applies to both owners of a sole proprietorship and managers of a company. Assisting spouses and helpers also contribute, as do those who start-up self-employed as a secondary occupation. The calculation of your social security contributions depends on your status.
Who must join a social insurance fund?
Anyone who sets up his or her own business must join a social insurance fund of his or her choice. This applies both to individual entrepreneurs with a sole proprietorship and to founders of a company.
Owners of a sole proprietorship
Self-employed persons with a sole proprietorship can easily join a social insurance fund. The affiliation must take place before the official start-up as a self-employed person. Your social insurance fund will then help you calculate the provisional contributions you will have to pay in order to qualify for your social rights.
Company managers
If you have a company, you pay a so-called company contribution. The underlying principle is the same as for social security contributions for entrepreneurs with a sole proprietorship. If you are authorised as a mandate holder or working partner in a company, you are liable for your company paying social security contributions.
Helpers
Someone who helps or replaces you in your sole proprietorship is regarded by social security as an independent helper. He or she must join a social insurance fund from 1 January of the year in which the helper turns 20 or, if the helper is already married, before that age.
Certain categories of helpers are exempt from paying social security contributions. These are:
- Helpers who assist you less than 90 days a year in your business
- Helpers who don’t provide help on a regular basis
- Students still entitled to child allowances
Assisting spouse
Assisting spouses must also join a social insurance fund and pay contributions. This is done in accordance with what is known as the maximum status, which gives them full social rights. Only if your assisting spouse was born before 1 January 1956, can he or she opt for a limited social status that only entitles him or her to a work incapacity allowance.
Calculating social contributions
Your social security contributions as a self-employed person are calculated based on your income. The tax authorities look at your income of the current financial year. As long as your final professional income is unknown, your social insurance fund will calculate provisional contributions. To do that, your indexed professional income from three years ago will be taken into account. Other factors also play a role in calculating your personal social security contributions:
- Your status. Pensioners or assisting spouses are covered by a separate scheme.
- Your status as a self-employed person as your main or secondary occupation. Self-employed persons as a secondary occupation pay fewer social security contributions.
Social contributions for starters
If you are just starting your own business, your income is still uncertain and an adapted regime applies to the payment of your social security contributions. In that case, you pay a statutory minimum contribution, which is regarded as a provisional social security contribution. For this calculation, your social insurance fund assumes a fixed (lump sum) annual income of € 16,861.46.
After two years, the tax administration notifies your professional income to the social insurance fund. At that time, your final social security contributions can be calculated. Have you overpaid? If so, the difference will, of course, be refunded to you. Is your income higher than the calculation base? Then you pay the additional amount.
You can also have the amount of your provisional social security contributions adjusted to your expected income. That way, you avoid unpleasant surprises in the form of a high settlement later on.
When do you pay social security contributions?
You pay your social security contributions to your social insurance fund on a quarterly basis. At the beginning of each quarter, the social insurance fund will send you a statement of account based on your provisional calculation. As an entrepreneur, you have until the end of the current quarter to transfer the full amount to the account of your social insurance fund. The fiscal quarters start each year respectively on 1 January, 1 April, 1 July and 1 October.
If you don’t pay the social security contributions on time, each social insurance fund is legally obliged to charge an additional rate of 3% at the end of each quarter. If you have not paid the quarterly contributions by the end of the relevant calendar year, a surcharge of 7% will be added.
Postponement of payment for entrepreneurs in difficulty
Are you unable to pay your social security contributions due to circumstances? If so, contact your social insurance fund as soon as possible. Depending on your situation, different solutions are possible.
Reduced contributions
As an entrepreneur, your income is often volatile. Since social security contributions for those who start up are calculated on the income from three years earlier, it may happen that you pay too much in provisional social security contributions as a self-employed person - for example, when your income drops. A reduced contribution can therefore provide relief.
Amicable repayment plan
In consultation with the NSSO, you can try to pay off your debt in instalments by way of a repayment plan. In this case, too, your social insurance fund is your first port of call. It can help you apply for a structured and realistic repayment plan.
Exemption from contributions
In exceptional cases, your social security contributions may be waived. Just think of an unexpected serious illness, a fire in your company or an economic crisis situation. Your social insurance fund will help you prepare your dossier and submit it to the NSSO.
Social contributions are deductible
The tax authorities regard the social security contributions you pay personally as being a professional expense. This means they are fully tax-deductible. Your social security contributions are calculated on your net taxable annual income. This is the gross annual income as a self-employed person minus professional expenses but before taxes.
Main points
- Your social security contributions are calculated on your net taxable annual income.
- Social security contributions are fully tax-deductible as professional expenses.
- As a self-employed person, you pay your social security contributions every quarter.
How do you join a social insurance fund?
Every self-employed person must join a social insurance fund before the official start-up of his or her business, which is the bridge between you and the government when it comes to the administrative handling of your quarterly contributions. In return, you receive the social protection you are entitled to and additional advice at every stage of your journey as an entrepreneur.
