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Pay your team in Belgium
Setting up payroll in Belgium
Income tax and social security in Belgium
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Processing payroll in Belgium can be quite a challenge for international employers. Not only can the different official languages used on the regional level lead to problems and hold-ups when communicating with the authorities, but also the payroll rules and regulations are quite complex.
A good example for the complexity of Belgian payroll is the variation in the employer contributions to social security. Contributions vary significantly depending on a number of factors such as company size, industrial agreement and more.
There are several administrative steps which need to be completed by employers before they can start processing payroll in Belgium. First of all, it is necessary to register as an employer with the National Social Security Office (NSSO) which is responsible for collecting social contributions. This can be done via email, letter or via an online access portal.
Employers are further required to take out industrial accident insurance. The insurance coverage must begin on or prior to the first working day of the company’s first employee. In order to be able to withhold income tax from their employees’ wages, employers also have to register with the local tax authority.
Once the registration with the social security and tax authorities is completed, employers need to file an electronic hiring declaration (DIMONA) - a declaration also needs to be sent for each employee leaving the company. New employees are then automatically added to the electronic database which has replaced the former staff register which needed to be kept by each company.
There is no legal obligation for international employers to set up a local legal entity in order to hire and process payroll in Belgium. However, they must fulfill the same registration and declaration requirements as local employers. This can be done by appointing a local representative or by working with a local payroll provider. Payments to authorities can be made from a foreign bank account.
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Belgium has a well-developed social security system which is financed by contributions levied on both employee and employer. Employees are automatically covered by the system which provides extensive coverage for pension, healthcare, invalidity, unemployment, family benefits and more. Income tax is progressive with four different rates (see table below), the top rate being 50%.
Belgian residents are taxed on their worldwide income, while non-residents are only taxed on income sourced in Belgium. However, tax rates for residents and non-residents are the same.
Employment income is subject to four different tax rates which range from a 25% basic rate to a 50% top rate. There is a personal tax-free allowance of EUR 9,270 (valid for 2022). The personal tax exemption increases if the employee has children. Work-related as well as certain other expenses can also be deducted.
In addition to national income tax, residents also have to pay communal taxes which range from 0% to 9% of the tax amount they owe. Residents have to pay the rate set by the municipality they live in. Non-residents liable for Belgian income tax pay a 7% flat rate.
In 2021, the Belgian government introduced a new tax regime for expats under which employees and directors coming to Belgium to work can receive a tax-free reimbursement of certain costs related to their work in Belgium amounting to up to 30% of their normal pay (capped at EUR 90,000). The new tax regime has entered into force in January 2022.
2022 Tax Bands
Corresponding Tax Rates
Employers have various obligations with regard to their employees’ income tax. It is the employer’s responsibility to calculate and withhold the correct amount of income tax from employee wages and pay them to the competent tax authority. Tax payments are done either monthly or quarterly. The deadline for monthly payments is generally the 15th of the following month. If the total annual amount of withheld income tax is less than EUR 41,700, an employer can reduce the payment frequency to quarterly payments.
Payments to the tax authority must be accompanied by a monthly tax return which must state the taxable income and the amount of income tax withheld. In addition to the monthly tax returns, employers also have to prepare an annual tax slip for each employee which has to be sent to both the tax authority and the employee.
With the information of their annual tax slip, employees then have to file their personal tax return. They have time to do so until 30 June of the following year. It is worth noting that married employees (or those officially living together) have to file a joint tax return while their income is taxed separately. The tax year in Belgium runs from 1 January to 31 December.
The only payroll tax employers need to withhold from their employees’ salaries (apart from income tax) is the employee’s share of the social security contributions which generally amounts to 13.07% (basic contribution rate; no ceiling). However, there are differences between white-collar employees and blue-collar employees with regard to the calculation base for the social contributions.
For blue-collar employees, social security contributions are calculated based on 108% of their normal salary. There also is a monthly special social security contribution of between EUR 9.30 and EUR 60.94 which must be withheld together with the regular contributions.
There is a 24.92% base social security contribution for employers. However, actual contributions can vary significantly depending on a number of factors such as industry sector, company size or eligibility for certain reductions. The employee’s occupation (i.e. whether they are white-collar or blue-collar employees) also needs to be considered.
In general, the employer part of the social security contributions is estimated between 27.5% and 28% for white-collar employees. This includes the base contribution as well as several minor contributions to other funds (e.g. Asbestos Fund) - some of the latter also being industry-specific.
Contributions paid for blue-collar employees are higher since employers further
have to contribute to a separate Holiday Pay Fund at a rate of 5.57%,
plus make an annual payment amounting to 10.27% of the employee’s gross salary by 30 April.
Again, calculations have to be based on 108% of the employee’s wages. Premiums for the employer’s work accident insurance are collected directly by the insurer and are thus not included in the estimate above.
The withheld amounts have to be paid to Social Security either on a quarterly basis or in form of monthly installments - in any case, social security contributions have to be withheld every month. It is mandatory to file an electronic social security declaration once every quarter - regardless of whether payments are made monthly or quarterly. This declaration is called DmfA (information only available in French). The deadline for submitting the declaration is the 30th of the month following the quarter, i.e. 30 April for the first quarter of the year.
Employees in Belgium are entitled to various benefits. These include:
Annual leave and public holidays: 4 weeks of paid annual leave, plus 10 public holidays
Maternity leave: 15 weeks
Paternity leave: 15 days (due to increase to 20 days in January 2023)
Parental leave: 4 months on full pay
Sick leave: 30 days fully paid for white-collar employees; 7 days fully paid and another 23 days partially paid for blue-collar employees
For more information on employee benefits and other employment requirements in Belgium (including severance pay and termination procedures), check out our Global Hiring Guide.
Minimum wages in Belgium are set by collective agreements. The minimum pay which must be granted to an employee depends on several factors, including the sector of industry as well as the employee’s age, qualification and seniority. In no case can an employee’s compensation be less than EUR 1,658.23 per month (as of February 2022).
Overtime hours on normal working days must be paid at a rate of 150% - 200% on Sundays and on public holidays. Some collective agreements require employers to pay their employees a 13th salary.
Payroll in Belgium is usually processed once per month. Payments to employees must be accompanied with a monthly payslip which can be provided either in paper form or digital. Furthermore, it is mandatory to save each employee’s payroll information in a separate digital account which provides a summary of their work and wages. Payroll records must be kept for a period of 7 years.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for Belgium.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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