Freelance tax higher in Belgium?

[candyflipper]

An umbrella company quotes the same retention figure for their freelance arrangement as for their direct employment arrangement.

Belgian freelancers pay less social security (because 20% < 35+13.07%) - so one would expect freelancers to have less overhead, and take more home. When asked why the take-home figure works out to the same, the umbrella rep said freelancers are taxed more on their income tax (neglecting itemized deductions).

All the tax tables published on the web do not distinguish employed from self-employed (Eg. the table at https://www.cfe-eutax.org/taxation/p...me-tax/belgium for example)

So how is Belgian self-employment tax computed?

[EDIT] Here's the tax table (seems to be the only tax table):

* 25% for the first EUR 7’560,
* 30% from EUR 7’560 up to EUR 10’760,
* 40% from EUR 10’760 up to EUR 17’920,
* 45% from EUR 17’920 up to EUR 32’860,
* 50% over EUR 32’860.

[Brussels Slumdog]

An umbrella company quotes the same retention figure for their freelance arrangement as for their direct employment arrangement.

Belgian freelancers pay less social security (because 20% < 35+13.07%) - so one would expect freelancers to have less overhead, and take more home. When asked why the take-home figure works out to the same, the umbrella rep said freelancers are taxed more on their income tax (neglecting itemized deductions).

All the tax tables published on the web do not distinguish employed from self-employed (Eg. the table at https://www.cfe-eutax.org/taxation/p...me-tax/belgium for example)

So how is Belgian self-employment tax computed?

[EDIT] Here's the tax table (seems to be the only tax table):

* 25% for the first EUR 7’560,
* 30% from EUR 7’560 up to EUR 10’760,
* 40% from EUR 10’760 up to EUR 17’920,
* 45% from EUR 17’920 up to EUR 32’860,
* 50% over EUR 32’860.

Everyone in belgium is subject to the same tax rate table as above.
How you arrive at your taxable income maybe different.

The more social security you pay the lower your taxable income.
If you pay less social security then your taxable income in higer

Gross income
less social payments
Taxable income

I guess Belgian freelancers pay less social security because large companies
have other incentitives.
Freelances pay a minimum and have a maximum security payment
Anyway who cares whether you pay more social security and less tax
or less social security and more tax
Belgium is a high tax country.

[candyflipper]

Everyone in belgium is subject to the same tax rate table as above.
How you arrive at your taxable income maybe different.

The more social security you pay the lower your taxable income.
If you pay less social security then your taxable income in higer

The difference in taxable income isn't enough to explain the difference, if the same tax table applies. The increase in taxable income would have to occur in a tax bracket that's taxed at 100% in order for the taxable income offset to cover the whole difference in tax.

Freelances pay a minimum and have a maximum security payment

Don't you have that backwards? Freelancers pay 20% social security, and contracting employees pay 13.07% plus the employer portion, 35%.

Anyway who cares whether you pay more social security and less tax
or less social security and more tax
Belgium is a high tax country.

Are you saying when an umbrella company gives a percentage retention figure, you should simply trust it? I don't even trust accountants; I have even less trust in umbrella company sales people. Contractors should do their own calculations, so they have figures they can trust, and so they can understand where the inefficiencies and losses are. Losses can be mitigated in some cases once they've been identified.

[Rantor]

The difference in taxable income isn't enough to explain the difference, if the same tax table applies. The increase in taxable income would have to occur in a tax bracket that's taxed at 100% in order for the taxable income offset to cover the whole difference in tax.

Don't you have that backwards? Freelancers pay 20% social security, and contracting employees pay 13.07% plus the employer portion, 35%.

Are you saying when an umbrella company gives a percentage retention figure, you should simply trust it? I don't even trust accountants; I have even less trust in umbrella company sales people. Contractors should do their own calculations, so they have figures they can trust, and so they can understand where the inefficiencies and losses are. Losses can be mitigated in some cases once they've been identified.

Freelance (zelfstanding/independent) is the worst tax set-up in BE and if you do it legit your retention will be 40-50 percent.

SPRL/Ltd Co takes you up to something like UK ltd retention IF you can expense heavily.

[Brussels Slumdog]

[QUOTE=candyflipper;861326].

Don't you have that backwards? Freelancers pay 20% social security, and contracting employees pay 13.07% plus the employer portion, 35%.

No as per Securex Caisse d'assurances sociales

Freelances in 2009 pay a minimum of about €630/€2500 year.
If you earned only €8000 you would still pay the €2500

Between €51060-€75250 14.16%

There is a maximum taxable revenue €75250 or €3606 quarter.

There are no umbrella companies in Belgium there are only management companies or umbrella companies outside belgium claiming to have a
BELGIUM SOLUTION.
If this statement is incorrect please disclose the name of the umbrella
company and their Belgian address.
Only a Belgian Fiscal tax adviser can tell you whether it is a legal solution or not

[Brussels Slumdog]

Freelance (zelfstanding/independent) is the worst tax set-up in BE and if you do it legit your retention will be 40-50 percent.

SPRL/Ltd Co takes you up to something like UK ltd retention IF you can expense heavily.

Correct but thats the price you pay for wanting to live in Belgium.
I had my appendix out within 2 hrs of visiting my GP.
Unemployed Belgians can get up to 80% of their last salary.

I am not aware of any hospital waiting list in Belgium so when you get
old like me you don't mind paying the 50% deduction.

If they all spoke the same language in Belgium maybe then then taxes would
not be so high.

[candyflipper]

Freelance (zelfstanding/independent) is the worst tax set-up in BE and if you do it legit your retention will be 40-50 percent.

Can you prove that? A net retention percentage is almost useless without knowing how it's derived. Every umbrella rep throws out these retention numbers, but they all end up having hidden fees.

SPRL/Ltd Co takes you up to something like UK ltd retention IF you can expense heavily.

What's the best option if you cannot heavily deduct expenses?

No as per Securex Caisse d'assurances sociales

Freelances in 2009 pay a minimum of about €630/€2500 year.
If you earned only €8000 you would still pay the €2500

Between €51060-€75250 14.16%

There is a maximum taxable revenue €75250 or €3606 quarter.

I misinterpreted what you said originally. I thought you were saying freelancers pay the max social security. We're actually saying the same thing.. freelancers pay less social security than contracting employees.

However, my original question remains unanswered. That is, how are freelancers suckered out of the full amount they save on lower social security?

There are no umbrella companies in Belgium there are only management companies or umbrella companies outside belgium claiming to have a
BELGIUM SOLUTION.
If this statement is incorrect please disclose the name of the umbrella
company and their Belgian address.

A company can be officially registered anywhere, but where they operate is what's relevant. For example, Albany is a UK registered umbrella company that operates in Belgium. The Belgian address would be that of the Belgian point of contact - their Belgian accountant or lawyer. Albany does business in Belgium, and they are named as the employer on Belgian work permits. A contractor in Belgium can hire an umbrella company that does business in Belgium. That said, I don't understand what point you're trying to make, or how it affects taxes. Is there a tax benefit to hiring a company that is registered in Belgium?

[Brussels Slumdog]

Albany work permits

A company can be officially registered anywhere, but where they operate is For example, Albany is a UK registered umbrella company A contractor in Belgium can hire an umbrella company that does business in Belgium.

Is there a tax benefit to hiring a company that is registered in Belgium?

Yes.
Trust.
If you want to trust a UK registered umbrella company with no Belgian Physical address that says it does Business in Belgium.
I would like to walk into their Belgian office and meet their team.

Albany does business in Belgium, and they are named as the employer on Belgian work permits.

Really so you will be providing IT services directly to Albany?
This means that Albany has advertised the job and could not find a suitable
EEC person to enable them to apply for your work permit.

or

You will be working for an actual Belgian employer and Albany providing an accounting service.


There are two possible ways for the candidate to be employed with a work permit:

As the direct employee of a Belgian company.
As the employee of a foreign company that is providing services to a Belgian company. This foreign company may not be a recruitment agency and must produce a service contract as part of the application. Where this occurs, the application needs to be made in conjunction with a Belgian accountant who must administer the payrolling of the candidate to ensure that all tax and social security is duly paid.

[acis]

SPRL on 6K+ ?

... SPRL/Ltd Co takes you up to something like UK ltd retention IF you can expense heavily.

Rantor would you have some concrete figures over this scenario? There's the rule of thumb of 6K monthly income in order to call it interesting. What would the retention be for an average income (say 6K/month) with roughly 20% expenses.

I am just trying to figure out if sprl is a go or I should considering looking in other directions.

Many thanks,

Acis

[Rantor]

Rantor would you have some concrete figures over this scenario? There's the rule of thumb of 6K monthly income in order to call it interesting. What would the retention be for an average income (say 6K/month) with roughly 20% expenses.

I am just trying to figure out if sprl is a go or I should considering looking in other directions.

Many thanks,

Acis

Yes, but prob on Thu/Fri as I do have a set of figures produced by an accountant. V small salary, v big expenses should do the trick.

How do you get 20% (1200) expenses - car, parking, utilities etc, rental of office space etc?