Reply to: Freelance tax higher in Belgium?

[CyranoB]

Yes you first setup the company and setup yourself as independant.

[Brussels Slumdog]

SPRL or indépendant

[QUOTE=CyranoB;868544]I can try to answer:

1) it's not legal to be employee of a company you own and run. You have to be 'indépendant' so no 35% employer taxes.

Does this mean that you first create a SPRL and then set yourself up as
an indépendant or first indépendant then later create an SPRL?

Then social security equals 21% € 6300 or minimum of €620 quarter.

salary gross € 30,000.00
social security 21% € 6300

[Rantor]

I can try to answer:

1) it's not legal to be employee of a company you own and run. You have to be 'indépendant' so no 35% employer taxes.

2) the company owns the car (lease it, buy it or bring your own car in the company) and pays for running it (insurance, maintenance, gas, etc.) all of this can be deducted and VAT claimed back. You'll have to pay some taxes for it but it's nothing compared to buying and running you own car. That's how local contractors pay for their Porsche...

Its more or less that, there are a few odds n' sods that you get stung for IIRC 35% emp charges on director salary is not one of them.

For the car, it is normal for a 4 or 5 yr right-off (3 if you are doing mega kms) You get 50% of the Vat back straight away.

Also, there are a lot of ways to reclassify cash going from yourco to you plus penalties for various disallowed expenses relating to cars etc.

One thing to avoid, is paying yourself a big salary - ouch.

[CyranoB]

I can try to answer:

1) it's not legal to be employee of a company you own and run. You have to be 'indépendant' so no 35% employer taxes.

2) the company owns the car (lease it, buy it or bring your own car in the company) and pays for running it (insurance, maintenance, gas, etc.) all of this can be deducted and VAT claimed back. You'll have to pay some taxes for it but it's nothing compared to buying and running you own car. That's how local contractors pay for their Porsche...

[Brussels Slumdog]

Missing parameter- Employer Contributions

The example below equates roughly to the 6k per month you mentioned. I’d make the following comments:
1. The personal tax would be lower if you have kids and/or your other half is skiving off work (joint declaration=use their tax allowance)
2. The personal tax would also benefit from other deductions for some personal expenses and mortgage tax relief is quite interesting (though co wee bit complicated)
3. The expenses shown for the company could be more, could be less. Group assurance would bump it up, as would buying running a car, utilities etc.
4. If you leave the dosh in the company, and don’t take a divi, then you benefit from layered corporation tax rather than the flat rate of 34%
5. The retention tax drops to 10% if you leave the money in the company till you wind it up

For my situation it looks like a 72% retention, maybe a bit more according to my accountant.


Daily rate € 330.00 Yearly 220 € 72,600.00

Gross € 72,600.00
salary € 30,000.00
expenses € 14,400.00 (1200 per mon)
€ 28,200.00
cooperation tax 34% € 9,588.00
€ 18,612.00
witholding tax 15% € 2,791.80
net/dividend € 15,820.20

salary gross € 30,000.00
tax € 7,800.00
social security € 4,700.00
net € 17,500.00

Total revenue: net + expenses 66% € 47,720.20

Questions for your accountant.
1Where is the Employer Social security contribution at about 34%?
If I have a salary of €30,000 my employer pays about 15000 so my
real Gross is about €45000.
Its expensive to employ people in Belgium.

Gross 72600
Salary -30000
Employer Soc security -15000
Expenses - 14400
13200
cooperation tax 34% -4488

8712
witholding tax 15% -1307
net 7405
2 Who owns the car you or your company?
If your company owns the car then you as an employee receive a benefit.
There may be tax to pay on this benefit.

3 Your calculation should be Total revenue: net + expenses 54% € 39305
but If you have actually spent 14400 then you only benefit by 4900
as this is the amount you would have paid in tax if you had not spent the 14400
Total revenue: net + 4900 = 41% € 29805

[Rantor]

The example below equates roughly to the 6k per month you mentioned. I’d make the following comments:
1. The personal tax would be lower if you have kids and/or your other half is skiving off work (joint declaration=use their tax allowance)
2. The personal tax would also benefit from other deductions for some personal expenses and mortgage tax relief is quite interesting (though co wee bit complicated)
3. The expenses shown for the company could be more, could be less. Group assurance would bump it up, as would buying running a car, utilities etc.
4. If you leave the dosh in the company, and don’t take a divi, then you benefit from layered corporation tax rather than the flat rate of 34%
5. The retention tax drops to 10% if you leave the money in the company till you wind it up

For my situation it looks like a 72% retention, maybe a bit more according to my accountant.


Daily rate € 330.00 Yearly 220 € 72,600.00

Gross € 72,600.00
salary € 30,000.00
expenses € 14,400.00 (1200 per mon)
€ 28,200.00
cooperation tax 34% € 9,588.00
€ 18,612.00
witholding tax 15% € 2,791.80
net/dividend € 15,820.20

salary gross € 30,000.00
tax € 7,800.00
social security € 4,700.00
net € 17,500.00

Total revenue: net + expenses 66% € 47,720.20

[LostInBrussels]

I am looking into some initial investments that would take care of a good part of it a certain period of time. Car (buy one), parking, utilities, internet, phone bills, furniture (to buy), plane tickets, meal tickets, other IT expenses that I have postponed up until now. Also put some money into health assurance.
Rental of Office space is a belgium St. Grail... everybody talks of it but in reality it can't be put in place … cannot deduct office as the landlords are aware and forbid it by contract. I'll rent a virtual office most likely. This can be handled if looking a bit further into buying a property on the company expenses ... but there's a lot of research to make and belgium is not exactly the place to get straight answers on simple problems.
All together I would be content with a 66-70% retention, but I guess one can go close to that if not taking home dividends. A 36K salary after ripped off on taxes would keep one alive (rent and pocket money) but would not pay home mortgage.
I would really appreciate some figures as all I could get from several accountants was global estimation and lots of ifs. I am also meeting another accountant next week. I'll share further specs.

Thanks again!

P.S. BTW can anybody tell me how to PM on this forum?

Having considered the option of buying a house under the company name in Brussels, I have been advised it's not always worth it. It's harder to get a mortgage and you end up paying more tax when you sell. It might be an option to purchase it under your personal name and rent it on to your company. Or, even purchase it so that a percentage belongs to you personally and a percentage belongs to the company.

I am unable to PM anyone. I think it's cos im a newbie.

<mod note>Yup, have just asked fo your account to be upgraded, give it 20 mins and try the PM system again!</mod note>

[acis]

SPRL on 6K+ ?

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?

I am looking into some initial investments that would take care of a good part of it a certain period of time. Car (buy one), parking, utilities, internet, phone bills, furniture (to buy), plane tickets, meal tickets, other IT expenses that I have postponed up until now. Also put some money into health assurance.
Rental of Office space is a belgium St. Grail... everybody talks of it but in reality it can't be put in place … cannot deduct office as the landlords are aware and forbid it by contract. I'll rent a virtual office most likely. This can be handled if looking a bit further into buying a property on the company expenses ... but there's a lot of research to make and belgium is not exactly the place to get straight answers on simple problems.
All together I would be content with a 66-70% retention, but I guess one can go close to that if not taking home dividends. A 36K salary after ripped off on taxes would keep one alive (rent and pocket money) but would not pay home mortgage.
I would really appreciate some figures as all I could get from several accountants was global estimation and lots of ifs. I am also meeting another accountant next week. I'll share further specs.

Thanks again!

P.S. BTW can anybody tell me how to PM on this forum?

[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?

[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

[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.

[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]

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.

[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

[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.