Belgian social security for the self-employed Anne Vanderstappen National Institute for the Social security of the Self-Employed

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The system

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Social security in Belgium

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Obligatory Solidarity Insurance

A worker can simultaneously contribute to multiple systems

but can benefit in only one (except for pension)

Employees Public servants

Children and family

Medical costs & Illness and incapacity

Retirement and widowing

Unemployment

Occupational accidents

Occupational disease

Annual holiday

Bankruptcy - Forced closure

7 b

ran

ches

Self-employed

3 systems

Social security for the self-employed

• The system covers anyone who is

• occupationaly active and

• not in a relationship of authority to an employer

• This includes:

• The self-employed

• Their helpers and helping spouses/partners

• Company directors

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Occupationaly active

Personal activity

Continuity, frequency,

regularity

Intention

Profit seeking

• Fact-based evaluation of 4 criteria taken together

• Criteria set forth by jurisprudence

• Legal presumptions: (e.g., fiscal treatment of revenue)

• not determinative

• but essential for detecting non-compliance

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Crowd Working

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• Evaluated according to general criteria

• Income above € 5100 yearly creates presumption of occupational activity

• No link to occupation

• Only through recognized platforms (currently 12)

• Income below € 5100 yearly

Occupation Extra income

Self-employed 25% of taxes go towards

financing the social security system for the self-employed

RULING COMMISSION At the request of one of the parties involved

Not in a relationship of authority

• 4 general criteria • evaluated in coherence

• Specific criteria for risk sectors create a presumption of self-employed or employee

Will of the parties

Freedom to organize the work

Freedom to organize working hours

Possibility to exercise authority

Starting point

Construction Security Cleaning Taxi

Road transport

Parcel delivery

Agriculture Artists

Freedom to contract

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Compliance

• All self-employed are required to register at startup.

• 11 social insurance funds (private partners) are tasked with registering, informing, and collecting contributions

• NISSE is tasked with countering non-compliance and social

fraud:

• countering non-compliance by systematically examining those who earn an income as a self-employed but are not registered with a social insurance fund

• countering benefit fraud by systematically examining whether non-EU citizens wishing to register exercise a real activity

• countering social dumping and detect undeclared work, NISSE cooperates with other social security institutions in pointed checks of risk sectors

• impose fines up to 2,000 EUR for non-compliance and fraudulent affiliation

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Financing social security for the self-employed

CONTRIBUTIONS

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Social contributions

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Guiding principles

• All self-employed contribute to the system

• Even those covered as an employee, students and pensioners (with exemptions for those with low revenue)

• Benefits are not accumulated across systems (except for pensions)

• Contributions without benefits are considered as solidarity.

• All self-employed are covered in at least one system

• Self-employed without full coverage as an employee pay a minimum contribution that guarantees their coverage as a self-employed.

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Calculation of social contributions

A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

Without retirement pension With retirement pension

21 % of income up to 57,000 EUR

15 % of income up to 57,000 EUR

+ 14 % of income between 57,000 EUR and 85,000 EUR

Nothing of income above 85,000 EUR

Amounts are rounded to thousands and are yearly adapted to cost of living index.

Percentage

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

• Net income as a self-employed

• Gross income: profits, remunerations, and advantages

• Minus operational costs

• Minus paid social contributions

• Established according to fiscal regulations

• Annualized

• according to the number of quarters of self-employed activity in the year in question

Net fiscal income

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

Amounts are rounded to thousands and are yearly adapted to cost of living index.

• Principal activity:

• Not (sufficiently) covered as an employee, not a pensioner, and younger than retirement age

• Height of income is not relevant (can be nil)

• Contribution base is at least 13,000 EUR

• This guarantees full coverage as a self-employed

• Contribution base for helping spouse/partner is at least 6,500 EUR

• Persons in need can ask to be exempt from payment

• and retain health insurance and child benefits

• but lose pension coverage

Minimum for principal activity

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

Amounts are rounded to thousands and are yearly adapted to cost of living index.

Employees Spouses and widowers

Students 65+ Pensioners

Conditions

Half-time employee or more

Income below 7,000 EUR Contributions for principal activity if income is above 7,000 EUR

Higher education Younger than 25

Above retirement age (no pension)

Retirement pension

Health insurance Child benefits

Covered as employee

Covered by spouse Covered by parents Not covered Covered as pensioner

Exemption of contributions

Income below 1,500 EUR

Income below 1,500 EUR

Income below 7,000 EUR Reduced contributions if income is below 13,000 EUR

Income below 3,000 EUR

Income below 3,000 EUR

If income reaches 13,000 EUR

Additional pension coverage

Full coverage Full coverage Full coverage, except for Illness/Incapacity

No additional coverage Contributes at reduced rate of 15% instead of 21%

• No minimum contribution base

• Exemption of contributions for low revenue

• Additional/full coverage as a self-employed if income reaches minimum contribution base for principal activities (13,000 EUR)

Non-principal activities

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

• A quarterly contribution is owed for every quarter of self-employed activity

• Even if the self-employed started or stopped in the course of the quarter

• The quarterly contribution has to be paid by the end of each quarter

• A quarterly interest of 3% is owed for late payment

• At the end of the year, a one-time interest of 7% is owed on contributions that remain unpaid

Quarterly payable

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

• A provisional contribution is owed based on the income of Y-3

• The provision contribution base is adapted to the cost of living index

• At startup, contributions are based on a legally fixed income

• The provisional contribution can be adapted to the

actual economic situation of the self-employed during the year in question

• Payment of the provisional contribution is

compulsory

• Payment of the provisional contribution provides social coverage

Provisional contributions during the year in question

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

• Supplementary payments are optional

• No interest is owed if definitive contributions turn out to be higher

• Benefits:

‐ Avoiding high surplus payments after the definitive calculation

‐ Fiscal optimazation (income year = fiscal year = contribution year)

• 3,7 % of self-employed make use of this possibility

• The provisional contributions can be lowered

• The self-employed has to proof that his/her income will fall below a legally fixed treshold (currently 4).

• Interest is owed if his/her income turns out to be above the treshold.

• 2,5 % of self-employed make use of this possibility

Adapting provisional contributions

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A percentage

of the (annualized) net fiscal income

with a minimum for principal activities

and exemptions for others with low revenue

quarterly payable

provisionally calculated during the year in question

definetively calculated after the year in question

• After one or two years, the income of the year in question is determined by the fiscal administration and...

• ... the contributions are recalculated and ...

• ... the self-employed pays the difference or gets a refund

• Additional time (at least 3 months) is provided for the surplus payment

• Pension is recalculated once all contributions before the

retirement date are recalculated.

Definitive contributions after the year in question

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Benefits

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Children and family

Medical costs

Illness/Incapacity

Forced closure

Bankrupcy

Retirement

Widowing

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