Belgium payroll and tax overview.

Belgium is a western European country and parliamentary constitutional monarchy. Bordered by France to the south, the Netherlands to the northeast, and Germany and Luxembourg to the east and southeast. Belgium’s north western coastline meets the southern edge of the North Sea and it enjoys strong transport and trade links to the rest of Europe and the world. A modern, developed nation, Belgium has long been a global economy, going through its industrial revolution in the early 19th century and becoming one of the world’s most prolific trading nations. Belgium’s main industries include metallurgy, textiles, chemicals, food processing, and paper manufacturing but it is also a financial hub, with the European Central Bank headquartered in its capital city, Brussels. Belgium’s GDP is around $550 billion and the country had a growth rate of 1.4% in 2019. As a member of the EU, Belgium benefits from tariff-free trade within the bloc while it is also a member of NATO, the OECD, the WTO, and the UN. In 2019, Belgium ranked 46 in the World Bank’s Ease of Doing Business Survey.

Foreign Direct Investment in Belgium

The government welcomes inward investment from foreign companies, providing an array of tax benefits and shelters to encourage inward investment in key growth areas for the country.

Tax benefits vary according to government strategy, but generally the country is always open to investment opportunities.

Registering a Company and Establishing an Entity in Belgium

A foreign company is not required to have a legal entity in Belgium in order to process a Belgian payroll.

Business Banking in Belgium

Payments to the Belgian authorities and to employees in Belgium can be made from a bank account outside Belgium.

Working Week and Working Hours in Belgium

The regular working week in Belgium is Monday to Friday, however in some sectors, including retail and hospitality, the working week can range from Monday to Sunday. Working hours must not surpass 8 hours per day or 38 hours per week. It is generally forbidden in Belgium to work outside the regular working hours, on Sundays, bank holidays and at night. It is compulsory that when working beyond the statutory working hours, workers must be compensated with sufficient rest time. Night work may be approved in cases where the nature of work justifies it. For example, employees working in the health care sector, hospitality, entertainment and agricultural workers.

General Information:

Full name: Kingdom of Belgium

Population: 11.46 million (Eurostat, 2019)

Capital: Brussels

Major Languages: Dutch, French, German

Monetary Unit: 1 euro = 100 cents

Main Exports: Machinery and electrical equipment, chemicals, vehicles, metals and diamonds

GNI per Capita: US $48,030 (MacroTrends, 2019)

Internet Domain: .be

International Dialling Code: +32

The tax year runs from 1 January to 31 December.

It is not necessary to be licensed to make any tax and/or social security filing on behalf of a customer.

However, for filing tax and social security returns, you do need to have access to the website of the social security and tax authorities via your eID card, the mobile app “itsme” or a certificate. Payroll providers can gain access to this via a qualified certificate.

The company needs to be assigned by the customer as “service provider”; this is done via a form that needs to be signed by a person who has the authority to sign on behalf of the customer.

Legislative decisions are taken by the federal authorities and by the authorities of the communities and regions.

Related to payroll, the following authorities are relevant:

National Social Security Office RSZ/ONSS

Victor Hortaplein 11

1060 Sint-Gillis (Brussels)

Belgium

Belgian Federal Public Service Employment, Labour and Social Dialogue FOD WASO/SPF ETC

Ernest Blerotstraat 1

1070 Anderlecht (Brussels)

Belgium

The tax authorities have three offices that handle withholding taxes, you can find the relevant office and their address via this website.

On this website, you can find the legislative texts relating to Belgian income taxes.

The general website for Belgian tax authorities can be found here.

Income Tax in Belgium

The employer is required to do the following:

• deduct withholding taxes from salary employee
• pay withholding taxes quarterly/monthly to tax authorities
• file quarterly/monthly withholding tax return (called form “274”)
• prepare individual yearly tax slip (called form “281”) and sent to employees and tax authorities

It is the responsibility of the employee to fill out a yearly tax return form.

Monthly contributions are due by the 15th of the following month, or by the first preceding regular working day, if the 15th coincides with a public holiday or weekend day.

Some companies only have to pay per quarter, i.e. by the 15th of the month following the previous quarter. Whether a company pays per quarter or per month depends on the total taxes they paid the previous year. The limit for 2021 is € 41.390,00. Therefore, if the company paid more than € 41.390,00 in taxes, they are obliged to file and pay monthly taxes. If the total taxes in 2020 were lower than € 41.390,00, they are obliged to file and pay quarterly taxes.

Withholding Tax Discounts for Start-Up Companies

As of 1st August 2015, any company who starts up in Belgium can benefit from an exemption of withholding tax on earned incomes.

A Belgian employer pays withholding tax on earned income for each employee. It is an advance on the employee’s income tax that is levied on his/her earned income. By applying discounts, the government is hoping that more companies will hire more employees. Discounts will also be given to companies that operate within zones with disrupted economic activity and researchers. The new discounts apply to companies that have been registered in the Crossroads Bank for Enterprises for a maximum of 48 months.

For a SME, the discount rate is 10%. The criteria to get the discount for an SME company are as follows:

• Annual average of a maximum of 50 employees
• Annual turnover excluding VAT of maximum €9.000.000,00
• Balance sheet total of maximum €4.500.000,00

For micro-companies, the discounted rate is 20%. The criterion to get the discount is as follows;

• Annual average of a maximum of 10 employees
• Annual turnover excluding VAT of a maximum of €700,000.00
• Balance sheet total of maximum €350,000.00

Social Security in Belgium

Social security requirements (employer):

• “Dimona”-declaration: notification of first day/last day of employment (“Limosa”-declaration for foreign employees)
• Deduct social security contributions from salary employee
• Pay the employee and employer contributions towards social security authorities: on a quarterly basis + in most cases also monthly advances are to be paid
• File quarterly social security return

Social security requirements, employee:

• Reimbursement medical costs

To be able to receive reimbursement of medical costs, the employee should affiliate with a “mutuelle”. There are several different “mutuelles” in Belgium (e.g. Partena, CM, Euromut). You can freely choose to which mutuelle you affiliate.

Late submission of social security contributions incurs the following penalty:

• 7% interest per year + penalty of 10%

Late submission of a social security return incurs the following penalty:

• A fixed sum of € 495,79, which may be increased with € 247,89 per bracket of € 24.789,35 for contributions above € 49.578,70

The social security system for employees includes one national pension scheme, a separate pension scheme exist for civil servants and independent workers.

Monthly

Report: Withholding tax return (monthly or quarterly depending on the size of the company)

Legal name of report: Document ‘274’

Information required to complete form: The total taxable income and payable withholding tax

The document ‘274’ needs to be filed in an electronic way by means of the ‘finprof’-web-application, by the 15th of the following month. It can be submitted on behalf of a partner. The customer is not required to sign the form, however the sender needs to sign (via certified electronic signature).

Quarterly

Report: Social security return

Legal name of report: DMFA-declaration

Information required to complete form: Information with regard to the quarterly salary and performance (working days) of the employees

The quarterly social security return needs to be submitted in an electronic way to the social security administration before the last day of the month following the end of the quarter:

• For the 1st quarter: April 30
• For the 2nd quarter: July 31
• For the 3rd quarter: October 31
• For the 4th quarter: January 31

The documents can be submitted by a partner, provided that they are appointed as “service provider”. The customer is not required to sign the form however the sender needs to sign (via certified electronic signature)

Yearly

Report: Tax return

Legal name of report: Fiche 281

Information required to complete form: Detailed information per employee on the taxable income and paid withholding taxes

A third party can submit the documents. The customer is not required to sign the form however; the sender needs to sign (via certified electronic signature).

New Employees in Belgium

New starts are required to be registered via a ‘first day of work declaration’, called ‘dimona (Déclaration Immédiate – Onmiddellijke Aangifte) declaration’

Employers must declare each hired employee to the social security authorities prior to the entry into service of that employee. Termination of service must be declared no later than the first business day following the termination of contract.

Leavers in Belgium

When the employment contract ends, all wages that are still due must be paid without delay, they must be paid on the first pay day following the date on which the employment contract ends at the very latest. (art. 11 of the Wage Protection Act)

Another ‘dimona declaration’ (last day of work declaration) needs to be made to the social security authorities, at the latest the day following the last contract day.

Payroll in Belgium

It is legally acceptable in Belgium to provide employees with online payslips.

Employer and employee may determine in common agreement which document(s) may be sent and filed in an electronic manner, in this case the agreement will apply for at least the current calendar year. When the calendar year is finished, either employer or employee may end the agreement.

A copy of each social document which has been sent electronically needs to be filed with an (external) provider of electronic archiving services. This archiving needs to be guaranteed for a period of at least five years after the end of employment.

In case social documents are established in an electronic manner, the work regulations must mention:

• The identity of the provider of electronic archiving services;
• The manner in which employees may have access to the documents both during and after the end of employment