At Bradford Jacobs, our Employer of Records (EOR) platforms provide reliable solutions for companies wishing to establish their presence in the Belgian economy. From the first steps of setting up operations to ensuring compliance with the local payroll laws and regulations, we offer dedicated Belgium Payroll solutions that can be personalized to your requirements.
We aim to make business expansion easy. At Bradford Jacobs, we navigate the administration of the Belgium payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities. We do the work, so you do not have to.
When expanding into a new country, you may encounter some challenges regarding payroll, but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for Belgium.
What Belgium Payroll Options are available for Companies?
- Remote payroll - This option allows businesses to operate under a single payroll system, by adding employees in Belgium to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
- Internal payroll - You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Belgium. However, this does require hiring dedicated HR staff who understand Belgian employment and compliance laws.
- Belgium payroll processing company - If you are considering outsourcing, then working with a Belgian payroll company will help in processing your payroll – but not when it comes to compliance.
- Belgium payroll outsourcing - However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle both payroll and compliance for all your employees in Belgium. We take the administrative stress off your shoulders so you can focus on what you do best.
Belgium Payroll Services
Establishing payroll in Belgium demands a total understanding of the employment laws and many levels of taxation regulations. The authorities strictly apply fines and sanctions for non-compliance with all legal aspects of payroll, taxation, and employment.
It is best to ‘play safe’ and outsourcing payroll services in Belgium will deal with the following:
- Electronically notifying the National Social Security Office (NSSO) staff have been hired
- Registering staff with the NSSO at the start and termination of employment
- Registering with the Tax Office for their region
- Taking out an industrial insurance policy
- Nominating a company officer to deal with employment documents and official correspondence with the NSSO and tax authorities
- In the case of hiring staff from outside Belgium, notifying the NSSO of the start date and anticipated length of employment
- Reconcile national and local taxes to assess for refunds or extra payments
- Applying for employees’ special expatriation status (if applicable)
- Calculating employees’ monthly salary and sending their pay slips
- Researching for any available tax incentives
- Submitting employees’ or employers’ wage tax returns and social insurance forms
- Creating and submitting your company’s annual accounts and year-end statements
- Creating payment schedules for wage tax, national insurance, and net wages
- Ensuring accurate personal income tax returns are filed for you and your employees, where required
The above checklist highlights why the vast percentage of foreign companies expanding into Belgium’s uniquely challenging market hand their payroll to Employer of Record (EOR) providers such as Bradford Jacobs.
By outsourcing payroll your company syncs with tax and employment regulations without risking sanctions or financial penalties for late or incomplete filing. You focus on your goals and expansion, free of any concerns over payroll. Questions? We have the answers. Contact Bradford Jacobs now.
What is required to set up Payroll in Belgium?
A foreign company planning to operate payroll in Belgium by establishing its own subsidiary must follow various procedures, and these vary according to company type. Regulations generally include:
- Incorporation through a notary
- Articles of Association for a company limited by shares must be published in the Belgian Official Gazette
- Official documents have to be translated into Dutch, French or German depending on the region of incorporation
- A two-year preliminary financial plan
- An in-country bank account (advisable, but not mandatory)
- Registration with the tax and social security authorities
- A VAT Number
In order to hire personnel and operate payroll, there are other considerations, which can vary according to the type of employment or status of the employee:
- Payroll must be established when an employee is subject to remitting social security and/or tax contributions and the employer must register with a number of agencies.
- All employees, in both private and public sectors, must file electronic notifications (or have them filed by the payroll providers) with the National Social Security Office (NSSO) at the start and termination of employment. These are known as DIMONA notifications and there are strict deadlines as to when notifications must be made.
- Employees must register with their relevant City Office (Leuven Stadskantoor) where a national registration number (rijsregisternummer) is issued. This is needed for local government departments, the tax office, health insurance etc.
- Foreign companies with staff temporarily or partially employed in Belgium must declare the start date and anticipated length of employment with the NSSO before the employee begins. This is required for any employee who was (or still is) habitually active outside Belgium or hired from outside the country. These are known as LIMOSA declarations.
- Employers must electronically file social security returns every quarter, detailing hours worked, salary paid and contributions by both the employer and employee.
- In addition, employers must prepare and retain documents relating to salary, employment conditions within the company, a staff register and individual accounts. These must be available for the Belgian inspectorate to examine. Additional requirements apply to foreign employees who are posted to work in Belgium.
What Entitlement, Termination Terms apply to Belgium Payroll?
Mandatory employee benefits in Belgium cover a wide area. Further benefits cover health and accident insurance and annual and vacation bonuses. Additionally, the above have to be considered within the context of Collective Bargaining Agreements (CBAs).
There is a high level of workers’ protection in Belgium, based on complex labor laws, which can prove problematic for companies considering setting up a subsidiary in the country. Belgian authorities apply strict penalties for non-compliance.
Here are some entitlement and termination terms that those wishing to expand into Belgium need to keep an eye on:
National Minimum Wage: Minimum wages in Belgium operate either with wages set by Collective Bargaining Agreements (CBAs) or as a national minimum, where no collective agreements are in place.
The Belgian Government reviews the NMW bi-annually, and in 2021 it remained at €1,627 (US$1,925) per month or €19,508 (US$23,086) per year, based on 12 payments each year.
Health Care: This is funded by a combination of social security contributions and insurance funds. All employees must contribute to a Belgian health insurance fund as part of their social insurance contributions, but many boost this with cover from a private fund.
Citizens of the European Union (EU) and the European Economic Area (EEA) can apply for the European Health Insurance Card (EHIC) which entitles them to the same treatments as a Belgian at the same costs, as long as the card was issued in their home country before they arrive in Belgium.
Notice Periods: Notice has to be given in writing by both parties and should include details of the start and finish of the notice period. Since the Unified Employment Status Act of 2014, notice periods for white- and blue-collar workers are the same. However, they do differ according to seniority and between the notice given by employer and employee.
For contracts written after January 2014, during the first three months the notice period is the same – one week. Then, there are 33 bands of notice periods. These range from one week (for both employers and employees) to up to 66 weeks’ notice (given by employers) to people with 25 years seniority and over.
Notice given by employees goes to a maximum of 13 weeks, again with seniority of nine years and over. There are different notice periods still in force for those employees/employers whose business relationship started before 1 January 2014.
Since 1 January 2014, the only exception is when determined by ‘company-level’ collective labor agreements.
Redundancy, Termination and Severance: Employees with more than six months’ service must be given the reason for their termination; failure on the part of the employer to do so can result in a ‘fine’ of two weeks’ salary.
If the Labor Court rules that dismissal was unjustified, the employee can be compensated with between three- and 17-weeks’ salary.
An employer can terminate a contract with a severance/redundancy payment in lieu of notice, either for the full period or part of it, with the remainder served as notice. The employer and employee must choose between serving the notice period, during which the employment contract is still running – or severance pay, by stopping the contract immediately.
In the latter case, severance pay is equivalent to the wage and benefits multiplied by the duration of the notice period that should have been notified.
Working Hours and Rest Periods: Daily working time should not exceed eight hours with a weekly limit of 38 hours, or nine hours a day and up to 40 hours a week in certain industries and sectors. Collective Bargaining Agreements may set fewer working hours per week in some sectors.
After working six hours the worker receives a break as per the applicable collective agreement, or for 15 minutes if there is no agreement. In the case of shift work it is permitted to work up to 11 or 12 hours per day to a maximum of 50 hours per week, based on two daily shifts and two workers.
Flexible arrangements allow for more than 38 hours worked in a week as long as the quarterly or annual average is brought down to 38 hours weekly. Strictly applied rules govern night work, working on Sundays or public holidays.
Overtime: Although normally prohibited, authorized overtime entitles workers to 50% extra above their hourly wage Monday to Saturday and a 100% increase for working overtime on Sundays or public holidays.
Overtime hours must not exceed normal working hours, on average, and employees receive compensatory time off or paid rest time during overtime. Rules on overtime do not generally apply to remote workers, sales representatives, or those in managerial or executive positions.
Sick Leave: Regulations identify a difference between white-collar and blue-collar workers. In the case of sickness or accident, the employer pays the white-collar employee statutory sick pay during the first 30 days of absence, after which payment comes from the Health Insurance Fund (Mutuelle / Ziekenfonds).
The employer is allowed to ask for a medical certificate confirming the employee’s condition or require a medical examination by an independent assessor.
Blue-collar workers receive their full salary from their employer for the first seven days of incapacity. After this compensation is shared between the employer at roughly 26% and by social security at 60%, capped at €147 (US$174) each day in a six-day week.
Holiday Leave: Paid vacations depend on length of service and months worked during the preceding year, which generally equates to 24 vacation days (six-days-a-week scheme) or 20 vacation days (five-days-a-week scheme) i.e., a maximum of four complete weeks of paid leave for a full-time working employee.
Employees who have worked less than 12 months have their entitlement reduced pro rata, while Collective Bargaining Agreements regularly increase basic statutory requirements.
Maternity Leave: The employed or unemployed are entitled to 15 weeks’ maternity leave, comprising two periods split between pre-and postnatal.
An employee’s maternity benefit is calculated as: 82% of salary (no ceiling) for the first 30 days; 75% of salary (subject to ceiling) from the 31st day onwards; a maximum €110.23 (US$129.47) per day from March 1, 2020. Maternity benefits are paid by the employee’s mutual insurance fund.
Co-parents are entitled to four months paternal leave each, which must be taken within 12 years from the birth of the child or 21 years in the case of a disabled child.
Paternity Leave: From January 2021 paternity leave was increased from 10 days to 15 days, which can be taken consecutively, in single days or 30 half-days. In 2023, it will be increased by a further five days and applies to all workers, the self-employed and civil servants.
Leave can be taken in the first four months after birth. The first three days are paid in full by the employer and the remainder is paid at 82% of salary by the social insurance fund, capped at €114.59 (US$134) per day.
Public Holidays: National and Bank Holiday dates are:
- New Year’s Day - January 1
- Easter Monday - March or April
- Labor Day - May 1
- Ascension Day - 39 days after Easter
- Whit (Pentecost) Monday - May or June
- Belgium National Day - July 21
- Assumption Day - August 15
- All Saints’ Day - November 1
- Armistice Day - November 11
- Christmas Day - December 25
Further holidays apply to the Dutch, French or German regions when public institutions, universities or banks may close. These include:
- Epiphany - January 6
- Valentine’s Day - February 14
- Iris Day (Brussels only) - May 8
- Flemish Community Day (Flanders) - July 11
- French Community Day (Wallonia) - 3rd Sunday of September
- Halloween - October 31
- All Souls’ Day - November 2
- German Community Day - November 15
- King’s Feast - November 15
- Saint Nicholas Day - December 6
- Second Day of Christmas - December 26
What Taxation Rules apply to Belgium Payroll?
Employers running payroll in Belgium must have total understanding of the laws and regulations surrounding taxation and filing returns. In 2017, the Belgian Government began overhauling their tax system, aimed at stimulating growth, creating jobs, and attracting foreign investment and expansion into the country. Belgium, nevertheless, is among the highest taxed countries in Europe.
The Belgian tax authorities closely monitor compliance with payroll taxes and procedures and are becoming more proactive in applying fines for non-compliance.
Income tax must be paid by anyone settled in Belgium or who has made it their center of financial interest regardless of their nationality – and it is payable on their worldwide income.
Belgian income earned by individuals neither living there nor having it as a center of financial interest must pay non-residents’ tax, but this is payable only on income earned in Belgium. Expatriate workers will normally be liable for Belgian taxes.
Employers are required to:
- Deduct withholding tax from the employee’s salary
- Remit quarterly or monthly withholding taxes to tax authorities
- File quarterly or monthly withholding tax return (Form 274)
- Prepare individual annual tax paper (Form 281) to be sent to employee and tax authorities
In addition, the employee must complete an annual tax return. Filing tax and social security returns requires access to the social security and tax authorities’ website via the eID card, the mobile app ‘itsme’ or a qualifying certificate. The payroll company needs to be assigned by the customer as ‘service provider’. Employers and employees in Belgium also need to be aware of the following taxes:
- National Income Tax: Personal tax rates vary between 25% on annual income up €13,440 (US$15,900) to 50% on income over €41,060 (US$48,600). The tax year runs from January 1 until December 31, with returns due by June 30 for residents and September 30 for non-residents, with exact dates set each year by the authorities. All residents, and non-residents taxed on Belgian-sourced income, must file returns. Failure can lead to fines or being taxed on estimated earnings. Married couples or those legally recognized as living together file joint returns but are taxed separately.
- Social Security Taxes: Belgium has an extensive social security system, to which foreigners are also entitled dependent on the conditions under which they live in Belgium, and in which region. As of February 2020, the employees’ contribution is 13.07% with the employers’ contribution varying around 27%.
Rules on other taxes:
- Corporate Income Tax (CIT): A company based in Belgium is liable for corporate tax on its global profits and income including capital gains; it is considered ‘resident’ if it has a legally registered office, and its effective management is based in Belgium. The corporate tax rate was reduced to 25% in 2020 (from 29.58%) with a conditional rate of 20% for small and medium-sized enterprises (SMEs).
- Withholding Tax (WHT): A rate of 30% applies to dividends, interest and royalties paid by Belgian corporations to foreign companies and individuals.
For more information on these taxes, as well as other taxes in Belgium for both individuals and corporations, check out our Belgium Tax page (available from the side menu).
Stress Free Global Expansion
Bradford Jacobs’ Employer of Record (EOR) solutions smooth your route into Belgium and every new territory targeted for worldwide expansion. Registration procedures, tax laws and dealing with relevant authorities are potentially hazardous barriers to your expansion, risking severe fines for non-compliance or late returns. Bradford Jacobs is on call every step of the way to ensure your company clears all the hurdles to establishing a successful presence in Belgium.
Contact us today to get started on your expansion into Belgium!