TAX AND SOCIAL SECURITY IN BELGIUM

TAX AND SOCIAL SECURITY IN BELGIUM2017-04-27T21:04:56+00:00

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Tax and Social Security in Belgium

Belgians pay the most

Effective tax rates in various countries as published by The Economist on Oct 16th 2012 are the following: http://www.economist.com/blogs/graphicdetail/2012/10/focus-4

Belgians pay the most: on earnings over $47,720 they must pay 33.9% in income tax and 13.1% in social security.

effective-tax-rates

The Economist Intelligence Unit’s quality-of-life index is based on a method that links the results of subjective life-satisfaction surveys to the objective determinants of quality of life across countries. Out of 111 countries, Belgium ranked 24 and Malta 28 (http://en.wikipedia.org/wiki/Quality-of-life_Index).

1. A Few Facts about Belgium

The comparative international taxation of expatriates is increasingly relevant for policy makers and multinational investors alike. PricewaterhouseCoopers and

The Zentrum für Europäische Wirtschaftsforschung (ZEW) collated information on the taxation of employment income in different countries and calculated and compared the costs of cross-border assignments.

From the perspective of Germany, assignments to Russia and Switzerland bear the lowest and assignments to Belgium and Slovenia the highest costs. In general, the ranking of the host countries from the lowest to the highest assignment costs follows the ranking of the top income tax rates.

http://ftp.zew.de/pub/zew-docs/gutachten/ExecSum-Expatriates.pdf

2. 216 days of work for the Belgian state

Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden… in Belgium it is 217.

Country Day of year
Belgium 217
Norway 210
France 197
Turkey 194
Germany 190
Slovenia 176
Poland 175
Israel 173
Croatia 161
Czech Republic 161
Canada 157
Slovakia 152
United Kingdom 150
Brazil 147
New Zealand 141
Hungary 140
Uruguay 133
South Africa 132
Spain 119
Estonia 114
Australia 112
United States 99
Albania 84
India 74

3. Social security

In addition to personal income tax, various social security contributions have to be taken into account.

Effective Employer and Employee Social Security Rates on USD 100,000 of Gross Income are the highest in France and Belgium (Source: http://www.kpmg.com/global/en/issuesandinsights/articlespublications/pages/individual-income-tax.aspx)

Employees and self-employed individuals pay progressive income tax. The top rate is approximately 53.5 percent (including communal tax) and starts at a salary level of €37,330 (2013 income and 2014 tax year figure).

In addition, social security must be paid on earned income. For employees, part of the social security is paid by the employer, and a smaller part by the employee. The employer’s social security contribution amounts to approximately 35 percent, while the employee’s social security amounts to 13.07 percent, both uncapped.

The social security tax for the self-employed is capped at approximately €15,905.32 per year (2013 figure).

http://www.socialsecurity.fgov.be/docs/en/alwa2012_en.pdf

What do you receive in return ?

Earnings-related pensions in Malta for instance are based on 66.7% of annual average earnings of the best 3 consecutive years in the 10 years before retirement for employed persons or in the 10 years before retirement for self-employed persons. It is usually referred to as the “Two-thirds” Pension.

In Belgium, the full pension is 60% of average life­time earnings (75% for a married couple). For each year of the insured’s career, the minimum adjusted earnings used to calculate benefits are € 22.189,36. For each year of the insured’s career, the maximum adjusted earnings used to calculate benefits are € 51.092,44 (2012).

The minimum annual pension is € 13.313,61 for a single person with a full contribution record; € 16.636,77 a year for a married couple.

Source: Programmes de la sécurité sociale dans le monde: l’Europe, 2010, États-Unis Social Security Administration