Chapter 11 Social Security Contributions - Self-employed
Self-employed persons join and pay social contributions to a social insurance fund for self-employed people or to the National Auxiliary Fund for Social Insurance of the Self-Employed, controlled by the National Institute for the Social Insurances of Self-employed Persons, INASTI- RSVZ. The self-employed pay their social security contributions to the social insurance fund they are affiliated with, while the financing of the self-employed workers’ schemes is similar to that of salaried workers.
Before 2015, contributions of self-employed were calculated annually on the basis of net professional income, but they were paid on a quarterly basis, based on their income in the third calendar year preceding the year of contribution (known as the reference year). However, as of 2015 these contributions are calculated based on the net professional income (gross earnings minus professional costs and possible losses) in the current year.
In the context of the tax shift, the rate for self-employed social contributions was systematically reduced in the years after 2016. Starting in 2016, the rate fell from 22% to 21.5%. In 2017 and 2018 this rate was further reduced to 21% and 20.5%, respectively. In addition, the self-employed also have to participate in the working costs of the social insurance fund to which they are affiliated. This contribution ranges between 3.5% and 4.7% of the regular social security contribution.
The final actual contribution that is due to the social insurance fund depends on whether the activity exercised as self-employed is the main one or it is complementary to other activities and whether this activity is performed before or after the retirement age.
11.1 Main activity before retirement age
Table 11.1 shows the calculation structure of the social insurance contributions for the self-employed in main activity before retirement age in 2020.
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(I \lt 13,993.78\) | \(2,838.72\) |
| \(13,993.78 \leq I \lt 60,427.75\) | \(0.205 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (89,051.37 – 60,427.75)\) |
If the spouse of a self-employed person works as her/his assistant there are two possibilities: (s)he opts for a “mini statute” or a “maxi statute”. A mini statute comprises only insurance for work-related illness and maternity benefits. A maxi-statute guarantees the same social protection as enjoyed by the self-employed in main activity. In the latter case, the normal rules to calculate social insurance contributions apply (see Table 11.1 above) with the only modification of the minimum threshold (€6,147.47 instead of 13,993.78). In the case of a mini statute the social insurance contributions for the spouse are calculated as depicted in Table 11.2.
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(13,993.78 \leq I \lt 60,427.75\) | \(0.0079 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.0079 \times 60,427.75 + 0.0051 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.0079 \times 60,427.75 + 0.0051 \times (89,051.37 – 60,427.75)\) |
11.2 Complementary activity before retirement age
When the self-employed activity is not the main activity of the individual, social insurance contributions are determined differently. If net earnings are less than a certain threshold, no social insurance contributions are due. If net earnings exceed this threshold, the same schedule applies as for the self-employed in main activity, but with a different minimum contribution (see Table 11.3).
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(I \lt 1,548.18\) | \(0\) |
| \(1,548.18 \leq I \lt 60,427.75\) | \(0.205 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (89,051.37 – 60,427.75)\) |
11.3 Retirement age without pension benefits
The social insurance contributions on the earnings of individuals who are self-employed after retirement age and without receiving pension benefits largely follow the same calculation scheme as the self-employed in main activity before retirement age (Section 11.1). However, a minimum threshold applies (below which no contributions are due) and if income exceeds this threshold, the minimum contribution that is due is also different (Table 11.4).
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(I \lt 3,096.37\) | \(0\) |
| \(3,096.37 \leq I \lt 60,427.75\) | \(0.205 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.205 \times 60,427.75 + 0.1416 \times (89,051.37 – 60,427.75)\) |
11.4 Self-employed activity with pension benefits
For individuals that receive pension benefits, specific rules exist about the combination of those benefits with a self-employed activity. In 2015, these rules have been considerably simplified. As of 2015, earnings from self-employed activity can be combined with pension benefits without limit for individuals older than 65 (or with a 45-year full career), provided that their spouse does not receive a pension as head of the family (e.g. a pension with a replacement rate of 75%). In this case, social insurance contributions that are due on the net earnings from self-employed activity (in combination with a public old age pension) are as follows (Table 11.5).
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(I \lt 3,096.37\) | \(0\) |
| \(3,096.37 \leq I \lt 60,427.75\) | \(0.1470 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.1470 \times 60,427.75 + 0.1416 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.1470 \times 60,427.75 + 0.1416 \times (89,051.37 – 60,427.75)\) |
For self-employed workers aged less than 65 and receiving one or more survival pensions the structure of their social insurance contributions is the same as for the self-employed in main activity (see Section 11.1).
11.5 Inactive self-employed
If a self-employed person is no longer active, but (s)he can still enjoy the benefits of the insurance fund, (s)he still contributes to the fund on the basis of her/his duly adjusted income according to the following scheme (see Table 11.6).
| Annual net indexed earnings (I) in € | Annual social insurance contribution in € |
|---|---|
| \(13,993.78 \leq I \lt 60,427.75\) | \(0.1178 \times I\) |
| \(60,427.75 \leq I \leq 89,051.37\) | \(0.1178 \times 60,427.75 + 0.0757 \times (I – 60,427.75)\) |
| \(I \gt 89,051.37\) | \(0.1178 \times 60,427.75 + 0.0757 \times (89,051.37 – 60,427.75)\) |
11.6 Modelling Assumptions
The self-employed have to contribute to the working costs of the social insurance fund to which they are affiliated. The amount of this contribution ranges between 3.5% and 4.7% of the regular social security contributions for the self-employed. Since we do not know the exact amount within this range (which depends on the actual social insurance fund with which the self-employed is affiliated), we take the lowest bound (3.5%).
11.7 Module input
11.7.1 Variables
| Name | Description | Database |
|---|---|---|
| activity | main, complementary, none | Other |
| dhm_p_hsc | Relationship to reference person in the household | HBS |
| locst01_p_fc | Labour status | HFCS |
| lse_p_hsc | Status in employment household member | HBS |
| status_spouse | maxi or mini | Other |
| ypp_p_fc | received income from private and occupational pension plans | HFCS |
| yse_pyn_sm | Yearly net income from self-employment | SILC |
11.7.2 Parameters
| Name | Description | Value (2020) |
|---|---|---|
| ssc_selfempl_ca1 | self employed / contribution amount 1 | 2838.72 |
| ssc_selfempl_cr1 | self employed / contribution rate 1 | 0.205 |
| ssc_selfempl_cr2 | self employed / contribution rate 2 | 0.1416 |
| ssc_selfempl_cr3 | self employed / contribution rate 3 | 0.1178 |
| ssc_selfempl_cr4 | self employed / contribution rate 4 | 0.0757 |
| ssc_selfempl_cr5 | self employed / contribution rate 5 | 0.147 |
| ssc_selfempl_ins_fund_wc | self employed / insurance fund working costs | 0.035 |
| ssc_selfempl_sp_ca1 | self employed / spouse /contribution amount 1 | 2838.72 |
| ssc_selfempl_sp_cr1 | self employed / spouse / contribution rate 1 | 0.205 |
| ssc_selfempl_sp_cr2 | self employed / spouse / contribution rate 2 | 0.1416 |
| ssc_selfempl_sp_cr3 | self employed / spouse / contribution rate 3 | 0.0079 |
| ssc_selfempl_sp_cr4 | self employed / spouse / contribution rate 4 | 0.0051 |
| ssc_selfempl_sp_yn_thr1_max | self employed / spouse / maxi-statute / net income threshold 1 | 6147.47 |
| ssc_selfempl_sp_yn_thr1_min | self employed / spouse / mini-statute / net income threshold 1 | 13993.78 |
| ssc_selfempl_sp_yn_thr2 | self employed / spouse / net income threshold 2 | 60427.75 |
| ssc_selfempl_sp_yn_thr3 | self employed / spouse / net income threshold 3 | 89051.37 |
| ssc_selfempl_yn_comp_thr1 | self employed / net income complementary activity threshold 1 | 1548.18 |
| ssc_selfempl_yn_ret_thr1 | self employed / net income retired activity threshold 1 | 3096.37 |
| ssc_selfempl_yn_thr1 | self employed / net income threshold 1 | 13993.78 |
| ssc_selfempl_yn_thr2 | self employed / net income threshold 2 | 60427.75 |
| ssc_selfempl_yn_thr3 | self employed / net income threshold 3 | 89051.37 |
11.8 Module output
| Name | Description |
|---|---|
| t_ssc_selfempl | amount of the social security contributions for the self employed |
11.9 References
[] Social Security, Everything you have always wanted to know (in Belgium). Federal Public Service Social Security, 2018.
[] Cotisations sociales pour l’année 2020 (hors frais de gestion des caisses). Federal Public Service Social Security, DG Soutien et coordination politiques Expertise travailleurs indépendants, 2020.
[] J. Derboven, Z. Rongé, S. Van Houtven, et al. “EUROMOD COUNTRY REPORT, BELGIUM (BE) 2016 – 2019”. In: n.d. (2019).