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Hiring in Belgium
Belgium, officially known as the Kingdom of Belgium, is a country in Western Europe. Brussels is the largest city and the capital of Belgium. Belgium economy is highly service oriented, with an extremely productive workforce, high GDP and high GNP. Its main trading partners are Germany, France, Netherlands and the United Kingdom. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Belgium’s legal and tax regulations. Employment regulations including probation period, holidays and termination are covered by the labor code. The labor code stipulates that white collar employees are entitled to 24 days of annual leave after one year of service. Residents of Belgium are taxable on their worldwide income, while non-residents are only taxable on Belgium-source income. As the employer of record (EOR), Global PEOs facilitate companies by ensuring compliance with Belgium’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- There can be a probationary period of up to two weeks for blue-collar workers, and anywhere between one and six months for white-collar workers if the annual wage does not exceed around EUR 36–37,000.
- White-collar employees earning more than this may have a trial period of up to 12 months.
Annual Leave
- In practice, employees (white-collar) are entitled to 2 vacation days per complete worked month in the preceding year.
- That means 24 vacation days (six-days-a-week scheme) or 20 vacation days (five-days-a-week scheme) for a complete year in service (or of assimilated periods), i.e. a maximum of 4 complete weeks of paid leave in the scheme of a full-time working employee.
- During their annual leave, the white-collar employees receive a “double holiday pay” in addition to their normal pay. The employer pays both the normal pay and the holiday allowance.
Public Holidays
- There are officially 12 Belgian national holidays but two fall on a Sunday – Easter Sunday and Whit Sunday (Whitsun or Pentecost) – typically giving workers 10 Belgian public holidays, unless other Belgian holidays fall on a Sunday:
- New Year’s Days (1st January)
- Easter Monday (13th April)
- Labor Day (1st May)
- Ascension Day (21st May)
- Whit Monday (1st June)
- Belgium National Day (21st July)
- Assumption Day (15th August)
- All Saints Day (1st November)
- Armistice Day (11th November)
- Christmas Day (25th December)
Maternity Leave
- Mothers can take up to 15 weeks’ maternity leave (or 19 weeks in the case of multiple births), receiving benefits equivalent to 82% of full salary for the first 30 days and 75% for the remainder (subject to a maximum amount currently set at €104.80 per day).
- Mothers are allowed six weeks of prenatal leave, five of which are optional and can be taken after your baby’s birth, although one the week preceding delivery is a mandatory period of time off.
- The nine weeks of postnatal leave begin on the day of birth, or on the first working day after the birth
Paternity Leave
- At least nine weeks must be taken after the birth and at least one week must be taken before the date when the baby is due.
- Following the birth of a child, the father has a right to ten days’ paternity leave, seven of which will be paid for by the social security system at 82 percent of salary (subject to a maximum).
Sick Leave
- In case of sickness or accident, the employee is entitled to a statutory sick pay during the first 30 days of absence, payable by the employer.
- The rate of the sick pay, based on the normal salary, depends on the nature of the contract (white- or blue collar worker), and on the length of his service to the employer).
Work Hours
- Belgian law fixes working hours at 8 hours per day and 40 hours per week.
- Both limits must be observed simultaneously.
- These maximum limits may be reduced by collective agreement.
Overtime
- Overtime work entitles the worker to be paid at least 50% extra wage during weekdays and 100% on Sundays and public holidays.
Notice Period
- Belgian employment law has historically differentiated between “blue-collar” manual laborers and “white-collar” office workers. However, since reform in 2014, the same statutory notice periods have applied to both categories, and they are based on an employee’s length of service, or seniority
- For instance, if an employee has worked for a period of 6 months, the notice period is 2 weeks. If an employee has worked for more than 25 years, the notice period is 13 weeks.
Severance
- Individual Dismissal: -
- Both the employer and the dismissed worker have to choose between the notice period during which the employment contract is still running and the severance pay by stopping the contract immediately.
- In the latter case, the severance pay is equivalent to the wage and benefits multiplied by the duration of the notice period that should have been notified.
- Collective Dismissals: -
- In addition to the unemployment benefits, workers affected by the collective dismissal are entitled to a special severance pay.
- The amount of this allowance is equal to half the difference between the net wage and the amount of the unemployment benefits the worker receives.
- The maximum gross salary value used for this calculation amounts to €3,144.66.
- The employee is entitled to four months of severance pay, starting the day after his/her working agreement or after his/her notice period ended.
- Fixed Term Contracts: -
- There is no severance pay during the trial period.
- After the trial period, the severance pay is equivalent to the amount of salary that was due until the end of the contract.
- Nevertheless, this amount may not exceed twice the wage corresponding to the duration of the notice period that would have been calculated in the case of a permanent contract.
13th / 14th Month Pay
- Yes (Mandatory)
- There is no statutory requirement to pay the 13th and the 14th month salary.
- The 13th month is given out in December and the 14th month is given out in July as a double salary or (92% in addition to wages)
income tax
- Belgium taxes its residents on their worldwide income, irrespective of their nationality.
- Residents of Belgium are taxable on their worldwide income, while non-residents are only taxable on Belgian-source income.
- Personal income tax (PIT) is calculated by determining the tax base and assessing the tax due on that base. Taxation is charged on a sliding scale to successive portions of net taxable income. For income year 2020, the federal tax rates range between nil and 50%.
- Since assessment year 2015 (income year 2014), the tax calculation contains two major components, notably the 'federal PIT' and the 'regional PIT'. Pursuant to the 6th Reform, the Belgian regions are now entitled to retain surcharges on 'reduced federal personal income taxation', and also grant tax reductions/tax credits.
- The tax liability may therefore differ (although slightly at this stage) depending on the region in which the residence of the taxpayer is located on the 1st of January of the respective tax year.
- Tax rates are the same for resident and non-resident taxpayers, but some deductions or tax rebates are only granted to non-residents, provided that they earn at least 75% of their worldwide professional income in Belgium.
- For residents of Belgium, communal taxes are levied at rates varying from 0% to 9% of the income tax due. The average rate being 7%. For non-residents, a flat surcharge of 7% is due. In some cases, communal taxes may also be levied on exempted foreign-source income.
|
Taxable Income (EUR) |
Rate (%) |
Tax on bracket (EUR) |
Cumulative tax (EUR) |
|
|
Over |
Not Over |
|||
|
0 |
13,440 |
25 |
3360 |
3360 |
|
13,440 |
23,720 |
40 |
4112 |
7472 |
|
23,720 |
41,060 |
45 |
7803 |
15,275 |
|
41,060 |
And above |
50 |
||
deductible expenses
Employment expenses
- In determining the tax base, compulsory social security contributions (paid in Belgium or abroad) are fully deductible.
- Employment-related expenses are also deductible, provided they are substantiated; alternatively, standard deductions may be claimed.
- For employees, the standard expense deduction amounts to 30% of the gross earning, up to a ceiling of EUR 4,880.
- For remunerated directors, the standard deduction is a flat 3% and cannot exceed the ceiling of EUR 2,580.
- In addition to social security contributions and professional expenses, some non-business expenses can also be deducted from the taxable basis, and personal exemptions are granted.
Personal deductions
- 80% of the support (alimony) payments to near relatives or a separated spouse are deductible (non-residents can deduct only payments made to residents of Belgium; however, there are some tax treaty exceptions).
- Some non-business expenses give rise to a tax reduction.
- At the federal level, the most commonly granted reductions mainly concern:
- Pension savings contributions, with a maximum of EUR 990 or EUR 1,270, depending on the extent of the tax reduction (i.e., resp. 30% or 25%).
- Employee's contributions to group insurance: 30%.
- Charitable contributions of minimum EUR 40 (up to a maximum of 10% of net taxable income, with a maximum of EUR 397,850 for income year 2020) made to certain recognized EEA institutions give right to a 45% tax reduction.
- Life insurance premiums: 30% with a maximum of EUR 2,390.
- Remuneration costs of domestic personnel give right to a 30% tax reduction (up to certain limits and under certain conditions).
- Child custody expenses, up to a maximum of EUR 11.20 per day for children under 12 years of age give right to a 45% tax reduction.
- At the regional level, the most commonly granted tax reductions concern:
- The capital repayment of a mortgage loan.
- Payment of services performed in the framework of local employment agencies or paid with service-checks.
- Security investment against theft or fire.
- Expenses incurred for the maintenance and renovation of certain real estate.
Personal exemptions
- In addition to the above-mentioned deductions, some personal exemptions are granted. The following amounts are deductible in determining taxable income.
- The personal basic exemption amounts to EUR 8,990.
- For any other dependent person, an amount of EUR 1,630 is deductible.
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Deductible Expenses |
|
|
Employment Expenses |
|
|
Personal Deductions |
|
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Personal Exemptions |
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immigration
- Citizens from the European Union (EU), the European Economic Area (EEA – EU plus Iceland, Liechtenstein and Norway) and Switzerland can work freely in Belgium without the need for a Belgian work permit.
- You must meet a number of conditions to come and work in Belgium. These conditions depend on the following three key factors:
- your nationality and country of residence;
- the length of your stay in Belgium;
- your professional status (employee or self-employed) in Belgium.
- In principle a Belgian work permit is required for any non-EU/EEA/Swiss national coming to work in Belgium. There are exceptions, however, depending on the nature of activities or residence status of the foreigner. For example, scientific researchers or those holding permanent residence permits entitling indefinite stay in Belgium are exempt from requiring a Belgian work permit.
- Type A Permit: -
- The Type-A permit allows you to work for any employer in Belgium for an unlimited period of time.
- In order to be granted a Type-A work permit you must have lived and worked in Belgium on a Type-B permit for a minimum of 4 years.
- The 4-year work requirement is shortened to 3 years for nationals of the following countries: Algeria, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, Morocco, Serbia, Tunisia, Turkey, and Croatia.
- The work requirement is reduced by another year if your spouse or dependent children have been living with you in Belgium for that time.
- Type B Permit: -
- The Type-B permit is valid for one employer and runs for one year, after which it can be renewed (by the same employer, usually for the same job or job classification). If you change employers, your new employer must apply for a new B permit; in which case you may need to return to your home country and re-apply for a residence visa before you can start your new job.
- Jobs filled using a Type-B work permit must pay a minimum of €39,802.
- Once you have lived and worked in Belgium for 4 years on the same permit, you can receive an unlimited A permit.
- Type C Permit: -
- The Type-C permit is valid for only one year, allowing the holder to work for multiple employers.
- This is usually issued to temporary migrant agricultural or domestic workers, or to those whose length of stay in Belgium is unconfirmed, such as asylum seekers.
- Type-C can be renewed.
Main Visas that allow you to enter and work in Belgium are as follows: -
- Schengen visas (Business Visa)
- Visas on the basis of a Work Permit (Type D)
- EU Blue Card: -
- If you have a higher education qualification and a contract or binding offer of work in Europe, then you may be eligible for a Blue Card. Once you have one, a Blue Card entitles you to work anywhere in the EU including Belgium (apart from Denmark, the Republic of Ireland and the United Kingdom).
- As a highly-skilled worker, you can obtain a work permit without the need for prior labor market analysis.
- Minimum gross salary for the blue card Belgium is 53,971 euros (3,877.23 euros x 13,92) for 2019.
|
Type of Visa |
Documentation |
Validity |
Eligibility |
|
Schengen visas (Business Visa) |
|
90 days;one or multiple entry |
|
|
Visas on the basis of a Work Permit |
|
|
|
|
EU Blue Card |
|
Maximum 4 years (renewable) |
|
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Note: - Documentation varies depending on your country of residence. |
|||
value added tax
- The following transactions are subject to VAT in Belgium if they are considered to take place in Belgium:
- The supply of goods and services effected for consideration by a taxable person acting as such.
- The acquisition of services for consideration from outside Belgium between taxable persons.
- The importation of goods.
- Intra-Community acquisition of goods for consideration by a taxable person acting as such or by a non-taxable legal person (including the transfer of assets).
- The self-supply by a taxable person.
- The standard VAT rate is 21%
- Certain supplies of goods and services are subject to a reduced rate of 12% and 6%
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VAT Rates |
|
|
General rate of 21% |
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Reduced rate of 12% |
Examples: -
|
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Reduced rate of 6% |
Examples: -
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withholding tax
- Domestic corporations and PEs of foreign corporations paying dividends, interest, royalties, service fees, and/or certain rentals are required to withhold tax.
- The default withholding tax rate on dividends paid to both residents and non-residents is 30%.
- Interest paid to a resident or nonresident generally is subject to a 30% withholding tax (15% for interest on certain specific government bonds and regulated savings deposits exceeding certain thresholds), unless the rate is reduced under a tax treaty or an exemption applies under the EU interest and royalties’ directive or domestic law.
- The withholding tax rate on royalties paid to both residents and nonresidents generally is 30%, reduced by a standard expense deduction of 15%. The rate is 15% for certain income from literary and associated rights and from legal and compulsory licenses not exceeding EUR 59,970 (for tax year 2019)
- Technical service fee: - Withholding tax also must be withheld on certain other payments to nonresidents at a rate of 33%. The effective withholding tax rate is reduced to 16.5% as the results of a 50% lump sum cost deduction.
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Payment/Income |
WHT |
|
Dividend |
The default withholding tax rate on dividends paid to both residents and non-residents is 30%. |
|
Interest |
Interest paid to a resident or nonresident generally is subject to a 30% withholding tax |
|
Royalties |
The withholding tax rate on royalties paid to both residents and nonresidents generally is 30%, reduced by a standard expense deduction of 15%. |
|
Technical Service Fee |
Withholding tax also must be withheld on certain other payments to nonresidents at a rate of 33%. |
termination
- Employment contracts are generally terminated through serving a notice period or the payment of an indemnity in lieu of notice.
- An employer does not require any authorization to dismiss an employee
- As part of the recent Belgian labor law reform, notice periods for blue- and white-collar employees are now aligned for employment contracts taking effect from 1 January 2014.
- These notice periods are fixed by law and only depend on the employee’s seniority.
- Where an employment contract is terminated for serious cause, no notice period needs to be observed nor does any compensation in lieu of notice have to be paid.
statutory benefits
- These are mandatory benefits as stipulated by the law
- These include annual leave, public holidays, maternity leave, paternity leave, sick pay, 13th month bonus, notice period and severance pay.
- Moreover, it includes social security benefits such as allowances in the event of sickness, unemployment benefits, allowances in the event of incapacity for work through sickness or invalidity, allowances in the event of accidents at work, allowances in the event of industrial disease, family allowances, pensions.
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Statutory Benefits |
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Annual Leave |
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Public holidays |
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Maternity leave |
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Paternity leave |
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Sick pay |
|
13th month |
|
Notice period |
|
Severance pay |
|
Social security benefits |
payments and invoicing
- All individuals’ resident in Belgium and non-resident individuals taxed on Belgian-sourced income are required to file an annual tax return. The government, in principle, issues a tax return form to each taxpayer.
- Taxpayer can opt to file their tax return electronically. Tax authorities will then, in principle, no longer issue a paper tax return form to these taxpayers.
- For residents, their filings are due within 1 month after receipt of the tax form from the tax authorities and, in principle, at the latest on 30 June of the year following the income year.
- For non-residents the filing deadline is, in principle, 30 September of the year following the income year.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Belgium ranked 46th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% | Based on one month bonus 8.33% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | The severance pay is equivalent to the wage and benefits multiplied by the duration of the notice period that should have been notified (9.61% of annual salary) |
| Vacations % | Employees are enitled to 20 days of paid annual leave (5.49% of annual salary) |
| Notice % | Employees are entitled to 35 days of notice period for one year of service or more (9.61%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | Double holiday payment at 92% of the monthly salary in June 7.66% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 33.04% |
employer accruals
Additional information (Country Accruals)
| White collar worker |
25.00% |
| Four months of severance pay |
|
| Christmas Bonus |
8.33% |
| Vacations |
8.22% |
| Description |
The employee's share of social security taxes is 13.07% of the total gross compensation, with no cap. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Employees are entitled to 20 days of annual leave | This equals 5.5% (20/365 days) of annual income |
| Maternity Leave | Mothers can take up to 15 weeks’ maternity leave (or 19 weeks in the case of multiple births), receiving benefits equivalent to 82% of full salary for the first 30 days and 75% for the remainder . |
This equals 82% of 28% (15/52 weeks) of annual salary |
| Paternity Leave | Following the birth of a child, the father has a right to ten days’ paternity leave, seven of which will be paid for by the social security system at 82 percent of salary (subject to a maximum). | Paid by social security system |
| Sick Leave | In case of sickness or accident, the employee is entitled to a statutory sick pay during the first 30 days of absence, payable by the employer. | This equals 8.22% (30/365 days) of annual income |
| Overtime | Overtime work entitles the worker to be paid at least 50% extra wage during weekdays and 100% on Sundays and public holidays. | Normal hourly rate is around 35 EUR. Overtime is paid at an additional 17.5 EUR. |
| Severance | The severance pay is equivalent to the wage and benefits multiplied by the duration of the notice period that should have been notified | Subjective |
| 13th Month Pay | According to the labor code, the 13th Month pay means one twelfth of the basic salary of an employee within a calendar year. | This equals 8.33% (1/12 months) of annual income |
| Social Security | Employers must make contributions of 27% | This equals 27% of annual income |
