What global businesses need to know about payroll in Belgium
Belgium may be a relatively small country – its population is only just over 11 million people – but it sits right at the heart of European politics and commerce. Its capital Brussels is the home of the European Union and the North Atlantic Treaty Organisation, and it ranks firmly within the top 20 countries in the world when it comes to GDP.
With a service-heavy economy, a well-educated workforce, strong links with other economies all over the world, and a welcoming attitude to foreign investment, Belgium is a great place to expand into. However, there are a number of unique characteristics to its payroll and employment rules, many of which have evolved substantially in recent years. This guide gives you all the basic facts about payroll in Belgium.
Getting Started
Foreign investors are welcomed and treated in the same way as local ones, and companies are not required to legally register in Belgium to deliver a Belgian payroll. Making things even simpler, you can complete all the key steps to setting up a business in Belgium online:
- Incorporating your company, including submitting articles of association and notarized deeds
- Register your business with the Crossroads Bank for Enterprises
- Register with the VAT authorities
- Register your business as an employer with the National Social Security Office, and submit a formal statement at the point when you hire your first employee in the country
Setting up a Belgian bank account isn’t compulsory, but it is advisable to do so as it can ease the process of paying employees and remitting tax and social security payments.
Employment Considerations
It’s important to note that blue-collar and white-collar workers are treated differently in many areas of Belgian employment law. The differences and regulations are changing on a regular basis, so it’s worth keeping an eye out for anything that might affect your business in the future.
Depending on worker type, contract length, compensation and other considerations, employers in Belgium can offer different kinds of employment contracts (known as Contrat de travail/Arbeidsovereenkomst).
Depending on the location of the employer’s operating site, these contracts must be drawn up in French, Dutch or German. Following the successful hire of an employee, the employer must then register that person with multiple government authorities, the insurance agency, a health provider, and with Dimona – an electronic system used to track social security. Failing to declare starters and leavers via Dimona can result in fines for employers.
Notice periods vary depending on the length of employment, and increase at regular intervals. It starts at one week for employees with less than three months’ service, reaches 12 weeks after two years of service, and can eventually reach a maximum of 65 weeks. New legislation introduced in 2023 allows employees to take time off during notice periods for training, with the intended aim of helping them find new work quickly.
Compensation and Severance
As of the end of 2023, the legal minimum wage in Belgium stands at €1994.18 gross per month (approximately £1700; $2200). The standard working week is 38 hours, generally across Mondays to Fridays, and any time worked above this is classed as overtime. The Belgian government has adopted the EU Working Time Directive, which limits individuals to a maximum working week of 48 hours.
Any overtime is paid at 150% of normal rate, or at 200% on Sundays and public holidays. However, there are some exceptions to the overtime rules, such as for management, and for those working in the entertainment and hotel industries.
Severance pay only applies in lieu of any notice period when employees are dismissed without any notice.
Tax and Withholding Considerations
To maintain payroll compliance, employers are required to deduct withholding taxes from employee wages. They must pay withheld taxes to the tax authorities on a quarterly or monthly basis, file withholding tax returns and prepare an individual annual tax slip that is sent to both employees and tax authorities.
Filing a yearly tax return is the responsibility of the employee, whether they are a resident or non-resident. For residents, returns are generally due by 30 June and for non-residents, 30 September (for the previous tax year, ending 31 December). Later dates may apply if filing electronically.
Income tax rates in Belgium are progressive and are applied across four different bands. The lowest, at 25%, is applied to the first €15,200 earned each year (approx. £13,100; $16,700). The highest band of 50% applies to all income above €46,440 per year (approx. £40,000; $51,000). On top of this, there are also local taxes applied at community level, which can run to as much as 9%.
Social security contributions are 25% by the employer and 13.07% by the employee. Companies should remit social security withholdings to the National Social Security Office quarterly.
Corporation tax in Belgium is currently 25%. VAT is at 21%, although reduced rates of 12% and 6% apply to certain goods and services.
Holiday and Leave Considerations
Belgium observes ten public holidays every year, which employees are entitled to be paid for. Days off in lieu should be given for any public holidays that fall on Sundays, or days that the employee would not normally work.
Paid leave is generally 20 days per year, although this can be increased to 24 for employees that work six days per week. Notably, employees in Belgium are not allowed to carry over any unused leave into the following year.
Paid sick leave entitlement is 100% of salary, paid by the employer, for the first 30 days of any certified illness. After this, employees receive 60% of their normal salary, paid for by the state Health Insurance Fund.
Maternity leave entitlement is 15 paid weeks, which is generally six weeks prior to the due date and nine weeks after it; this can be increased by a further four weeks if it’s a multiple birth or if there are complications. The National Health Service pays about 82% of full pay (no ceiling) for the first month, then 75% of full pay (subject to ceiling) for the remainder of the leave.
Paternity leave entitlement is 20 days, the first three of which are paid at full salary by the employer. The following 17 days are paid by public health insurance (subject to ceiling) at 82% of normal salary. All parents also have the right to request parental leave or flexible working patterns, the details of which should be agreed between employee and employer.
Belgium Payroll: A Summary
As this guide demonstrates, there are lots of changes and complexities to be aware of when it comes to employment and payroll in Belgium. So while you should absolutely take advantage of the opportunity to do business at the heart of Europe, it’s vital you stay abreast of all the rules and regulations and keep your business compliant. Partnering with a global payroll provider can give you that all-important expertise and insight, so that you can focus your efforts on your international expansion.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.