1 INTRO
2
3 The salary calculation in Belgium has 5 steps that we will call by their
4 respective french/dutch names:
5
6 'brut ONSS/RZW brutto'
7
8 The calculation of the brutto salary that will be submitted to 'ONSS/RZW'.
9 This is not the same as the brutto salary, as some payments, e.g. the 8th and
10 the following days of sickness leave are excluded from this sum, as well as
11 the money paid for the period of annual vacations, whatever that means. 'brut
12 ONSS/RZW brutto' is equal to 108% of brutto for blue collars and to 100% for
13 white collars.
14
15 'cotisation ONSS/RZW bijdrage'
16
17 The sum due to ONSS/RZW. It is generally 13.07% of the 'brut ONSS/RZW
18 brutto'. As usual, there are many exceptions, e.g. pensions have the
19 ONSS/RZW tax to 7.50%, unemployment money has the ONSS/RZW tax at 0.87%.
20
21 'imposable/belastbaar'
22
23 The brutto salary as submitted to the Ministry of Finance. This is what is
24 left from 'brut ONSS/ONSS brutto' once 'cotisation ONSS/RZW bijdrage' has been
25 extracted. This is the only amount that will be taken into account by the
26 Ministry of Finance while calculating the income tax aka 'IPP/PB' aka 'impot
27 des personnes physiques/personenbelasting'.
28
29 'précompte/bedrijfsvoorheffing'
30
31 The monthly amount due to the Ministry of Finance directly. It is actually an
32 advance that is calculated to match as close as possible the future 'IPP/PB'
33 tax by the end of the year. Naturally, the 'précompte/bedrijfsvoorheffing'
34 calculation uses the 'imposable/belastbaar' as the starting point. The exact
35 calculation of 'precompte/bedrijfsvoorheffing' is impossible. The employer
36 has no means to know whether you will die or marry during the current year or
37 that you pay your mortgage. These factors, as well as a few dozens of others
38 heavily impact your 'IPP/PB'. This is why, after one year and half, you get
39 your cashback or a heavy bill from the Ministry of Finance.
40
41 'net/netto'
42
43 This is what is left after 'précompte/bedrijfsvoorheffing' has been withdrawn
44 from the 'imposable/belastbaar'. It is also the amount you see flowing into
45 your bank account.
46
47 Let us start by introducing shorter names for the terms explained before. We'll
48 gain in clarity once the actual formulas will become more and more complex.
49
50 * 'brut/brutto' => brutto
51 * 'brut ONSS/RZW brutto' => ss_brutto
52 * 'cotisation ONSS/RZW bijdrage' => ss_contribution
53 * 'imposable/belastbaar' => taxable
54 * 'précompte/bedrijfsvoorheffing' => withholding_tax
55 * 'net/netto' => netto
56
57 Following the previous explanation, here are the simplest possible formulas for
58 the brutto-to-netto calculation:
59
60 1. brutto = ss_brutto
61 2. ss_brutto * 0.1307 = ss_contribution
62 3. brutto - ss_contribution = taxable
63 4. tax(taxable) = withholding_tax
64 5. taxable - withholding_tax = netto
65
66 By now, we know almost everything to do the brutto-to-netto calculation for the
67 simplest case, the only information missing is the meaning of tax(), which is
68 the formula to calculate the 'withholding_tax' so that it matches the yearly
69 income tax as closely as possible.
70
71 WITHHOLDING TAX
72
73 The calculation of the 'withholding_tax' is done in 4 steps:
74
75 * calculation of the yearly taxable income => 'yearly_taxable_income'
76 * calculation of the netto yearly taxable income => 'netto_yearly_taxable_income
77 * calculation of the base tax => 'base_tax'
78 * application of the tax reductions => 'tax_recutions'
79 * calculation of the 'withholding_tax' itse;f
80
81 calculation of the yearly taxable income
82
83 For emoployees and workers, this is generally done by multiplying the 'taxable'
84 by 12 and rounding it down to the nearest multiple of 15.
85
86 calculation of the netto yearly taxable income
87
88 This is basically about deducing the so called fixed professional expenses
89 that are arbitrarily set to the following:
90
91 0...4.880,00 25%
92 4.880.01...9.700,00 10%
93 9.700.01...16.140,00 5%
94 16.140,01...57.006,67 3%
95 57.006,57...∞ 0%
96
97 That is, for the yearly taxable income of 20.000, we substract 1.220 EUR for
98 the first 4.880,00 EUR, then -- 482 EUR for the second range, 322 EUR for the
99 3rd range and 115,80 for the 4th range.
100
101 calculation of the base tax
102
103 The base tax is then calculated using the table below.
104
105 0...7.430,00 26,75%
106 7.430,01...10.090,00 32,10%
107 10.090,01...14.620,00 42,80%
108 14.620,01...32.280,00 48,15%
109 32.280,00...∞ 53.50%
110
111 Since the first 5140.00 are not taxed, the result is reduced by 1374.95, which
112 is 5140*0.2675. It is important to remember that 1374.95 should be deduced after
113 the tax is calculated upon the table above and before the reductions are applied.
114
115 There is a special case. If the partner of the person has no income or her
116 income is less that 110 EUR per month, it is possible to transfer 30% if the
117 income of the person to the partner. The maximum transferable amount is
118 8720.00.
119
120 In this case, we calculate two yearly taxes, one for the taxpayer and the
121 other for his partmner and sum them up before applying the reductions.
122
123
124 application of the tax reductions
125
126 The reductions on the yearly tax are quite complex. We'll try to cover the
127 basics here.
128
129 Here is a list of reductions the children that the person is in charge of:
130
131 0 => 0
132 1 => 348.00
133 2 => 948.00
134 3 => 2520.00
135 4 => 4620.00
136 5 => 6828.00
137 6 => 9036.00
138 7 => 11232.00
139 8 => 13608.00
140
141 In case there is more than 8 children, each child adds 2460.00 to the total
142 of the reduction. Each impared children counts as two.
143
144 Alongside the children's reduction, there are 7 other types of reductions.
145
146 1 252.00 for people living alone or with an unemployed partner
147 2 348.00 for widows and single parents
148 3 348.00 for handicapped
149 4 708.00 for people having dependant persons > 65 y.o.
150 5 348.00 for people having dependants
151 6 1098.00 for people whose partner earns less thatn 183 EUR per month
152 7 2196.00 for people whose partner has less than 366 EUR in pensions
153
154 In case someone participates in a group insurance plan or has a death
155 insurance, they can reduce the 'withholding_tax' by 30% of their group
156 insurance bill.
157
158 calculation of the 'withholding_tax' itself.
159
160 This is done by the division of the yearly tax by 12. No magic here.
161
162 Let us give formal names to the abovementioned four concepts as well:
163
164 * yearly taxable income => 'yearly_taxable_income'
165 * netto yearly taxable income => 'netto_yearly_taxable_income
166 * base tax => 'base_tax'
167 * tax reductions => 'tax_recutions'
168
169 EMPLOYMENT BONUS
170
171 We will now have to take a step back and look closer at the calculation of
172 'ss_contribution'. Private sector workers do effectively pay 13.07% of their
173 'ss_brutto' to the Social Security. However, there is a number of reductions.
174 Most are industry-specific. There is only one that applies salaries under
175 2076,63 and that is called 'bonus à l'emploi/werkbonus'.
176
177 This reduction is calculcated in 3 steps:
178
179 * calculation of 'salaire mensuel de référence/montly reference salary'
180 * calculation of 'montant de base de la réduction/base reduction amount'
181 * calculation of the actual amount of the reduction
182
183 'salaire mensuel de référence/monthly reference salary'
184
185 This value can be calculated exactly only and the end of the pay period. For
186 the sake of simplicity, we can assume that it is equal to 'ss_brutto'.
187 Subsequently, we will abbreviate the 'monthly reference salary' to S.
188
189 'base reduction amount'
190
191 This is calculated with the data from the table below:
192
193 monthly salary worker employee
194
195 0 .. 1283.91 154.44 143.00
196 1283.91 .. 2076.63 154.44-(0.1948*(S-1283.91)) 143.00-(0.1804*(S-1283.91))
197 2076.63 .. ∞ 0 0
198
199 For full-time employees and workers, the 'base reduction amount' is equal to
200 the 'employment bonus'. Part-time workers should be reviewed on a case-by-case
201 basis.
202
203 ADDITIONAL SOCIAL SECURITY CONTRIBUTION
204
205 This is a supplementary contribution that is supposed to be paid by high
206 salaries. Practically, the majority of the salaries is entitled to this payment.
207
208 The rates exist in two flavours: for a single-revenue family and for a
209 double-revenu family. There can be a minumum and a maximum amount imposed. The
210 percentage is calculated on the salary minus the lower boudary of the
211 applicable salary range. For a monthly salary of 3000, a single-revenue
212 contribution would be
213
214 18.60+(3000-2190.19)*0.011, that is, 27.507 or 27.51, if rounded.
215
216 montyly salary double rev. single rev. min. max.
217
218 0 .. 1095.09 0 0 - -
219 1095.10 .. 1945.38 9.30 0 - -
220 1945.39 .. 2190.18 9.30 + 7.6% 18.60 + 7.6% 9.30 -
221 2190.19 .. 6038.82 18.60 + 1.1% 18.60 + 1.1% 51.64 60.94
222 6038.83 .. ∞ 51.64 60.94 - -
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