Posted by I guess most people don’t pay much attention to all the details of their monthly salary slips in Belgium, thanks to the language barrier as well as its complexity. Today I would like to help you understand all the records on a salary slip with a real example.
Below is a pay slip of someone who worked in Belgium, not going to disclose where it comes from, but I can guarantee its validity and authenticity.
Before reading the payroll, you must first understand what benefits your company has when it offers you a position. These benefits will appear on your payroll each month in a certain format.
In the example payslip, the benefits included in this job are the mobile phone, telephone bill, internet bill, company car, group insurance, hospitalization insurance, meal ticket, etc. How they are presented on the payroll will be explained step by step.
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1. The pre-tax salary/brut salary 3900 €
The pre-tax salary is negotiated with your employer when you accept the job (3900€). As shown in the picture above, the payroll includes the salary for 156 hours of workday (3,456.82 €) and 20 hours of paid vacation salary (443.18 €). ), as well as the mobile phone, telephone bills, and network benefits that the company has provided to the employee (3+4+5 = 12 €).
At this time, you might wonder, since the company has already given out these benefits (in their physical forms), why should it be written in the payroll?
Very good question, let’s put a pin on it and come back later.
2. Social security (Afhouding R.S.Z. bruto) -511.3 €
Social security contribution is the basis for the operations of Belgium as a country. No, it is not an insurance saving for the future for yourself, but it is a fund for providing benefits for the current population (including yourself). For white-collar workers, the Belgian social security deducts 13,07% of the individual’s pre-tax salary, and the calculation of blue-collar social security starts from 108% of his pre-tax salary.
The government collects social security funds for social welfare, such as pensions for people who are now retired, unemployment benefits, subsidies for long-term illnesses or disabled people, salary when taking annual leave, reimbursement after you see a doctor, etc.
You can imagine the entire country of Belgium as a big club, and everyone who lives in Belgium can enjoy the services (such as health services, education and so on) of the club. The operation of the club requires membership fees. Those who make more money pay more, those who make less money (or the family has a heavy burden) pay less, and those who have no money do not pay for anything.
At the end of the article, you will see that in addition to the personal contribution of 13.07% of social security, the company also pays about 32% of the pre-tax salary (1,070,31 Euro) for this employee. Now you probably know why Belgian social welfare is so good.
3. Total taxable amount (Belastbaar）3.632,11€
In the next section, you will see that after the social security is deducted, two more amounts have been added to the payroll, 1,56 euros (a small company-specific benefit) and 229,85 Euro for the company car. This is because the car provided by the company can be used for personal life besides commuting, 229,85 Euro represents the estimated benefits of the car and fuel card (within Belgium). This number is related to your car’s lifespan, carbon dioxide emissions, etc.
Now the same question, since the car has been given to me in its physical format, why should it be written in the payroll? We will address it soon in this article.
4. Withholding tax（Bedrijfsvoorheffing） – 1.134,07 €
Personal income tax withholding is a percentage that the company deducts from the taxable amount. This percentage is based on the individual’s salary level (used for tax collection), family conditions, such as marriage, whether there are children, whether the spouse has a job, etc. The calculation is super complicated, so I won’t go into details here. The number shown in your payroll is only an estimate.
The exact personal income tax amount will only be calculated when you file your tax return in June of the next year, and then you might get some tax refund or need to hand in more tax. Whether the tax withholding is accurate or not, depends on your company’s HR! To make sure you get the most optimization of your tax, check my previous post Tax refund in Belgium: Optimise your income tax
I did notice that the 50% tax cap in Belgium is much lower than in the Nederlands, which means mid-income or lower-income already suffer quite a lot from the high tax.
In contrast, below is the tax collection rule from the Nederlands, including the social security.
5. Group insurance self contribution （Groepsverzekering）-57,04 €
After you retire at the age of 65, the social security paid by young people in the future will be used to pay your pensions, medical reimbursements, and so on. However, both companies and individuals know that with the current population aging rate and other reasons, our generation is not very confident about the social security fund when we retire, if we were to keep the same level of life quality. Check How Much Pension Fund Can You Get when Retire in Belgium?
Therefore, many insurance companies launch group insurance products and sell them to companies as employee benefits. The group insurance scheme generally depends on a certain percentage of your annual salary. Part of it is paid by the employee after tax (57,04 Euro), and the other is paid by the employer tax exempted (114,08 Euro).
After the group insurance is deducted, it will be stored in your complementary pension reserve ( with a minimum of 1.75% annual interest rate). It can be taken out when you retire with a lump sump or with an annuity, and it can also be used as insurance for serious illness or death.
When changing jobs, you can choose to move the group insurance to the insurance company provided by the next company, or you can choose to stay there and take it out when you retire.
6. Meal cheques self contribution（Maaltijdcheques werknemer）-21,8 €
Most employers will provide something commonly called a meal ticket. It used to be a paper voucher, but now it has become a card. It is calculated according to the number of days you work every month, max 8 euros per day. The employees pay 1,09 euros, the company pays 6,91 euros. The amount paid by the employer is more cost-effective than paying you directly because you do not have to pay social security and personal taxes.
If you don’t take vacations every month, you can have an extra income of close to 160 Euros, which you can use to buy food in supermarkets, eat in restaurants, etc. Every June, the company will also issue 250 Euros called eco cheques to buy environmentally friendly electrical appliances or other items.
It is already the season to get Eco cheques, check my previous post: How to spend the annual 250 eco cheques in Belgium?
7. Hospitalisation insurance（Hospitalisatie werknemer）
In this payslip is only indicated that the company is paying the hospitalization for the employee, no contribution from the employee is needed.
8. The social security and tax contribution for benefit in kinds
The benefits in-kind provided by the company are included in the salary, for which as an employee you need to pay social security and personal tax. Therefore, as mentioned above, the value of the mobile phone, telephone, and internet charges will be added to the pre-tax salary in the form of cash for the calculation of social security and personal taxes. After the social security and tax are deducted, the same amount is deducted from the net salary.
This weird calculation means that the mobile phone bill provided by the company provides the employee with personal convenience, and he/she has to pay social security and personal tax for the corresponding value.
9. (Social security exempted) tax for benefit in kinds
Other benefits provided by the company, such as cars, are not required to pay social security according to regulations. This is why after deducting social security, the valuation of the car will be added first, and after the tax is deducted, the same amount will be deducted. In other words, for the benefits that the car brings, the employee needs to pay income tax only, but not social security.
10. Special social security (Bijzondere bijdrage sociale zekerh) -37,54 €
With the aging of the population, to ensure that social security can ensure a certain quality of life, Belgium introduced special social security in 1994, which is deducted from your after-tax salary and is also related to your family situation. This means that your payment for social security contribution is higher than 13.07%.
11. What is the real cost of hiring an employee in Belgium?
At the bottom of the payroll, there is additional information about the cost of an employee besides the salary and benefits the company spends on this employee.
- Social security paid by the company: €1,070,31
- The company paid extra for the company car: €48,92
- The company paid for the meal ticket benefits: €138,2
- The company paid for the group insurance: €114,08
- Company car leasing cost, let’s estimate €400
- The cost of the mobile phone, phone bill, and internet is estimated €80 per month
- The hospital insurance provided to the employee by the company: Not shown, let’s estimate as €20.
- The brute salary: €3900
In summary, a conservative estimate of the total monthly expenditure of the company after recruiting this employee: is €5,691, however, the employee got €2,155 in hand, with other benefits mentioned above.
This is an introduction to the Belgian payroll. Although the social security and taxes paid by everyone are high, we do get some benefits from this society. For example, after seeing a doctor, it is equivalent to only spending 4 euros after the reimbursement. Children don’t have to pay tuition for school, and adult education (university, language, or other skills) also has government subsidies. If you (in an unfortunate condition) lose your job, there will be benefits that will support you with basic living.
Of course, many people think that such a high-welfare society is not suitable for motivating talented young people. What do you think?
If you just got out of school, don’t forget to check out my friend Toon’s post What to do after you finish your study.
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More articles about working in Belgium:
How can you spend the 250 euro eco cheques?
Tas refund in Belgium – Optimise your income tax
Health insurance, are you using it to its full potential?
All the paid holidays you might have missed in Belgium
Back to school – working student in Belgium
Fun facts about divorces in Belgium
References:
Everything about social security
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