Belgian Umbrella Companies are setup expressly to help contractors get the highest net retention possible. They have a deep knowledge of the Belgian tax system and use this to minimise the tax burden. With the general tax and social costs in Belgium being so high, contractors benefit from utilising their tax residency status and dual taxation agreements. A typical contractor will get 60-65% of their gross billing using a management structure. This compares to 40-50% going through a standard local payroll. For a contractor earning EUR 500 per day, this equates to an extra 25 thousand euro per year!
What tax do contractors pay in Belgium?
The standard tax rates in Belgium are amongst the highest in the world with an upper tax rate of 55% combined with employee social costs of 13.07%. Our Tax Calculator for Belgium computes total tax and net earnings. As detailed below EU citizens are able to stay outside the Belgian tax system for the first 6 months of their contract, which greatly reduces their tax.
How many days can a contractor work in Belgium without paying local tax?
This depends on the nationality and visa status of the contractor. Contractors from within the EU will not have Belgian tax residency for the first 183 days of their assignment. For the first 6 months most contractors choose to get paid in their home country or through an umbrella company setup outside of Belgium. For example a UK contractor working in Brussels for 3 months is best advised to get paid through their UK Limited Company or a UK Umbrella Company. After 6 months the contractor will become a local tax resident and need to be paid through a Belgian entity. Given the high tax and social costs (employer social security can be as high as 41%) contractors are strongly recommended to use a Belgian umbrella company who will ensure they get the greatest take home pay.