Every taxpayer in Belgium pays personal income tax: it is a tax you pay on your taxable annual income. As a self-employed person, you are therefore taxed on your salary, as well as on the income from your self-employed activity. If you have a one-man business, you declare the latter income via the personal income tax.
Your taxes are calculated based on your net income: the sum of your earnings minus your professional expenses. Since some of you are also an employee as a self-employed person in a secondary occupation, the net income from your salaried job is added to the net income of your business.
Personal income tax taxes your total net income in brackets. A different tax rate applies to each bracket:
In income year 2022, these tax brackets looked like this:
From 0 to 13,870 euros
From 13,870 to 24,480 euros
40 per cent
From 24,480 euros to 42,370 euros
45 per cent
From 42,370 euros
50 per cent
Good to know: part of your net income is never taxed. That is the tax-free sum. That amount depends on a number of factors, but for tax year 2023 it is at least 9,270 euro. So the taxman first deducts that amount from your net income before determining which tax brackets your income falls into.
If your net income from your job and your secondary profession together amounts to 25,000 euro, the tax authorities will first deduct at least 9,270 euro (the tax-free allowance). The remaining 15,730 euro is then taxed in the following brackets:
13,870 euros of the 15,730 is taxed at 25 per cent (tax of 3467.5 euros)
the remaining €1860 ends up in the second 40 per cent bracket (tax of €744)
So you pay a combined 4211.5 euros in taxes on your net income of 25,000 euros, leaving you with 20,788.5 euros.
Something less fun to read: you will be taxed once more on your taxes. It does not matter whether you are self-employed in a secondary occupation or an employee. This is because the municipality also sits down to levy a tax on the personal income tax you have to pay. How much that tax rate is, each municipality can decide for itself.
The net income from your secondary occupation comes on top of the net income you get from your job. So there is a fairly good chance that the extra penny you earn ends up in 1 of the higher tax brackets: as a result, the net profit from your sideline job is only half in some cases.
Besides personal income tax, you also have the social security contribution:
The rate of social contributions is the same as for the self-employed in main occupation: 20.5%.
However, there are a number of differences:
If you earn less than €1,621.72, you can apply for an exemption for your social security contributions.
The social contributions of the self-employed in a secondary occupation are so-called "solidarity" contributions. You will never or rarely be able to draw social security from these. Your social rights are covered by your main profession, e.g. as an employee, civil servant, pensioner or job seeker.
As a self-employed person in a secondary occupation, you are not entitled to a start-up discount on your social security contributions.
If you are self-employed in a secondary occupation and pay social contributions on a taxable income of at least €14,658.44, you can take out a Free Supplementary Pension for the Self-employed (VAPZ). From this amount, you are also entitled to additional social rights, such as service vouchers after childbirth.
And don't forget VAT, of course:
Paying VAT is also something that usually comes with being self-employed. Unless if you're franchisee, then you don't have to worry about VAT. If you are liable for VAT, you charge VAT on your sales invoices. You pay that VAT back to the government at the end of each quarter. The advantage? You can also deduct the VAT you pay on your purchases (and for which you have a VAT invoice). This only applies if they are professional expenses.
As with social security contributions, you can also apply for a VAT exemption for your secondary profession. You can opt for this if your annual turnover is less than EUR 25,000.
I hope this answer helps you a little further along the way, but if you are looking for accounting advice, you can also turn to an accountant for help or even better, just drop us a message.