12 min read
Contractor Classification in Belgium
Businesses hiring in Belgium should understand the legal distinction between independent contractors and employees. Fines or penalties may be issued to businesses that are hiring independent contractors under the guise of employment. In Belgium, numerous legal formalities must be followed before employing a contractor to ensure compliance. It’s crucial to work with a partner like Worksuite when engaging contractors abroad, to establish a compliant and legal hiring framework.
There are two distinct legal statuses that govern the relationship between a hiring organization and its employees (employés; medewerkers) or independent contractors (indépendant; onafhankelijke aannemers), or self-employed workers, as they are called in Belgium. A standard employment contract (contrat de travail; arbeidscontract) indicates the traditional relationship between an employer and an employee. A business contract (contrat d’entreprise; zakelijk contract) indicates a freelance engagement whereby an independent contractor agrees to provide a defined piece of work for a set amount of money. 20% of Belgian professionals are currently engaged as independent contractors.
Belgian labor and civil laws are constantly subject to revision and policy changes. In addition, the country’s legislation defines very strict procedures to be followed by a contractor before engaging in work. It is important to work with a partner like Worksuite to ensure that you have an engagement framework that properly classifies freelancers able to work as independent contractors.
Factors
Employee
Independent Contractor
Employment Laws
In Belgium, both employment and independent contractor agreements are regulated by the Labor Relations Act and subject to the jurisdiction of local labor courts.
There are several types of employment agreements in Belgium:
- Open-ended (contrat de travail à durée indéterminée; arbeidsovereenkomst voor onbepaalde tijd) – an indefinite contract
- Fixed-term (contrat de travail à durée déterminée; arbeidsovereenkomst voor bepaalde tijd)
- Replacement (contrat de remplacement; vervangend contract) – an agreement for an employee to replace an existing employee who is temporarily absent
- Temporary (contrat de travail temporaire; tijdelijk arbeidscontract) – an agency contract
- Part-time (contrat de travail à temps partiel; parttime arbeidsovereenkomst)
An open-ended contract can be concluded verbally. All other types of employment agreements must be concluded in writing. If an open-ended contract contains the following clauses, it must be concluded in writing:
- Training
- Non-competition
- Remote work
- Arbitral clauses for high-paid employees with managerial responsibilities
Collective bargaining agreements (CBAs) may apply.
An employment contract must be drafted in French, Dutch or German, depending on the employer’s operating location.
Independent contractors must have a certification that can be obtained after passing an online examination (examen
du Jury central; examen Centrale Examencommissie). The exam is needed to confirm a contractor’s basic knowledge of Belgian labor legislation.
There is no specific legal act that regulates an independent contractor relationship. The general labor, civil, and commercial regulations apply.
Hiring Practice
Candidates are recruited externally through job boards and advertising. An applicant must submit their CV to the employer.
Selected applicants receive an offer letter, and if there is a need for a written contract, it must be provided and signed before the employment start date.
The following aspects must be collected and included in the contract, in addition to special clauses, if applicable:
- Name and address of the employer and employee
- Employment date
- Place of work
- Description of duties
- Salary information
- Working schedule
Employers reserve the right to perform background checks during the hiring process, but they must not request any information that is not related to the nature of the work. This process can be delegated to third parties, provided that they comply with the European Union privacy regulations.
Belgian Labor Law does not allow probation periods.
Through professional employer organizations or directly.
Contractors can be hired directly or via a third party, such as a staffing agency. Contractors may be found via word-of-mouth, job boards, social networks, industry bodies, or other forums. Although hiring practices vary, the contractor may be asked to provide a CV, portfolio, and references and possibly sign an NDA.
There is no limitation on the use of independent contractors. However, a person cannot be an employee and an independent contractor at the same company.
An independent contract agreement must clearly stipulate that the worker is free to organize his/her work and his/her working time. Otherwise, the agreement shall be treated as an employment contract. Apart from that, an independent contractor agreement contains the same details pertaining to the nature of the work.
Tax Documents
The tax year runs from 1 January to 31 December. Employers are obliged to submit income and social security tax reports (les déclarations mensuelles de revenus et de charges sociales; aangifte inkomstenbelasting en sociale zekerheid) to the Belgian tax authority via its online portal on either a monthly or a quarterly basis.
Monthly contributions are to be paid by the 15th of the following month. Such contributions are paid quarterly when a company paid less than EUR 41390 in taxes the previous year.
Employers must:
- Deduct and pay withholding taxes from employee’s salary
- File quarterly/monthly withholding tax return (called form “274”)
- Prepare the individual yearly tax slip (called form “281”) and send it to employees and tax authorities
Contractors file personal income tax reports (mpôt des personnes physiques; personenbelasting) on their own upon receipt of a tax return form (déclaration; aangifte) once a year. Income tax is payable one year after the end of the Belgian tax year.
In Belgium, independent contractors also pay VAT on a quarterly basis. They are exempt from it if their annual taxable income gained from work is less than EUR 25,000. VAT is paid by direct deposit to the Belgian Tax Authority bank account.
Before receiving an independent contractor certification, workers must register with the Belgian Social Insurance Fund for Self-Employed Persons. This fund provides health insurance, maternity, disability, and child benefits to contractors. Contributions are paid on a quarterly basis.
Payer's Tax Withholding & Reporting Requirements
Employers must withhold:
- VAT – 21%
- Personal income tax – from 25% to 50% depending on the size of an employee’s annual income
- Social Insurance Fund contributions – 13.07% (pensions – 7.5%, health insurance – 4.7%, unemployment insurance – 1%)
Independent contractors must pay:
- VAT – 21%
- Personal income tax – from 25% to 50% depending on the size of a contractor’s annual income
- Social security contributions – specific, progressive, and dynamic for every contractor according to his/her gross personal income (provisional charges may apply when a contractor has not yet generated any income from the work)
Payer’s Withholding / Reporting Requirements for Independent Contractors:
N/A
Remuneration
Employers are expected to pay their staff via automatic monthly payroll deposits in euros to their bank accounts.
There is no obligation to pay independent contractors monthly. Employers are responsible for providing consistent compensation in euros. There are no standard payment terms. Remuneration frequency is to be agreed upon between the contractor and the employer. Payments become due after the contractor issues an invoice.
Workers’ Rights
In Belgium, employees enjoy the following rights:
- Paid annual leave – 4 weeks
- Sick leave – first 30 days are covered by the employer, the rest – by the Social Insurance Fund
- Maternity leave – 15 weeks (6 weeks for prenatal leave, 9 weeks for postnatal leave); additional 2 weeks are granted for multiple births; first 30 days are paid at 82% of the employee’s salary, and the rest is paid at 75%
- Paternity leave – 15 days, paid at 82% of the regular pay
- Parental leave – 4 months; or 80% reduction of working hours for up to 20 months
- Family care leave – temporary unpaid suspension of services for up to 3 months in case of a sickness of a family or household member
- Adoption leave – up to 6 weeks
- Marriage leave – 1 day
- Court leave – 1 day
- Bereavement leave – 1 day
- Severance pay (in case of a termination without notice) – one monthly salary
- Premium payment rate for overtime work – 150% for work during weekdays and 200% during weekends and public holidays
- Termination notice – based on a duration of the employment, from 2 to 62 weeks
Contractors are entitled to:
- Health insurance
- Unemployment insurance
- Disability insurance
- Maternity leave – 12 weeks
There is no protection from a sudden termination of the contract.
Benefits
All employees must have health and unemployment insurance, which the employer is required to pay for. Pension and health insurance contributions are deducted from employees’ salaries and are paid by employers. Employees may be granted additional internal benefits not otherwise governed by labor laws.
Independent contractors enjoy the benefits granted by the Social Insurance Fund. They do not enjoy any rights granted to employees unless an agreement says otherwise.
Third-party benefits granted by professional employer organizations may apply when an independent contractor is hired through such organizations (i.e. umbrella company) and is considered their employee.
When Paid
Determined by the contract.
Salary must be paid at least once a month.
Typical contractor invoices are issued monthly on net 30-day terms. Each invoice usually includes the following details:
- Invoice number and date
- The client’s name and address
- The contractor’s bank details
- Agreed payment terms and due date
Employee
Employment Laws
In Belgium, both employment and independent contractor agreements are regulated by the Labor Relations Act and subject to the jurisdiction of local labor courts.
There are several types of employment agreements in Belgium:
- Open-ended (contrat de travail à durée indéterminée; arbeidsovereenkomst voor onbepaalde tijd) – an indefinite contract
- Fixed-term (contrat de travail à durée déterminée; arbeidsovereenkomst voor bepaalde tijd)
- Replacement (contrat de remplacement; vervangend contract) – an agreement for an employee to replace an existing employee who is temporarily absent
- Temporary (contrat de travail temporaire; tijdelijk arbeidscontract) – an agency contract
- Part-time (contrat de travail à temps partiel; parttime arbeidsovereenkomst)
An open-ended contract can be concluded verbally. All other types of employment agreements must be concluded in writing. If an open-ended contract contains the following clauses, it must be concluded in writing:
- Training
- Non-competition
- Remote work
- Arbitral clauses for high-paid employees with managerial responsibilities
Collective bargaining agreements (CBAs) may apply.
An employment contract must be drafted in French, Dutch or German, depending on the employer’s operating location.
Hiring Practice
Candidates are recruited externally through job boards and advertising. An applicant must submit their CV to the employer.
Selected applicants receive an offer letter, and if there is a need for a written contract, it must be provided and signed before the employment start date.
The following aspects must be collected and included in the contract, in addition to special clauses, if applicable:
- Name and address of the employer and employee
- Employment date
- Place of work
- Description of duties
- Salary information
- Working schedule
Employers reserve the right to perform background checks during the hiring process, but they must not request any information that is not related to the nature of the work. This process can be delegated to third parties, provided that they comply with the European Union privacy regulations.
Belgian Labor Law does not allow probation periods.
Tax Documents
The tax year runs from 1 January to 31 December. Employers are obliged to submit income and social security tax reports (les déclarations mensuelles de revenus et de charges sociales; aangifte inkomstenbelasting en sociale zekerheid) to the Belgian tax authority via its online portal on either a monthly or a quarterly basis.
Monthly contributions are to be paid by the 15th of the following month. Such contributions are paid quarterly when a company paid less than EUR 41390 in taxes the previous year.
Employers must:
- Deduct and pay withholding taxes from employee’s salary
- File quarterly/monthly withholding tax return (called form “274”)
- Prepare the individual yearly tax slip (called form “281”) and send it to employees and tax authorities
Payer's Tax Withholding & Reporting Requirements
Employers must withhold:
- VAT – 21%
- Personal income tax – from 25% to 50% depending on the size of an employee’s annual income
- Social Insurance Fund contributions – 13.07% (pensions – 7.5%, health insurance – 4.7%, unemployment insurance – 1%)
Remuneration
Employers are expected to pay their staff via automatic monthly payroll deposits in euros to their bank accounts.
Workers’ Rights
In Belgium, employees enjoy the following rights:
- Paid annual leave – 4 weeks
- Sick leave – first 30 days are covered by the employer, the rest – by the Social Insurance Fund
- Maternity leave – 15 weeks (6 weeks for prenatal leave, 9 weeks for postnatal leave); additional 2 weeks are granted for multiple births; first 30 days are paid at 82% of the employee’s salary, and the rest is paid at 75%
- Paternity leave – 15 days, paid at 82% of the regular pay
- Parental leave – 4 months; or 80% reduction of working hours for up to 20 months
- Family care leave – temporary unpaid suspension of services for up to 3 months in case of a sickness of a family or household member
- Adoption leave – up to 6 weeks
- Marriage leave – 1 day
- Court leave – 1 day
- Bereavement leave – 1 day
- Severance pay (in case of a termination without notice) – one monthly salary
- Premium payment rate for overtime work – 150% for work during weekdays and 200% during weekends and public holidays
- Termination notice – based on a duration of the employment, from 2 to 62 weeks
Benefits
All employees must have health and unemployment insurance, which the employer is required to pay for. Pension and health insurance contributions are deducted from employees’ salaries and are paid by employers. Employees may be granted additional internal benefits not otherwise governed by labor laws.
When Paid
Determined by the contract.
Salary must be paid at least once a month.
Independent Contractor
Employment Laws
Independent contractors must have a certification that can be obtained after passing an online examination (examen
du Jury central; examen Centrale Examencommissie). The exam is needed to confirm a contractor’s basic knowledge of Belgian labor legislation.
There is no specific legal act that regulates an independent contractor relationship. The general labor, civil, and commercial regulations apply.
Hiring Practice
Through professional employer organizations or directly.
Contractors can be hired directly or via a third party, such as a staffing agency. Contractors may be found via word-of-mouth, job boards, social networks, industry bodies, or other forums. Although hiring practices vary, the contractor may be asked to provide a CV, portfolio, and references and possibly sign an NDA.
There is no limitation on the use of independent contractors. However, a person cannot be an employee and an independent contractor at the same company.
An independent contract agreement must clearly stipulate that the worker is free to organize his/her work and his/her working time. Otherwise, the agreement shall be treated as an employment contract. Apart from that, an independent contractor agreement contains the same details pertaining to the nature of the work.
Tax Documents
Contractors file personal income tax reports (mpôt des personnes physiques; personenbelasting) on their own upon receipt of a tax return form (déclaration; aangifte) once a year. Income tax is payable one year after the end of the Belgian tax year.
In Belgium, independent contractors also pay VAT on a quarterly basis. They are exempt from it if their annual taxable income gained from work is less than EUR 25,000. VAT is paid by direct deposit to the Belgian Tax Authority bank account.
Before receiving an independent contractor certification, workers must register with the Belgian Social Insurance Fund for Self-Employed Persons. This fund provides health insurance, maternity, disability, and child benefits to contractors. Contributions are paid on a quarterly basis.
Payer's Tax Withholding & Reporting Requirements
Independent contractors must pay:
- VAT – 21%
- Personal income tax – from 25% to 50% depending on the size of a contractor’s annual income
- Social security contributions – specific, progressive, and dynamic for every contractor according to his/her gross personal income (provisional charges may apply when a contractor has not yet generated any income from the work)
Payer’s Withholding / Reporting Requirements for Independent Contractors:
N/A
Remuneration
There is no obligation to pay independent contractors monthly. Employers are responsible for providing consistent compensation in euros. There are no standard payment terms. Remuneration frequency is to be agreed upon between the contractor and the employer. Payments become due after the contractor issues an invoice.
Workers’ Rights
Contractors are entitled to:
- Health insurance
- Unemployment insurance
- Disability insurance
- Maternity leave – 12 weeks
There is no protection from a sudden termination of the contract.
Benefits
Independent contractors enjoy the benefits granted by the Social Insurance Fund. They do not enjoy any rights granted to employees unless an agreement says otherwise.
Third-party benefits granted by professional employer organizations may apply when an independent contractor is hired through such organizations (i.e. umbrella company) and is considered their employee.
When Paid
Typical contractor invoices are issued monthly on net 30-day terms. Each invoice usually includes the following details:
- Invoice number and date
- The client’s name and address
- The contractor’s bank details
- Agreed payment terms and due date
Who classifies as an Independent Contractor in Belgium?
Self-employment as an independent contractor is a popular income model for many individuals. The latest pandemic restrictions have prompted more and more Belgians to work as self-employed independent contractors. Moreover, hiring independent contractors from Belgium is currently a booming trend among organizations from all over the world. More and more representatives of Belgium’s highly-educated workforce choose to be their “own bosses” and engage with companies as independent contractors.
In Belgium, independent contractors are defined as “self-employed workers” rendering services as an enterprise. Their relationship with companies is regulated by different commercial and civil laws, and there is no specific legal act that governs only independent contractors.
Who is an Independent Contractor?
Any individual who independently and consistently carries out a gainful activity in the form of providing services for profit to a given organization, while not abiding by its internal legal directives under an employment contract is considered an independent contractor.
Under Belgian law, an independent contractor is NOT obliged to:
- Complete work for a set period of time each day, nor from a specified location
- Make arrangements with the employer to take time off from work
- Follow the employer’s disciplinary procedures
Some professionals may need to receive a certification to become an independent contractor. The requirement to pass an online exam is waived when a contractor has one of the following:
- Higher education
- CESS certificate (Certificat de l’Enseignement Secondaire Supérieu)
- 15 years of professional experience
- Any certification obtained after qualification of secondary-level studies, after six years as an accounting technician or a commercial technician, or after seven years as a manager of a small business
To become a contractor, a worker needs to register with the Crossroads Bank for Enterprises (Banque-Carrefour des Entreprises, Kruispuntbank van Ondernemingen) and obtain an ID, which can also serve as a tax ID and a social security number.
Contractors must also have a VAT registration number. It can be obtained through a local tax office.
The exact nature of the relationship between a company and the worker is determined by an agreement. Although open-ended contracts may be concluded verbally, it is recommended to have a written contract that would clearly emphasize the independence and absence of subordination. This is needed to avoid misconceptions and consequential legal proceedings.
Contracting Models
Self-employed workers with their own business are classified as sole traders (entreprise individuelle; als eenmanszaken) or sole proprietors (propriétaire unique; de enige eigenaren).
Engagement Models
There are two primary engagement models for working with independent contractors in Belgium.
A. Direct engagement of the worker as self-employed and registered via their own limited company. Under this model, the hiring company engages directly with the independent contractor and draws up an agreement for the provision of services. The hiring company then pays the independent contractor directly.
B. Umbrella company. Companies operating under Employer of Record services in Belgium are often split into two categories, but both are essentially designed to vet and engage freelancers compliantly as either contract employees or independent contractors on your behalf.
- Staffing agency: Some contractors may work under an umbrella company. In this case, the contractor is responsible for finding and performing their work, but they are an employee of the umbrella company, which manages payroll and applies an administration fee on the contractor’s earnings.
- Hiring partner: The hiring company can also work with a hiring partner who helps them vet potential contractors, set up contracts, ensure the contractor is properly classified, onboard and manage contractors, and make payments to them.
Contractor Payments
Independent contractors typically get paid upon issuing an invoice on net 30-day terms to the employer at the end of each month unless otherwise stipulated in the contract. Payments are made through direct deposits to their bank accounts or another preferred method stipulated in the contractor agreement.
Alternatively, companies may partner with wage processing providers. They can process wage calculations, prepare tax statements, and make deposits and withdrawals for contractors.
Terms, conditions, and frequency of payments can be settled between a contractor and an employer. Currencies other than the euro can be used in Belgium, and they are subject to fluctuating exchange rates, which may have an impact on a contractor’s paycheck.
If you work with a hiring partner like Worksuite, it becomes significantly easier to streamline contractor payment processes. A dependable partner can help you hire contractors legally and pay them quickly, accurately, in euros, and in a way that complies with Belgian regulations.
Contractor Taxes
Independent contractors submit their own income tax reports. It is possible to submit and pay personal income tax and social security contributions via Taxonweb, an online portal.
Gross Income Tax
A contractor’s taxable income is the income left after deductions for social security contributions. If a contractor is married, and the spouse’s income is less than 30% of a contractor’s joint income, then a contractor can also deduct a dependent spouse allowance.
Value-Added Tax
The majority of services, imports of goods and services, and the sales value of items are subject to a VAT deduction of 21%.VAT is paid by direct deposit to the Belgian Tax Authority bank account.
