Last Updated on July 12, 2020 by Mr. FightToFIRE
In recent years, the Belgian government made it easier to make an extra income through a side hustle. In 2015 it introduced a new form of unlimited untaxed income albeit with stringent measures: Flexi-jobs. Later, in 2018, it introduced another form of untaxed income with a limit of 6,340 EUR. It is this last form that the Constitutional Court has annulled. But what does this mean for people that want to still earn something extra?
The law made it possible to earn something extra as a natural person (i.e., not a company) for your local sports clubs but also for couriers like Deliveroo and UberEats. There was a list of recognized sectors and companies where you could register.
But now the Constitutional Court ruled that the regulation is contrary to the principle of equality and non-discrimination. The court stated that persons carrying out the same activities as their main profession are ‘treated very differently, without reasonable justification, with regard to employment legislation, the social security system, and taxation’.
Since Belgium still doesn’t have a new government it’s likely that as of 2021, the ruling will go into effect.
Ending 2020: untaxed occasional jobs
The law that has a ceiling of 6,340 EUR per year is mainly used by sports associations. To benefit from this favorable measure, you must meet a number of conditions:
- You are an employee (at least 4/5th), civil servant, self-employed person in main occupation or retired (already retired for at least 2 quarters). Jobseekers, housewives, and students (who are not taxed anyway) are not eligible for this measure.
- The additional income you earn is occasional, so not on a fixed basis. Your client is a private individual (childcare, tutoring, lawn mowing) or association (both sports and socio-cultural association) or you work for a partial platform (Deliveroo, Parcify, Uber Eats, Listminut, Helppr,…). On this list you will find a handy overview of allowed activities.
- Full-time self-employed people are given the additional condition that the additional income is a different activity than their main activity.
- Before you can start working, you have to report the activity to social security services. This can be done on the platform www.bijklussen.be. Those that work through a platform such as Deliveroo don’t have to do anything: it’s reported automatically.
Those who work in the system do not pay any social contributions or taxes, nor do they accrue any social rights. Various professional organizations and trade unions had appealed, with success, against this law to the Constitutional Court. The Constitutional Court ruled that the supporting legislation disproportionately affects the rights of the employees and employers concerned.
What side hustles are possible?
While there are a few restrictions it remains that it allows for a nice net extra per month. However, due to the ruling, it’s clear that at least one form of untaxed side hustling will stop to exist at the end of the year. But what is still possible?
I will list a couple of alternatives. Regardless of what you will choose, it’s clear that each of the following options has some sort of limitation. It really is meant as a side activity to compliment your main job.
First, we still have the other form of untaxed jobs, the so-called flexi-jobs. The flexi-jobs system allows only pensioners and employees who work at least 4/5 to earn an extra penny on favorable terms. It’s this type of job I registered for at the beginning of the year. Unfortunately, Corona put a stop to that plan (for now).
With a flexi-job you don’t pay taxes or social security contributions on the extra income. Your gross salary is therefore the net salary. You do build up social rights (unemployment benefit, pension, holidays, etc.). It is not the tasks you perform that determine whether you can work a flexi-job, but whether the employer is active in the sector that is allowed to employ you.
You can carry out a flexi-job in:
- Catering industry
- Retail trade
Self-employed secondary profession
So, if you are planning an activity that does not fall under one of the above categories or if you want to earn more, it is worth considering becoming self-employed in a secondary occupation. The status of a self-employed person as a secondary profession can also be a first step towards establishing yourself as a self-employed person as your main occupation at a later stage.
Consequently, if you don’t do this, you will get taxed based on the progressive tax brackets that exist for your main income. As a result, if you are already in the highest tax bracket of 50% (!) your extra income will get taxed at that rate.
You can, however, take some small comfort in knowing that if you have a net taxable income on an annual basis of fewer than 1,548.18 EUR, you do not pay social security contributions.
Occasional sales and activities
It might be the dream of many to turn a hobby into a profession. It sounds fun but not everyone wants to spend the necessary administration on it right away. That is why there are a few alternatives to a secondary or main profession. Possibly the ‘big leap’ can be made after all.
As a private individual, you can always sell your own private surpluses. These must be surpluses that “do not go beyond the normal management of a private patrimony”. These are goods that you, as a private seller, have not bought, produced, or cultivated with a view to selling them. A private individual may also only sell his own goods if the sale remains occasional.
Since the legislative amendment of 2017, the municipality can specify the occasional character in a regulation. The mayor or his representative must give prior authorization for events that bring together various non-professional sellers (e.g. a flea market). This can be reserved for non-professional salesmen or extended to professionals (holders of a doormat). They may also specialize in the theme of the event. The municipality may also make individual private sales (e.g. garage sales) subject to prior authorization.
Artist’s card (KVR)
Artistic services can be reimbursed via the small fees scheme for artists (KVR). This is an all-in expense reimbursement that you cannot combine with another expense reimbursement (such as kilometers traveled):
- a maximum of EUR 130.79 per day per client
- not more than 7 days in a row at the same client
- not more than 30 days per year
- maximum 2,615.78 euros per year
To make use of this scheme, you must have an artist’s card. All information about this (such as the nature of the activities) can be found on kunstenloket.be. On the electronic platform [email protected], artists have the opportunity to apply for an artist’s card and register the services provided under the small fees scheme online.
An income from an activity that is independent of your profession and occasional is in principle a diverse income. Characteristics are the low frequency, no financing, no cooperation with others, and that the secondary activity is completely separate from the main activity. You must declare the income from the occasional activity to the tax authorities. This can be done under the heading “Miscellaneous income” of the declaration. These are taxed at 33% unless the marginal tax rate is lower. In this case, the marginal tax rate is taken. In case of an occasional activity, you cannot draw up an invoice. What is possible, however, is an expense account.
Please note: if it is not an occasional activity, there may be a re-qualification to professional income. In that case, the tax will usually be higher, and social security contributions may still be due. All this with retroactive effect. You will therefore also have to join a social insurance fund. In the worst case, you will also have to pay a fine.
Volunteering is, as the word says, free and without obligations. In principle it is also unpaid, only the expenses can be reimbursed.
Since 1 January 2019, a higher reimbursement of expenses is possible for certain volunteers. As a result, certain groups of volunteers may receive a higher amount on an annual basis within the fixed expense allowance. This is a maximum of 2549.90 EUR in 2019 and 2020 instead of 1388.40 EUR in normal circumstances. However, the maximum daily amount is 34.71 EUR. You do not have to declare a volunteer’s allowance on your tax return. After all, it is not an income but a way of reimbursing expenses.