What is payroll?
Payroll services involves everything that has to do with salary calculation, the payment of employees, the filing of employment taxes and social security contributions.
Examples of types of employees in the private sector that require salary administration include blue-collar employees, white-collar employees, directors, expatriate employees (or expats) and posted workers (or seconded employees).
If you hire employees in Belgium, you have to follow a number of procedures and keep social documents up to date.
Don’t forget the Dimona declaration for local employees, or the Limosa declaration for posted employees, prior to the starting date of the employees.
Depending on the business activity, every employer falls under a specific joint industrial committee. The rules of a joint industrial committee are usually binding for all employers and apply to all employees. Often, white-collar employees and blue-collar employees working in the same company are resorting under another joint industrial committee.
The Belgian social security system is financed mainly by contributions from both employers and employees. The rate of employer social security contributions used to be (relatively) high in Belgium. However, the situation has changed. With the so called “tax shift”, a number of employment promoting measures seriously reduced the amount of the social security contributions. (e.g. New employers get almost full exemption from employer’s social security contributions for a first hiring!).
Several social security agreements have been signed between Belgium and other countries, which makes it more advantageous for seconded employees.
As the tax burden is rather heavy on labour, employee benefits for white-collar employees and blue-collar employees are quite common and popular in Belgium. Some benefits are exempted from tax and social security withholdings, provided that certain conditions are met. Most common benefits are group insurance and meal vouchers.
Special rules also exist for an expat, including tax benefits on income and property, foreign business travel exclusion and expatriate allowances.
If you employ an expat, it is recommended to have a payroll provider that also offers immigration services.
Salary split payroll
A salary split is quite common. Belgium is a small country with our neighboring countries. The Netherlands, France, Luxembourg, United Kingdom and Germany. An employee working in multiple countries often obtains significant tax benefits. A simultaneous employment situation requires a salary split payroll.
In order to reduce mistakes, companies often choose an automated time and attendance system that integrates with salary software.
Belgium is uniquely phenomenal. Compared to other countries, salary calculation is more complicated. For this reason, more than 90% of Belgian employers outsource salary calculations to an external provider.
Belgian payroll providers take care of all staff administration. Most of them are also ready to assist employers with an efficient calculation process and legally compliant services.