A number of interesting amendments have been introduced in respect of the social insurance regulations for self-employed persons which we would like to inform you of.
1. Deadline for joining
To date, new self-employed persons were required to join a social insurance fund no later than on the date upon which the independent activities commenced.
Since 01 July 2016, they have been required to join prior to the activities commencing.
Anyone caught practicing an independent activity without having joined a social insurance fund can expect to pay a penalty of €500 to €2,000.
2. Joint and several liability for administrative monetary penalties
Henceforth a self-employed person is not only jointly and severally liable for the payment of the social security contributions of his or her self-employed assistant, but also for administrative monetary penalties payable by the self-employed assistant. This pertains to monetary penalties from €500 to €2,000 payable for each established infringement: for example, if the starting self-employed person has not immediately joined a social insurance fund while being obliged to do so, or where it emerges that a person is practicing a different profession to the one that he or she registered for with the Crossroads Bank for Enterprises.
Legal entities have already been jointly and severally liable for some time for both the social security contributions as well as the administrative monetary penalties payable by their ‘members or mandatories’.
3. Applications to have social security contribution payments reduced streamlined
Since 2015 the social security contributions have been provisionally calculated using the professional income for three years beforehand. After that an adjustment is performed using the professional income for the current year.
If those provisional sums are too high, then one can apply for a reduction on the basis of the presumed income for the current year, subject to presenting objective elements that justify such a reduction.
Until recently it was the rule that a separate application had to be submitted for each calendar year.
In the meantime the FPS Social Security has streamlined this rule, which means that henceforth an application can be submitted for one, two or three calendar years using the same application form. Objective elements that concern the reduced income for those years for which a reduction is requested must of course be presented.
A self-employed person must however still submit an application each year, as he or she will generally not be able to present objective elements concerning a reduced income over multiple years.
On the other hand, an unremunerated mandatory can present a report from the general meeting or a copy of the articles of association in order to request a reduction in the provisional contributions for three successive years.
4. No post-retirement adjustment
If you are set to retire or completely cease operating as a self-employed person, then you can apply to stop paying the adjustments after retiring.
Until 2014 you paid social security contributions on your professional income earned three years before the date of payment. That was a final sum that was not adjustable.
As of 2015 you first pay a provisional sum on your income earned three years ago. Two years later an adjustment is performed for this contribution based on the professional income for the contribution year itself.
When you retire you can apply to stop paying these adjustment sums. These adjustment contributions can only be waived under specific conditions:
- You cease your independent activities no later than on the date of your retirement;
- You apply for the adjustments to be waived prior to your retirement commencing;
- The application pertains to the adjustment contributions for the year you retire and for the three preceding contribution years, insofar as these contributions have not yet been adjusted on the date that retirement commenced;
- You did not receive a contribution reduction for any of these years. If this was the case you are still able to waive this reduction, but in that case you will pay increased sums. You will thus have to check whether these expenses outweigh the gains.
You are to retire on 1 January 2017. You can apply to not pay the adjustment contributions for 2015, 2016 and 2017. You must submit the application before 1 January 2017 and you must cease your self-employed activities no later than on that date. In that event, the Social Security Fund will not send you adjustment statements.
The application pertains to both the adjustment contributions you must pay as well as to any funds you will receive back. You must thus estimate whether the balance for the entire period is positive or negative.
You are to retire on 1 September 2017. Let’s say that you have to pay an adjustment of €2,000 for 2015, but for the years 2016 and 2017 you will get back €2,500 in total. On balance that means you gain €500, and in this case it is best to not apply for the adjustments to be waived.