The pitfalls of the part-time business in Belgium

Anyone working at least part-time as an employee in Belgium can opt for his own part-time business. This is even mandatory if you have a constant revenue stream coming from the side projects.

At first sight, this option looks very competitive. You pay lower social charges and retain all the benefits of the employee position while being able to exercise the secondary activity in your spare time.

On the taxation side, things look much dimmer. Let's assume that you are a full-time employee in IT and want to do some consulting on the side. You probably have a rather high salary, that attains already, although barely, the highest 53.50% tax level. This is realistic for many IT professionals.

You do your first project and charge your client 1000 €, including VAT. How much will you have left after the taxes?

Well, that's easy. You pay subsequently 21% of VAT, 22% in social charges, and then 53.50% of the income tax, which amounts to

1000*0.79*0.78*0.4650=286.53 €

286.53 € out of that nifty pay-check of 1000 € that you just thought will go into your pocket.

You were expecting to get more, and you start to look for ways to avoid taxation. Fortunately, this is possible by going to the natural economy instead of the monetary one. That is, you try to increase your expenses and reduce the monetary profits.

You worked on that project at home and burned electricity, so you deduce the electricity charges. You used your personal computer, and you amortize its usage. You called the client over phone so the phone bill shall be added to the expenses. You ate while working, so here we join the restaurant bill. The incentive to go to the smallest detail in inflating the expenses is proportional to the tax burden, and the current legislation encourages this behaviour.