Taxshift: important reduction of social security charges in 2018?

The 2nd taxshift phase is announced for 1 January 2018. What will be the impact of this 2nd phase on the social security contributions?

The first phase of the taxshift took place in April 2016 (see our infoflash of 15 February 2016).

In a next infoflash we will discuss the impact of this 2nd taxshift phase on a tax level.

Reminder: determining the category

The effect of the taxshift is different for all employers. The percentage of the base social security contributions and the structural reduction amounts depend on the category you belong to. These categories are the structural reduction categories.

As a reminder, these are the categories:

Percentages of the base social security contributions

From 1 January 2018 these are the base social security contributions:

On 1 January 2018 the percentage does not decrease for category 2.

On top of the base contributions, special contributions are due of which the percentage depends on your activity sector.  

Structural reduction

From 1 January 2018 these are the amounts of the structural reduction:

 So the amounts are modified, but we also remark that:

• the base amount for the categories 1 and 3 (non-handicapped) is abolished
• the ‘high wages’ supplement for the categories 1 and 3 (as well handicapped as non-handicapped) is abolished

* amounts subject to publication in the Belgian Official Gazette

Example

In this example we calculate the effect of the taxshift on the employer costs for an employer coming under JC 200 and more specifically for an employee earning a gross monthly wage of €3,000.

This employer belongs to category 1.

Base social security contributions:

• In 2017 the base employer social security contributions that are due for this employee each quarter amount to €2,700 (= 30% x €9,000).
• In 2018 the base employer social security contributions that are due for this employee each quarter will amount to €2,250 (= 25% x €9,000).

Structural reduction

• Since 1 July 2017 the amount of the structural reduction must be calculated as follows: €438 + 0.1369 x (7,178.76 – S) + 0.0600 x (W-13,942.47)
  
  The structural reduction in our example amounts to €438/quarter. The employer is only entitled to the base amount of the quarterly reduction (€3,000/month is neither a low nor a high wage).
• From 1 January 2018 the structural reduction must be calculated as follows: 0 + 0.1280 x (8,850.00 – S)
  
  For this employee the employer will no longer be entitled to the structural reduction.

Conclusion

So the lower percentage of the base employer social security contributions is countered by the reform of the structural reduction.

Besides, in certain sectors wages will be indexed on 1 January 2018. As a consequence the amount of the base employer social security contributions will rise again.