belgian salary calculation in 2007

1	                                INTRO
2	
3	The salary calculation in Belgium has 5 steps that I will call by their
4	respective french/dutch names:
5	
6	'brut ONSS/RZW brutto'
7	
8	  The calculation of the brutto salary that will be submitted to 'ONSS/RZW'.
9	  This is not the same as the brutto salary, as some payments, e.g. the 8th and
10	  the following days of sickness leave are excluded from this sum, as well as
11	  the money paid for the period of annual vacations, whatever that means. 'brut
12	  ONSS/RZW brutto' is equal to 108% of brutto for blue collars and to 100% for
13	  white collars.
14	
15	'cotisation ONSS/RZW bijdrage'
16	
17	  The sum due to ONSS/RZW. It is generally 13.07% of the 'brut ONSS/RZW
18	  brutto'.  As usual, there are many exceptions, e.g. pensions have the
19	  ONSS/RZW tax to 7.50%, unemployment money has the ONSS/RZW tax at 0.87%.
20	
21	'imposable/belastbaar'
22	
23	  The brutto salary as submitted to the Ministry of Finance. This is what is
24	  left from 'brut ONSS/ONSS brutto' once 'cotisation ONSS/RZW bijdrage' has been
25	  extracted. This is the only amount that will be taken into account by the
26	  Ministry of Finance while calculating the income tax aka 'IPP/PB' aka 'impot
27	  des personnes physiques/personenbelasting'.
28	
29	'précompte/bedrijfsvoorheffing'
30	
31	  The monthly amount due to the Ministry of Finance directly. It is actually an
32	  advance that is calculated to match as close as possible the future 'IPP/PB'
33	  tax by the end of the year. Naturally, the 'précompte/bedrijfsvoorheffing'
34	  calculation uses the 'imposable/belastbaar' as the starting point. The exact
35	  calculation of 'precompte/bedrijfsvoorheffing' is impossible. The employer
36	  has no means to know whether you will die or marry during the current year or
37	  that you pay your mortgage. These factors, as well as a few dozens of others
38	  heavily impact your 'IPP/PB'. This is why, after one year and half, you get
39	  your cashback or a heavy bill from the Ministry of Finance.
40	
41	'net/netto'
42	
43	  This is what is left after 'précompte/bedrijfsvoorheffing' has been withdrawn
44	  from the 'imposable/belastbaar'. It is also the amount you see flowing into
45	  your bank account.
46	
47	Let us start by introducing shorter names for the terms explained before. We'll
48	gain in clarity once the actual formulas will become more and more complex.
49	
50	 * 'brut/brutto' => brutto
51	 * 'brut ONSS/RZW brutto' => ss_brutto
52	 * 'cotisation ONSS/RZW bijdrage' => ss_contribution
53	 * 'imposable/belastbaar' => taxable
54	 * 'précompte/bedrijfsvoorheffing' => withholding_tax
55	 * 'net/netto' => netto
56	
57	Following the previous explanation, here are the simplest possible formulas for
58	the brutto-to-netto calculation:
59	
60	  1. brutto = ss_brutto
61	  2. ss_brutto * 0.1307 = ss_contribution
62	  3. brutto - ss_contribution = taxable
63	  4. tax(taxable) = withholding_tax
64	  5. taxable - withholding_tax = netto
65	
66	By now, we know almost everything to do the brutto-to-netto calculation for the
67	simplest case, the only information missing is the meaning of tax(), which is
68	the formula to calculate the 'withholding_tax' so that it matches the yearly
69	income tax as closely as possible.
70	
71	                        WITHHOLDING TAX
72	
73	The calculation of the 'withholding_tax' is done in 4 steps:
74	
75	 * calculation of the yearly taxable income => 'yearly_taxable_income'
76	 * calculation of the netto yearly taxable income => 'netto_yearly_taxable_income
77	 * calculation of the base tax => 'base_tax'
78	 * application of the tax reductions => 'tax_recutions'
79	 * calculation of the 'withholding_tax' itse;f
80	
81	calculation of the yearly taxable income
82	
83	  For emoployees and workers, this is generally done by multiplying the 'taxable'
84	  by 12 and rounding it down to the nearest multiple of 15.
85	
86	calculation of the netto yearly taxable income
87	
88	  This is basically about deducing the so called fixed professional expenses
89	  that are arbitrarily set to the following:
90	
91	  0...4.880,00  25%
92	  4.880.01...9.700,00  10%
93	  9.700.01...16.140,00  5%
94	  16.140,01...57.006,67  3%
95	  57.006,57...∞  0%
96	
97	  That is, for the yearly taxable income of 20.000, we substract 1.220 EUR for
98	  the first 4.880,00 EUR, then -- 482 EUR for the second range, 322 EUR for the
99	  3rd range and 115,80 for the 4th range.
100	
101	calculation of the base tax
102	
103	  The base tax is then calculated using the table below.
104	
105	  0...7.430,00  26,75%
106	  7.430,01...10.090,00  32,10%
107	  10.090,01...14.620,00  42,80%
108	  14.620,01...32.280,00  48,15%
109	  32.280,00...∞  53.50%
110	
111	  Since the first 5140.00 are not taxed, the result is reduced by 1374.95, which
112	  is 5140*0.2675. It is important to remember that 1374.95 should be deduced after
113	  the tax is calculated upon the table above and before the reductions are applied.
114	
115	  There is a special case. If the partner of the person has no income or her
116	  income is less that 110 EUR per month, it is possible to transfer 30% if the
117	  income of the person to the partner. The maximum transferable amount is
118	  8720.00.
119	
120	  In this case, we calculate two yearly taxes, one for the taxpayer and the
121	  other for his partmner and sum them up before applying the reductions.
122	
123	
124	application of the tax reductions
125	
126	  The reductions on the yearly tax are quite complex. We'll try to cover the
127	  basics here.
128	
129	  Here is a list of reductions the children that the person is in charge of:
130	
131	  0 => 0
132	  1 => 348.00
133	  2 => 948.00
134	  3 => 2520.00
135	  4 => 4620.00
136	  5 => 6828.00
137	  6 => 9036.00
138	  7 => 11232.00
139	  8 => 13608.00
140	
141	  In case there is more than 8 children, each child adds 2460.00 to the total
142	  of the reduction. Each impared children counts as two.
143	
144	  Alongside the children's reduction, there are 7 other types of reductions.
145	
146	  1 252.00 for people living alone or with an unemployed partner
147	  2 348.00 for widows and single parents
148	  3 348.00 for handicapped
149	  4 708.00 for people having dependant persons > 65 y.o.
150	  5 348.00 for people having dependants
151	  6 1098.00 for people whose partner earns less thatn 183 EUR per month
152	  7 2196.00 for people whose partner has less than 366 EUR in pensions
153	
154	  In case someone participates in a group insurance plan or has a death
155	  insurance, they can reduce the 'withholding_tax' by 30% of their group
156	  insurance bill.
157	
158	calculation of the 'withholding_tax' itself.
159	
160	  This is done by the division of the yearly tax by 12. No magic here.
161	
162	Let us give formal names to the abovementioned four concepts as well:
163	
164	 * yearly taxable income => 'yearly_taxable_income'
165	 * netto yearly taxable income => 'netto_yearly_taxable_income
166	 * base tax => 'base_tax'
167	 * tax reductions => 'tax_recutions'
168	
169	                          EMPLOYMENT BONUS
170	
171	We will now have to take a step back and look closer at the calculation of
172	'ss_contribution'.  Private sector workers do effectively pay 13.07% of their
173	'ss_brutto' to the Social Security. However, there is a number of reductions.
174	Most are industry-specific. There is only one that applies salaries under
175	2076,63 and that is called 'bonus à l'emploi/werkbonus'.
176	
177	This reduction is calculcated in 3 steps:
178	
179	  * calculation of 'salaire mensuel de référence/montly reference salary'
180	  * calculation of 'montant de base de la réduction/base reduction amount'
181	  * calculation of the actual amount of the reduction
182	
183	'salaire mensuel de référence/monthly reference salary'
184	
185	  This value can be calculated exactly only and the end of the pay period. For
186	  the sake of simplicity, we can assume that it is equal to 'ss_brutto'.
187	  Subsequently, we will abbreviate the 'monthly reference salary' to S.
188	
189	'base reduction amount'
190	
191	  This is calculated with the data from the table below:
192	
193	monthly salary      worker                            employee
194	
195	   0    .. 1283.91  154.44                            143.00
196	1283.91 .. 2076.63  154.44-(0.1948*(S-1283.91))       143.00-(0.1804*(S-1283.91))
197	2076.63 .. ∞        0                                 0
198	
199	For full-time employees and workers, the 'base reduction amount' is equal to
200	the 'employment bonus'. Part-time workers should be reviewed on a case-by-case
201	basis.
202	
203	              ADDITIONAL SOCIAL SECURITY CONTRIBUTION
204	
205	This is a supplementary contribution that is supposed to be paid by high
206	salaries. Practically, the majority of the salaries is entitled to this payment.
207	
208	The rates exist in two flavours: for a single-revenue family and for a
209	double-revenu family. There can be a minumum and a maximum amount imposed.  The
210	percentage is calculated on the salary minus the lower boudary of the
211	applicable salary range. For a monthly salary of 3000, a single-revenue
212	contribution would be
213	
214	  18.60+(3000-2190.19)*0.011, that is, 27.507 or 27.51, if rounded.
215	
216	montyly salary        double rev.   single rev.     min.    max.
217	
218	   0    .. 1095.09    0              0               -       -
219	1095.10 .. 1945.38    9.30           0               -       -
220	1945.39 .. 2190.18    9.30 + 7.6%   18.60 + 7.6%     9.30    -
221	2190.19 .. 6038.82   18.60 + 1.1%   18.60 + 1.1%    51.64   60.94
222	6038.83 .. ∞         51.64          60.94