Social security incentive
If you employ staff in Belgium, you are normally liable for a 25% social security contribution on top of the gross salary. The employee’s gross salary itself is subject to a standard 13.07% deduction.
Before, employers in Belgium could receive full reduction in social security contributions for an unlimited duration for their first employee. In 2022, this ‘target group reduction’ was reduced to max. €4,000 EUR per quarter, but still for an unlimited duration.
A few years ago, the system was extended and employers could benefit from a reduction of the employer’s social security contributions for the 6 first hires. The number of quarters for which the reduction applies, and the amount of the reduction varied depending on whether it was the first, second, third, fourth, fifth or sixth employee hired.
What will change in 2024?
- Limitation for first employee: the reduction for the first employee has been restricted to €3,100 per quarter (instead of the current limit of €4,000). However, this reduction continues to apply indefinitely. The limit also applies to reductions for initial hires initiated before 01.01.2024.
- No more benefit for fourth, fifth, and sixth employee: from 2024 onwards, there will be no more target group reduction available for the fourth, fifth, or sixth employee. Only the first 3 hires will still result in a reduction of employer social security contributions.
- Same reductions for second and third employee: the target group reductions for the second and third employee remain unchanged. This means that there is a reduction from €1,550 to €450 limited to a maximum of 13 quarters.
Transitional measures are being prepared for employers who have already applied target group reductions for their fourth, fifth, and sixth employees before 1 January 2024. Although the details of these transitional measures still need to be determined, it is expected that employers will continue to benefit from these reductions for the remaining duration.
In other words, in 2024, the reduction for the first employee remains but with a lower limit, while there is no reduction anymore for the fourth, fifth, and sixth employee. Employers are advised to consider these changes when planning new hires after 1 January 2024.