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What are the incentives in Belgium for hiring a first employee?

What are the incentives in Belgium for hiring a first employee?

To boost the economy and create a more attractive financial environment for companies, the Belgian Government has implemented so-called ‘target group reductions’ several years ago. It is a series of support measures to stimulate Belgian employers to hire staff and attract or retain employees from certain target groups.

Currently there are a number of reductions in place at regional level. These are namely for employing young people (under 25), older people (over 55) and people with an occupational impairment. There is also an important reduction at federal level that allows employers in Belgium to receive an indefinite exemption from social security contributions for hiring their first employee.

The employer is normally liable for a 25% social security contribution on top of the gross salary, while the employee’s gross salary itself is subject to a 13.07% contribution.

Already since 2016, new employers can receive this exemption for their first employee. For the next five employees there are also several reductions that are time-bound and are limited as follows:

2nd 1 – 5€ 1,550.00 per quarter
3rd – 6th 1 – 5€ 1,050.00 per quarter
2nd – 6th 6 – 9€ 1,050.00 per quarter
2nd  – 6th 10 – 13€ 450.00 per quarter

Only ‘new’ employers can benefit from the exemption, which means that they have to meet the following conditions:

  • The company never have had any staff before, and therefore has never been required to pay any social security contributions for employees;
  • The employer may not have been subject to Belgian social security during the four quarters preceding the quarter in which the first employee is recruited;
  • The company is not linked to another company which already employs or employed personnel in Belgium over the past 12 months (in case they would constitute a so-called ‘technical business unit’).

It is also important to mention that these reductions concern an exemption for the employer’s contributions. The employee continues to owe the social security contributions as usual.

The first employee exemption is also not personalized. In other words, it is possible that the first employee that initially entitled the employer to the reduction is no longer with the company. In that case the exemption will shift to the ‘next’ employee in line. Your Belgian payroll provider will normally follow up on these matters and examine in which way the reduction can be optimized each quarter.

While the target group reduction for a 2nd to 6th employee will remain in place after 1 January 2021, it is still unclear at this moment whether the indefinite exemption for a first employee will still apply after 31 December 2020. Although it seems very likely, it has not yet been decided whether the Belgian Government intends to extend the current measure in 2021.

If you intend to hire your first employee but you are still in doubt about doing so in 2020 or to better wait until 2021, it is therefore advisable to still do it this year.