Understanding Payroll

Payroll services encompass everything related to salary calculation and wage calculation, employee payment, and filing withholding taxes and social security contributions.

In Belgium, workers fall into three employment statuses: employee, civil servant, or self-employed, each with its own legal framework. You can switch from one statute to another or combine several statutes.

Examples of types of employees in the private sector requiring salary administration include blue-collar employees, white-collar employees, directors, expatriate employees (or expats), posted workers (or seconded employees) and split payroll employees.

Managed Payroll Services

It is remarkable that almost all employers in Belgium are outsourcing their payroll to a specialized external company, known as managed payroll service provider.

Managed payroll ensures compliance with payroll regulations by having an external vendor handle salary processing and management. This includes paying employees, managing social security contributions, withholding taxes, and other deductions, as well as overseeing all payroll processes, data, and records.

Managed payroll services can be provided by social secretariats (sociaal secretariaat in Dutch or secrétariat social in French) and social service providers (sociale dienstverlener in Dutch or prestataire de services sociaux in French). Both type of providers can submit returns to the National Social Security Office or NSSO (RSZ in Dutch or ONSS in French). It’s essential to choose a provider that matches your needs, with language and service quality being critical factors.

Starting Payroll Administration

Most foreign employers don’t use Employer Of Record (EOR) or umbrella payroll services because it is not compliant with Belgian legislation. There is a better alternative.

In Belgium, it is not necessary to setup a legal entity when a foreign employer wants to hire employees. Almost always, they operate as employer without establishment in Belgium (or non-residential employer).

If you hire employees in Belgium, you have to follow a number of procedures and keep social documents up to date. Because payroll administration is a complex matter, it is not recommended to handle it yourself. For this, rely on a payroll provider that can serve you in English language.

They will assist you with the Dimona declaration for local employees, or the Limosa declaration for posted employees, prior to the starting date of the employees.

Depending on the business activity, every employer falls under a specific joint industrial committee. The rules of a joint industrial committee are usually binding for all employers and apply to all employees. Often, white-collar employees and blue-collar employees working in the same company are resorting under another joint industrial committee.

Functioning of Social Security in Belgium

The social security is handled by the National Social Security Office or NSSO, that are based in Brussels.

Belgium’s social security system is primarily financed by contributions from employers and employees. While employer social security contributions were previously high, employment-promoting measures have since reduced these contributions. New employers, for example, benefit from reductions on social security contributions for their first hires.

Belgium has also signed several social security agreements with other countries, benefiting seconded employees.

Employee Benefits in Belgium

The payment of salaries and wages in Belgium must be conducted in accordance with the regulations established in the law on the protection of employees’ wages. Besides salary, almost all employees get fringe benefits.

Due to the high tax burden on labor, employee benefits are common and popular in Belgium. These extra-legal benefits, such as group insurance, company cars, and meal vouchers, can be tax-exempt and free from social security withholdings, provided specific conditions are met.

The EU directive on pay transparency requires organisations to put in place fair and equal pay policies. Member States have until 2026 to transpose the directive into national law.

International Employment

The capital city of Brussels is an international capital. It is home to a number of important international institutions such as the European Parliament, the European Council, the Council of the European Union and the European Commission. NATO and the United Nations also have several offices and liaison offices in Brussels. Numerous multinationals have their European or global headquarters in Belgium. And this attracts staff from other countries as well as diplomats, lobbyists, journalists, students and international schools.

For this reason, international employment in Belgium is significant, and there is also demand for international payroll for expatriate workers, split salary employees and posted workers.

Expatriate Workers (expats)

Special rules also exist for an expat, including tax benefits on income and property, foreign business travel exclusion and expatriate allowances.

Split Salary Employees

A salary split is quite common. This is logic because Belgium is a small country with neighboring countries such as The Netherlands, France, Luxembourg, United Kingdom and Germany. An employee working in multiple countries often obtains significant tax benefits. A simultaneous employment situation requires a split salary payroll.

Posted Workers

A company whose registered office is not established in Belgium can temporarily post workers to Belgium. The employer-employee relationship remains intact throughout the posting. In this case, it must respect the employment conditions applicable in Belgium. A posted workers salary caclulation is required.

If you have international staff, it is recommended to collaborate with a provider that also offers legal advice, immigration assistance and tax services. Use the contact sheet below, if you would like to get a referral.

Running Payroll in Belgium

Belgian salary and wage calculation is complex, prompting over 90% of employers to outsource to managed payroll providers. These providers handle all staff administration and ensure an efficient, legally compliant salary process. To minimize errors, many employers use automated time and attendance systems integrated with wage software.