How is the crisis-bridging entitlement taxed?

If, as a self-employed person, you are forced to interrupt your self-employed activity in full or in part, you are entitled to this. But how is such a benefit taxed?

Type of activity and type of income

The taxation of the financial benefits you received under the crisis-bridging entitlementdepends on two things.

1. The nature of the self-employed activity
2. The type of income

The taxation of the benefit differs depending on whether you are self-employed in a sole proprietorship or a collaborating spouse).

Self-employed for profit or gain: Compensation

The crisis-bridging entitlement that you receive as a self-employed person (in a main or secondary occupation) and have applied for via the social insurance fund for self-employed persons is taxed as a compensation payment in the personal income tax. This is a payment to compensate for a forced reduction in activity.

The tax rate is 16.5%. It applies insofar as the payments do not exceed the taxable net profit or income you obtained from that no longer exercised activity in the 4 years preceding the year of the reduction of activity. Unless joint taxation with your other income is more beneficial.

Payments that, together with those other payments, exceed the taxable net income or gains for those 4 years are taxable at the progressive tax rates. Please note that this tax qualification only applies to payments to self-employed persons with profits or gains.

For your information: the crisis-bridging entitlement of the self-employed person must be indicated in the box showing profits or gains. This amount is taken into account for the calculation of the social contributions that are due. In order to treat all recipients of a bridging entitlement equally, this crisis-bridging entitlement is exempt from social security contributions.

Independent Business Leaders: replacement income

The crisis-bridging entitlement that you receive as a business owner (and therefore not as a self-employed person with profits or gains) is taxed as a replacement income, with a possible right to tax relief. That replacement income is taxable at the progressive rate.

Cooperating spouse: not taxable

The crisis-bridging entitlement that you receive as a collaborating partner as compensation for the loss of remuneration is not taxable.

Exempted compensation

Compensation paid by the regions, communities, provinces or municipalities as Corona support measures is exempt from personal income tax.

Exempted compensation is not taxable, and does not have to be declared. It is included in the assessment notice for personal income tax in order to correctly assess the means of existence of dependants, for the granting of para-fiscal allowances, etc.

The regions, communities, provinces or municipalities provide the necessary information to the FPS Finance. This communication takes place via the new 281.99 file. It does not contain any declaration codes and, as the recipient of aid, you do not have to declare the amounts shown on it.

Do you still have any questions? We’ll be happy to help you, so please don’t hesitate to contact us.