The self-employed student
Enterprising students who combine their studies with independent money-making and that comply with certain conditions can, as of 1 January 2017, make use of the new self-employed student status.
The new status
Up until 31 December 2016 students who were self-employed could make use of the fact that their work was considered equivalent to a sideline activity (‘article 37’), which meant their social security contributions were discounted. But since the introduction of the new self-employed student status on 1 January 2017, these students are no longer placed on an equal footing with a sideline activity.
What exactly has changed?
The social security contributions payable by the self-employed student is dependent on the net taxable income they receive. There are three categories:
- The self-employed student is not required to pay social security contributions if his or her income is less than half of the minimum threshold for a self-employed person’s principal activity (less than €6,648.12 in 2017).
- If their 2017 income is between €6,648.12 and €13,296.25 then the self-employed student pays social security contributions amounting to 21% of that part of the income in excess of €6,648.12.
- The self-employed student who earns more than €13,296.25 in 2017 will pay the same social security contributions that every self-employed person practicing a principal activity is paying.
What are the conditions?
- If a self-employed student wishes to use this new status he or she must submit an application to the social insurance fund. In other words, the new status is not automatically implemented!Students who do not submit an application will receive a request over the course of March or April to pay social security contributions as a self-employed person practicing a principal activity. The new status replaces the existing contribution regulation known under article 37 for students. This means that self-employed students have no other available options.
- In principle, all students between the ages of 18 and 25 are eligible. They can start off as self-employed students from the quarter of the year in which they turn 18 and until the third quarter of the year in which they turn 25.
- Self-employed students must be registered with a Belgian or foreign educational institute for at least 27 credits or 17 lectures a week. The diploma they are aiming for must be accredited by the competent authorities, and applicants must furnish proof of enrolment to their social insurance fund.
- The students must also submit a declaration to their social insurance funds confirming that they regularly attend class. If they do not do so, they could lose their status as self-employed students.
- The students must perform an independent activity that does not involve a relationship of authority with an employer - or in any event, the intention to do so must exist.
How and when does the status end?
Every self-employed student keeps the special status until the end of the third quarter of the year in which he or she turns 25. It is in the fourth quarter of that year that the status is changed to a self-employed person practicing a principal activity. Even if the student graduates before he or she turns 25, the change will still only occur in the fourth quarter.
Please note: if the student drops out, his or her status will change in the quarter in which he or she quits studying.
Are social entitlements accrued?
If the self-employed student’s annual income is less than €13,296.25, then he or she does not start building up health insurance entitlements but instead remains a dependant of his or her parents for medical care. Reduced contributions can, under specific conditions, trigger the waiting time for occupational disability insurance. With an annual income of €13,296.25 or more, the self-employed student accrues the same social entitlements as a self-employed person practicing a principal activity.
A student who is employed under an employment contract for employing students will benefit from an advantageous status: the ‘student-employee’.
What has changed?
The student quota is no longer registered by days but by hours, while the Dimona declaration (Déclaration Immédiate/Onmiddellijke Aangifte – an electronic form used to register every employee starting or leaving his or her job) has also been amended.
A student who is employed under a contract for student work may work for remuneration for a given period, deviating from the standard social security contributions. Instead of these contributions, the employer and the student-employee must only pay what is known as a solidarity contribution, which is considerably less than the ordinary social security contribution.
This solidarity contribution amounts to 2.17% of the gross wages for the employee and 5.42% of the gross wages for the employer.
Until 1 January 2017 the student had a student quota of 50 days.
Since 1 January 2017 the existing quota of 50 days has been converted into one of 475 hours, during which the student may perform student work at a more advantageous social security rate. Because the days have been scrapped, if a student does not work a full day it will not have to be deducted in its entirety from the quota.
As soon as these 475 hours are exceeded, both the student and his or her employer at the time of that threshold being crossed lose their social benefit and the standard social security contributions are payable as of the 476th hour.
The balance of the student quota can be checked using the ‘student@work’ tool made available by the National Social Security Office (Rijksdienst voor Sociale Zekerheid - RSZ).
What are the conditions?
In order to make use of this preferential regime, the employer wishing to employ a student must henceforth state the number of hours the student works under the preferential regime in the Dimona declaration, instead of the number of days.
The following information must also be provided:
- a declaration of the capacity of student;
- the address of the location where the employment contract is performed, if that address differs from the employer’s registered office as listed in the Crossroads Bank for Enterprises;
- the end date of the employment contract;
- for each quarter, the number of hours (not days) during which the student works for the employer under the preferential regime for social security contributions.
Child benefits and the tax status
Certain limits must be observed for both the status of self-employed student and that of student-employee if the student does not want to lose his or her right to child benefits and they wish to remain a dependant of their parents.
What about child benefits?
In principle a student is entitled to child benefits as long as he or she is studying, up until the age of 25.
If a student works, they may work no more than 240 hours a quarter during quarters 1, 2 and 3. If that threshold is exceeded, then the student loses the right to child benefits.
In quarter 3 (the summer months) there are no restrictions to the number of hours the student works in respect of losing his or her right to child benefits.
For a student to be a dependant of his or her parents in respect of taxes, the following conditions must be met:
- He or she must be part of the family;
The self-employed student must be legally resident in his or her parents’ house on 1 January 2017 for the 2017 tax year. Even a student who is temporarily not staying at home (such as in a digs or as an Erasmus exchange student) is in the eyes of the law still part of the family.
- The student may not receive remuneration categorised as the parents’ professional expenses;As soon as the student’s remuneration is deducted as a professional expense from the parents’ income, the student is no longer a dependant of his or her parents.
- The self-employed students net taxable annual income may not exceed the following sums:
- €3,200 if his or her parents are taxed jointly.
- €4,620 if his or her parents are taxed separately and the student is not deemed to be handicapped from a tax perspective.
- €5,860 if his or her parents are taxed separately and the student is deemed to be handicapped from a tax perspective.
For the 2017 income year an initial income bracket of €2,660 from a student job is exempted from the assessment of whether the student worker remains a dependent of his parents. With respect to the remainder, the actual or fixed (20%) expenses may be deducted.
A student has an occasional gig as a model and earns €6,600 a year. Her parents are married and are consequently taxed jointly. Of the student’s income, €2,660 is exempted, and of the remaining €3,940 20% may be deducted as fixed expenses*. What is left is €3,152 in net taxable income. This means that student falls just below the threshold of €3,200 and she remains a dependant of her parents.
* Given that the actual costs are mostly less, in principle this remains the most advantageous option.