IV. BELGIUM: A VIRTUOUS MECHANISM, YET CURRENTLY LIMITED TO SOME INCOME CATEGORIES ONLY
A. AN INCENTIVISING SYSTEM: A 10% FLAT TAX ON INCOME UNDER EUR 5,100, IN RETURN FOR AUTOMATIC REPORTING
In Belgium, income received by private individuals for service activities carried out by through online platforms is subject to ordinary law. It comes under the category of miscellaneous income , equivalent to that of the industrial and commercial (BIC) or non-commercial profits (BNC) in France. It is taxed at the rate of 33% .
In practice, this relatively deterrent tax rate results in this income being rarely reported, and therefore rarely taxed , especially as it is difficult for the administrative authorities to carry out checks on individually modest amounts that are difficult to trace (minor DIY services, gardening, babysitting, etc.).
At the initiative of the Deputy Prime Minister and Minister of the Digital Agenda, Alexander De Croo, the House of Representatives, in June 2016 adopted a bill aimed at establishing specific taxation regime for private individualsincome derived from collaborative service platforms , such as Listminut (see below) or MenuNextDoor (take-away food cooked by private individuals).
This specific system, in force since 1 March 2017 , is based on a threshold of EUR 5,100 108 ( * ) and a fixed tax rate of 10, in discharge of ordinary income tax:
- income under EUR 5,100 gross per year is taxed at the flat rate of 10% 109 ( * ) , instead of 33%. The tax is calculated and collected at source by the platform, with the service provider receiving an amount net of tax. To this end, the Act authorises the platform to ask the user for his name and his national register number , the equivalent of the tax number;
- income under EUR 5,100 gross per year is subject to income tax under the conditions of ordinary law.
As regards social contributions, a user whose income exceeds the EUR 5,100 threshold is considered to be a self-employed worker and must be affiliated to social security. He then pays social contributions on all his income, which prevents, with regard to this aspect, a distortion of competition. Affiliation as a self-employed worker is not mandatory for users of online platforms whose income is under EUR 5,100. As in the proposal of the Senate Finance Committee Working Group, a single threshold only is therefore used for taxation and social contributions .
Implementation of the mechanism is optional , with Alexander De Croo giving three arguments: its incentivising rather than coercive nature, the difficulty of imposing such a measure on foreign platforms, and in particular the potential perverse effect of an obligation on the newest start-ups where appropriate, it would be an improvement either to provide for a minimum threshold of transactions, or a waiting period (e.g. one year) before implementation.
In April 2016, the Government estimated that the measure could bring in EUR 20 million per year to the State. During his interview with the members of the Working Group, Alexander De Croo stated that approximately 90% of private individuals received income below the EUR 5,100 threshold for their service activities on collaborative platforms.
* 108 In the initial bill, the threshold was set at EUR 5,000. It was raised to EUR 5,100 when the act came into force, to take account of inflation. It should be noted that the Government initially envisaged a EUR 8,000 threshold.
* 109 Formally, the Act provides for a rate of 20%, applicable to gross income after a 50% tax-free allowance. It is a State tax, but part of the income is paid to the self-employed workerssocial security system, without however giving the taxpayer any rights to it. This fraction is therefore comparable to the CSG in France, but not to the social contributions.