How much tax do you pay as a self-employed person?

The question is simple, but the answer is complex. It depends in particular on whether or not you work as part of a company.

COMPANY OR NOT?

A self-employed person can work alone or as part of a company. There are different things to consider in this choice:

  • additional protection (e.g. SARL)
  • no accounting requirements (e.g. SNC)
  • size of profits
  • etc.

Corporate tax rates are lower than personal income tax rates. If your self-employed activity generates considerable profits, then it is best to create a company. Otherwise you will pay a high rate of personal income tax.

Corporate tax rates

  • The basic corporate tax rate will decrease from 29.58 % in 2018 (2019 taxation year) to 25% in 2020 (2021 taxation year).
  • For SMEs, the rate on the first bracket of €100,000 of profit will be 20.40 %, which will decrease to 20% as of 2020. For this, they must meet a certain number of conditions. Two important conditions are that: 
    • At least one manager must receive a remuneration of at least €45,000. If the taxable result is lower than €45,000, then the remuneration of a manager must be equal to the amount of this result. 
    • More than half of the shares must be owned by private persons.
  • Until present, a company lost the right to a 'reduced rate' when it paid more than 13% of paid-up capital as dividends. This rule no longer applies.
  • The supplementary crisis contribution will be reduced to 2% as of 2018 and will disappear as of 2020(2021 taxation year).

Corporate tax is paid from company profits.

Personal income tax rates (2019 income)

Income bracket

Rate

€ 0,00 - € 13.250,00

25 %

€ 13.250,00 - € 23.390,00

40%

€ 23.390,00 - € 40.480,0

45%

As of € 40.480,0

50%

Personal income tax is paid from the salary which you receive from the company.

SPEAK WITH YOUR ACCOUNTANT

You should discuss the most advantageous method. There are other ways to use money from your company.

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