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Bridging right 2020 : how will you be taxed?

The worldwide coronavirus crisis allowed many self-employed and companies’ directors to benefit from the bridging right during the year 2020.

The Belgian Tax Authorities recently brought some clarifications on the tax and social impacts of those allowances.

In this article, we summarize the tax rate applied to these allowances as well as the impact on the social security contributions of free-lances and directors. They benefited under different conditions, either from the « crisis » bridging right or the “relance” bridging right.

 

The « crisis » bridging right for self-employed persons

 The crisis bridging right was granted :

  • In case of partial or complete discontinuation of activities due to the government measures
  • To persons who were not forced to close their business activities but interrupted it during seven consecutive calendar days due to the coronavirus crisis

The financial benefit received are taxable at a rate of 16,5%, to the condition that the allowance does not exceed the net taxable profits of the last four periods (the such called “4×4 rule”).

In the contrary, the allowances will be globally taxable depending on the normal progressive tax rates.

The taxable allowances of the bridging right are not taken into account for the calculation basis of

the independents social contributions.

 

The « crisis » bridging right for directors

 The allowances are taxable at the normal progressive tax rates and are not taken into account for the calculation basis of the independents social contributions.

As director, you do not have to pay social contributions on the received financial benefit.

 

The « relance » bridging right

 This allowance was granted to independents to support the resumption of their activities during the months of June until December 2020.

Both for self-employed people earning profits from their activities and for self-employed directors, the services granted under the bridging right are taxed at the normal progressive rates and will never be part of the calculation basis of social contributions.

 

Tax Consult follows the news of the new measures taken and applied by the Authorities on a daily basis and is regularly in contact with the (tax) Administration. In case of question, do not hesitate to contact our team (info@taxconsult.be) or directly your file manager in order to receive a tailor-made advice adapted to your situation.

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