Taxing Wages - Belgium Tax burdens on labour income The tax burden on labour income is expressed by the tax wedge, which is a measure of the net tax burden on labour income borne by the employee and the employer.

TAX WEDGE ON LABOUR INCOME

(𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞 𝐭𝐚𝐱 + 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞 𝐚𝐧𝐝 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐫 𝐬𝐨𝐜𝐢𝐚𝐥 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬 (𝐒𝐒𝐂𝐬)) − 𝑭𝒂𝒎𝒊𝒍𝒚 𝑩𝒆𝒏𝒆𝒇𝒊𝒕𝒔

𝐓𝐨𝐭𝐚𝐥 𝐥𝐚𝐛𝐨𝐮𝐫 𝐜𝐨𝐬𝐭𝐬 (𝐠𝐫𝐨𝐬𝐬 𝐰𝐚𝐠𝐞𝐬 + 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐫 𝐒𝐒𝐂𝐬)

Single worker

Belgium has the highest tax wedge among the 34 OECD member countries. The average single worker in Belgium faced a tax wedge of 55.6% in 2014 compared with the OECD average of 36.0%.

In Belgium, income tax and employer social security contributions combine to account for 81% of the total tax wedge, compared with 77% of the total OECD average tax wedge.

Average tax wedge: average single worker, no children

One-earner married couple with two children

The tax wedge for a worker with children may be lower than for a worker on the same income without children, since many OECD countries provide benefits to families with children through cash transfers and preferential tax provisions.

Belgium has one of the highest tax wedges in the OECD for an average married worker with two children at 40.6%, which compares with the OECD average of 26.9%.

Child related benefits and tax provisions tend to reduce the tax wedge for workers with children compared with the average single worker. In Belgium in 2014, this reduction (15 percentage points) was greater than the OECD average (9.1 percentage points).

Average tax wedge: One-earner married couple at average earnings, 2 children

OECD Average, 36.0

-5

5

15

25

35

45

55

65

Employer SSC Employee SSC Cash transfer Income tax Average tax wedge (%)%

OECD Average, 26.9

-15

-5

5

15

25

35

45

55

Employer SSC Employee SSC Cash transfer Income tax Average tax wedge (%)%

Tax burden trends between 2000 and 2014

In Belgium, the tax wedge for the average single worker decreased by 1.5 percentage points from 57.1% to 55.6% between 2000 and 2014. During the same period, the average tax wedge across the OECD decreased by 0.7 percentage points from 36.7% to 36.0%.

Since 2009, the tax wedge for the average single worker decreased by 0.1 percentage point in Belgium. During this same period, the tax wedge for the average single worker across the OECD increased by 0.9 percentage points.

Average tax wedge over time for a single worker

Employee tax burdens on labour income The employee net tax burden is a measure of the net tax burden on labour income borne directly by the employee.

EMPLOYEE NET TAX BURDEN

(𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐞 𝐩𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞 𝐭𝐚𝐱 𝐚𝐧𝐝 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞 𝐬𝐨𝐜𝐢𝐚𝐥 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬) − 𝑭𝒂𝒎𝒊𝒍𝒚 𝑩𝒆𝒏𝒆𝒇𝒊𝒕𝒔

𝐆𝐫𝐨𝐬𝐬 𝐰𝐚𝐠𝐞𝐬

In Belgium, the average single worker faced the highest net tax burden among the 34 OECD member countries at 42.3% in 2014 compared with the OECD average of 25.5%. In other words, in Belgium the take-home pay of an average single worker, after tax and benefits, was 57.7% of their gross wage.

Taking into account child related benefits and tax provisions, the employee net tax burden for an average married worker with two children in Belgium was reduced to 22.9% in 2014, compared with 14.8% for the OECD average. This means that an average married worker with two children in Belgium had a take-home pay, after tax and family benefits, of 77.1% of their gross wage compared to 85.2% for the OECD average.

Average employee net tax burden

Contacts David Bradbury

Centre for Tax Policy and Administration Head, Tax Policy and Statistics Division David.Bradbury@oecd.org

Maurice Nettley

Centre for Tax Policy and Administration Head, Tax Data & Statistical Publications Maurice.Nettley@oecd.org

Dominique Paturot

Centre for Tax Policy and Administration Statistician Dominique.Paturot@oecd.org

55.6

36.0

30

35

40

45

50

55

60

Belgium OECD - Average%

OECD single average, 25.5

OECD married average, 14.8

0

5

10

15

20

25

30

35

40

45

Single worker One-earner married couple, 2 children%