Change of target group reduction for the first hiring

Until now, new employers in Belgium who hired a first employee could benefit from an almost full exemption from social security contributions for this employee during the entire period of employment of this first employee. This is called the 'target group reduction first hiring’.

The purpose of the target group reduction for the first hiring was to support starting businesses and to create more jobs. Studies show that this support measure had a limited effect. Therefore, a new law was published that made fundamental changes to the target group reduction for the first hiring.   

Changes

Capped exemption

The employer's contribution for social security amounts to approximately 25% of the gross salary for a white-collar worker in Belgium. Until now, employers did not have to pay this contribution for a first hired employee. However, as from January 1, 2022 the amount of the reduction for the first hiring will be capped at € 4,000  per quarter. This target group reduction may still be applied unlimited in time.

No transition period is foreseen in the new regulations. Current reductions for first hirings, which until now have benefited a near-full exemption, will switch to the lump sum from January 1, 2022 onwards.

In practice, the new scheme only affects gross monthly wages of at least € 5,333  a month. For a white-collar worker who earns a maximum of € 5,333 gross per month, the employer will not have to pay social security contributions. For white-collar workers with a higher gross monthly salary, the employer will have to pay social security contributions on the part exceeding the exemption of € 4,000. The following example will make this clear.

Example: A white-collar worker earns  € 5,333  gross per month. This is € 16,000  per quarter. We subsequently take 25% of € 16,000. This is 4,000. The first € 4,000 is exempt from social security contributions. 

If you have an employee with a target group reduction first hiring, you do not have to take any action yourself. We will automatically calculate the capped exemption for you. If the salary of the employee, for whom you currently benefit the target group reduction, exceeds the salary cap of € 5,333, take into account that your salary costs will increase.

Concepts

The new law also defines the term 'new employer'. A new employer is an employer who has never been subject to Belgian social security, or who has not been subject to it for at least 12 consecutive months preceding the starting date of the first employee. Moreover, the company may not belong to the same so-called ‘technical business unit’ with another company.

The term ‘technical business unit’ is also explicitly defined from now on. Two or more companies form a technical business unit together if there is a social link (at least one common person in the companies) and if there is a socio-economic interdependence (this is assessed on the basis of activities, location, clientele, material, personnel management, etc.).

Second to sixth hiring

Employers are entitled to a target group reduction for the first 6 hired employees. The target group reductions for the second to the sixth hirings remain unchanged. For these employees, the employers benefit from a lump-sum reduction that is valid for a fixed period.

Overview

Finally, we give a brief overview of the target group reductions from January 1, 2022 onwards. The following amounts are exempt from social security contributions on the employers' side.

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