How to increase your income as a freelancer with fringe benefits?

Are you a fulltime freelancer or do you run a one-man business? You are probably wondering how to increase your net taxable income while paying as little tax as possible? As a freelancer, you are entitled to fringe benefits, and this is exactly the wage optimisation you need.

What are extralegal benefits?

Extra-legal benefits are additional benefits you can grant yourself as a freelancer on top of your income. The advantage of fringe benefits is that they are taxed less than your salary. This ensures that the tax and parafiscal burden on your salary as a self-employed person will be reduced.

Extra-legal benefits can take the form of vouchers such as the very famous meal voucher but also in-kind such as a company car and more. Below, we list all the fringe benefits for self-employed workers or sole proprietors for a more attractive pay package.

Meal vouchers

Everyone knows them by now, and rightly so, as they are Belgians’ favourite fringe benefit. But did you know that freelancers are also entitled to them? At a time when the effects of inflation are still being felt, meal vouchers are an excellent way to maximise your purchasing power! Not only because they can be used as a means of payment in many restaurants and food shops, but also because they are very beneficial for tax purposes.

In fact, amounts received in this form are not subject to taxes and social security contributions and are partially exempt from income tax. Have you not yet granted yourself this benefit? Find out more about meal vouchers.

Benefits in kind

Car, internet subscription, phone or laptop: these are the benefits in-kind you can register as freelancer under your company for both private and professional purposes. But there are other benefits, such as a partial reimbursement of rent or electricity, water or heating costs. These housing benefits are win-win: you enjoy the benefits on a daily basis, while you can deduct a chunk of the expenses from your income.

In-kind benefits are considered taxable professional income. They are therefore subject to personal income tax and social security contributions.

Pension benefits

Another way to optimise your wealth is through deferred income, such as pension savings or a supplementary pension on top of your statutory pension. Supplementary pension schemes can offer specific tax advantages because they are taxed less than salary income. Therefore, the amounts will not be paid to you until your retirement. We are talking about long-term optimisation here, as you have to wait before you can enjoy these benefits.

The 4-in-1 package for freelancers

With this fringe benefit, you can ensure that €2150 of your income is 100% exempt from social contributions. Monizze offers a 4-in-1 package specially designed for the self-employed that is a mix of meal vouchers (€1750), eco vouchers (€250/year), Activ’ vouchers (€100/year) and gift vouchers (€40/year). You benefit from numerous advantages and optimise your income.

Would you like to find out more about what exactly Activ’ is, what gift vouchers mean or what the 4-in-1 package is in the first place? Read more about it!

Annuities and dividends

Dividends are taxed differently from salaries and can offer tax advantages in certain situations. Just a reminder, a dividend is a part of the profit distribution. Therefore, it is not considered a salary and is not subject to social security contributions.

A bonus, on the other hand, is a profit distribution that you can pay out to yourself as a company director at the end of your sole trader’s financial year. Like a salary, it is subject to income tax, but in some cases, it can be a benefit as a company director.

These two benefits are complex and can have significant implications. Want to put them to good use? Get advice from your accountant.

Stock options

Stock options allow people running a company to buy shares in the future at a predetermined price. If their value increases, this can be a way to optimise their remuneration by enjoying the capital gain when the shares are sold.

Are you interested in this? Make sure you inform yourself well as the tax rules and conditions for granting stock options can vary. It is essential to understand them well before taking the plunge.

Fringe benefits or a gross salary increase?

Why do so many self-employed company directors choose fringe benefits over a classic gross salary increase? The answer lies in their tax and parafiscal treatment. A gross salary increase is fully taxed and subject to social contributions, so little net income remains. Fringe benefits, on the other hand, enjoy more favourable tax treatment and are often fully or partially exempt from social security contributions. This way, you keep more of every euro invested.

Keep in mind, though, that not every benefit is treated the same way. Meal vouchers and eco-vouchers, for example, are exempt from social contributions, whereas benefits in kind, such as a company car, are considered taxable professional income. Always get guidance from your accountant to find the right mix.

Points of attention with fringe benefits

Fringe benefits offer many advantages, but it is worth keeping a few points of attention in mind. Because part of your remuneration runs through benefits rather than a classic gross salary, this can affect the build-up of certain rights linked to your salary. For your pension, it is therefore worth combining fringe benefits with specific formulas such as the Free Supplementary Pension for the Self-Employed (PLCI/VAPZ) or the Individual Pension Commitment (IPT/EIP).

In addition, the tax rules vary from one benefit to another and are regularly updated. Good guidance from your accountant or social secretariat helps you stay within the legal conditions and make the most of your salary optimisation.

These various fringe benefits will ensure that you can increase your income as a freelancer. Not sure with which benefit to start? Granting the 4-in-1 package for freelancers is the easiest option. In less than 5 minutes, you will have added this fringe benefit as part of your salary optimisation. So don’t wait any longer to increase your salary. You have all the assets, now all you need to do is take action!