More than 5% of turnover and 50% of the operating profit of Belgian SMEs goes to the government

More than half of Belgian SMEs pay at least 27.2% company tax

Brussels, 6th March 2012 – Deloitte Fiduciaire today announced the results of its latest overview of Belgium's SME sector. A survey conducted among 2600 Belgian SMEs shows that the country's government receives up to 50% of the profit generated by SMEs established in Belgium. The largest chunk of tax paid by SMEs to the government in Belgium comes from employer contributions, representing 62% of all government contributions, followed by company tax, which makes up 28% of all payments made to government. One of the conclusions to be drawn from the survey is that the government is the biggest stakeholder in Belgian SMEs. Deloitte has developed a "Tax Footprint" that measures how much businesses hand over to their largest stakeholder. Deloitte Fiduciaire also concludes from the annual financial statements of the SMEs surveyed that 70% of SMEs are again returning a profit – which itself is a strikingly strong performance so soon after the hard-hitting crisis of 2009.

The aim of the analysis by Deloitte Fiduciaire was to gain a better insight into the tax pressure placed on Belgian SMEs. The analysis itself was based on a survey of 2600 family-owned SMEs and Operating Companies that ended their financial year from 1st April 2010 to 31st March 2011 at the latest.

An overview of the main conclusions:

Belgian SMEs again paying large amounts of company tax after heavy losses in 2009 Deloitte Fiduciaire was able to conclude from the annual accounts of the SMEs surveyed that 70% of them are again recording a profit. This represents an extremely strong performance after the hard-hitting effects of the crisis experienced in 2009. Of all businesses generating a profit, more than 73% are effectively paying company tax – which is a high percentage once again. Nikolaas Tahon, Managing Partner of Deloitte Fiduciaire: "This is a high percentage because many of these profitable companies are still recovering losses that they brought forward from 2009."

Of those Belgian SMEs and Operating Companies that are paying company tax, more than half are paying at least 27.9%. One in four profit-making SMEs are even paying at least the maximum tax rate of 33.8%. A further finding was that only one in four companies are paying less than 18.6% tax on their declared profit.

Tax Footprint of Belgian SMEs: more than 5% of turnover and over 50% of operating profit goes to the government

Of course, companies hand over more to the government than company tax alone. Deloitte Fiduciaire set out the main fiscal and parafiscal burdens borne by businesses and compared them with turnover and operating profit (EBIT). Nikolaas Tahon again: "This produces a tax footprint that measures how much a company is paying its main stakeholder, the government." A summary of the main (para)fiscal contributions made by SMEs to the government is shown below:

Employer contributions and property tax indicate the extent to which the government taxes the labour force deployed by businesses and investments they make. The company tax is, of course, the advance payment that the government demands before the company is able to build up reserves or pay a dividend to shareholders.

In more than half of companies, at least 52% of every 100 EUR of operating profit (EBIT) goes to the government. And for every 100 EUR of operating cashflow (EBITDA), over 35% of that cashflow goes to the government in half of all companies. This analysis leads to the conclusion that more than half of businesses hand over more than 5.30 EUR immediately to the government for every 100 EUR of turnover generated.

Social Footprint: up to 20% of the turnover of an SME goes to the government

The Social Footprint goes a step further and calculates the social importance of a family-owned operating company. It looks at what the company also pays to the government in indirect taxes. These indirect taxes are represented in the main by payroll tax, social security contributions for employees and levies on income derived from securities. The Social Footprint can only be calculated on a company level because a great deal of unpublished information has to be analysed.

A survey of a number of SMEs in the metal industry shows that:

Naturally, these figures vary from sector to sector and company to company. It can be seen from the sample that even companies that provide services have a Social Footprint of 22 to 25%. This fact is related to their labour-intensive nature, which generates a high level of payroll tax and social security contributions.