Employer charges represent 65% of all government contributions in the Tax Footprint of Belgian SMEs

Analysis of results of Deloitte Fiduciaire about the tax pressure on Belgian SMEs

Diegem, 18 December 2012. Today Deloitte Fiduciaire announces the results of its second 'Tax Footprint', a screening of the Belgian SME sector, which measures how much an entrepreneur leaves to her most important stakeholder. From this study, which is based on the data of 2,000 Belgian SMEs, it appears that employer charges are still the most important fiscal contributions of a SME to the Belgian government – these charges represent 65% of all government contributions. With regard to operating companies, even 70% of all government contributions are derived from employer charges. A comparison with 2010 shows there is even an increase of 3%. This is entirely in line with the rising cost of wages.

The aim of this analysis by Deloitte Fiduciaire is to obtain greater insight into the tax-related pressure being carried by Belgian SMEs. The analysis is based on data from 2,000 family-owned SMEs whose financial year ended on 31st December 2011.

An overview of the most important conclusions:

Employer charges represent 65% of all government contributions in the total Tax Footprint

The Tax Footprint counts all fiscal and parafiscal charges together and measures how much an organisation remits to the government. The paramount importance of employer charges – 65% of the total Tax Footprint – jumps immediately in the eye. Henk Hemelaere, leading partner Deloitte Fiduciaire Tax & Legal Services points out: "For companies with more than 50 employees, this component even rises up until 78%." The second most important component is the corporation tax with 25%.

In 2011, more than half of Belgian SMEs paid at least 27.2% company tax

More than half of profitable Belgian SMEs pay at least 27.2% property tax. Of Belgian management companies, more than sixty per cent pay at least 28.5% company tax, which also indicates that this highly targeted group of companies is paying more than its fair share.

Henk Hemelaeare: "One in four profit-making SMEs even pays more than the maximum rate of 33.99% Only a quarter of companies pay less than 14.6% tax on their declared profit." The notional deduction of interest plays a particular role in this and gives our Belgian SMEs a minimum amount of fiscal breathing space.

In the services sector, over half of SMEs pay at least 31.8% company tax. The shortage of 'fiscal incentives' in this sector and the large proportion of inadmissible expenses are possible explanations for this. In the manufacturing and trade sector, more than half of SMEs pay nearly 28% company tax.

The total Tax Footprint of Belgian SMEs up by more than 2%

In over half of companies, at least 53.3% or more per 100 EUR of operating profit (EBIT) goes to the government. The total Tax Footprint in terms of operating profit rose on average in 2011 by a little more than 2% compared with 2010.

The study also shows that in operating companies employing more than 10 staff, a good 60% or more per 100EUR of operating profit (EBIT) goes to the government.

On average, operating SMEs spend 25.6 EUR on payroll charges for every 100 EUR of turnover. The services sector stands out in particular here with an average of 43.2 EUR in payroll charges for every 100EUR of turnover. This clearly demonstrates the 'inflexibility' that exists between staffing costs, with related social security charges on the one hand, and the profits that Belgian SMEs make on the other.