Given an annual turnover of EUR 100 000, what will your net income look like in the coming years if you continue to operate as an independent natural person (znp) or decide to establish a company.

For a gross annual turnover of EUR 100 000, it is not yet interesting to establish a company in 2023. But that does change from 2024.

In other words, journalists, writers, graphic designers, ... and anyone else who can still take advantage of the tax-favored copyright regime in the coming years would do well, during 2023, to prepare for what is to come in 2024 and 2025.

The pension capital of the self-employed natural person who makes deposits into a pension agreement self-employed (POZ) is naturally higher. Yet the total net income of the self-employed person with a management company at the end of the career is higher. We also modeled that 😊

Thus, in this blog we have not analyzed the situation of those who will no longer be able to benefit from the favorable copyright regime as of January 1, 2024. Now, a good listener immediately sees that there too the establishment of a company will be appropriate.

Copyright anno 2023: to recap

Things have changed in terms of the copyright tax favor system. With all the attention in recent months, that's an open door.

Still, let me briefly recap what exactly has changed. Two things are important for this blog.

• Introduction of a relative cap. The copyright portion may not exceed a certain percentage of the total gross fee (excl. VAT).
  
  For 2023 revenues, the copyright transfer fee may not exceed 50% of the total gross fee (excl. VAT). For 2024 revenues, it is a maximum of 40%. And for 2025 revenues, it is a maximum of 30%.
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• Introduction of an absolute ceiling. The copyright portion may not exceed a certain amount.
  
  That amount is equal to (non-indexed) 37 500 EUR gross. For 2023, that indexed amount is equal to EUR 70 220.

With the introduction of the relative and absolute ceiling on copyright remuneration, it may at some point become more financially attractive to establish a company as an independent natural person (znp).

When taking personal income tax measures - such as limiting copyright transfer fees - the government sometimes loses sight of the impact of corporate income tax. Corporate and personal income taxes are communicating vessels.

When it becomes more financially interesting for the self-employed person to set up a company (read: the self-employed person pays less taxes overall by setting up a company), the self-employed person in question will normally set up a company.

In this blog, we calculated the annual turnover (excluding VAT) from which an independent natural person should best consider forming a company.

Before you read on

Before you read on, these are the assumptions on which we based our calculations.

We took into account:

• a single person with no children;
• EUR 35 000 (excluding VAT) in costs. We divided these costs into the percentage of royalties for an independent natural person to determine the net taxable professional income;
• in the context of a company we have taken into account the application of VVPRbis;
• the desired liquid net on a monthly basis is EUR 2 500. That amount already includes a flat expense allowance of EUR 230 per month and EUR 160 per month in meal vouchers to achieve that net;
• for the manager of a company, a financial envelope of 25% was used for copyright remuneration. Within that financial envelope, the maximum percentage allowed for royalties for that assessment year was allocated;
• maximum pension is accrued within the second pension pillar (supplementary pensions);
• we have assumed a new activity so that we can abstract from the new regulations regarding the average revenue due to copyright over the past four fiscal years;
• we cannot predict the index for 2024 and 2025, so we cannot calculate the indexed absolute ceiling with sufficient accuracy. Therefore, we have taken into account the absolute ceiling as applicable for 2023 revenues, specifically EUR 70 220 (excluding VAT).

Assessment year 2024 - tax year 2023

In 2023, it is best to establish a company only when your gross annual turnover is at least EUR 110 000 (excluding VAT).

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Assessment year 2025 - tax year 2024

If you establish a company in 2024, you will already realize a net gain of EUR 1 000 for an annual gross turnover of EUR 82 500 (excl. VAT). For a turnover of EUR 100 000, you make a net gain of about EUR 4 000 when you establish a company.

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Assessment year 2026 - tax year 2025

For a self-employed person who can claim copyrights, it is (given our assumptions) always financially advantageous in 2025 to form a company. With a gross annual turnover of EUR 100 000, you do a net benefit of over EUR 7 000 per year when you decide to form a company.

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Wondering how you can optimize your net income in 2023, 2024 and beyond?

Well, let's meet online over a cup of coffee (or tea 😊).

Would you rather discover for yourself how to best shape your net income based on your characteristics and preferences?

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