Invalidity benefit and taxes

When you become incapacitated for work, you will initially receive primary incapacity benefit payments. From the second year, you will receive invalidity benefit payments. Both are a replacement income. The tax you owe on your benefit payments is automatically deducted.

Withholding tax on your benefit payments

Helan Health Insurance Fund deducts the withholding tax from your benefit payments in advance. Primary incapacity benefits and invalidity benefits are a replacement income. You must declare this replacement income in your annual tax return.

In the first year, a payroll tax of 11.11% is in principle withheld for employees and the self-employed, or 10.09% for the unemployed if withholding tax was also withheld at your unemployment institution.
From the second year onwards, no withholding tax is withheld for tax purposes. Nevertheless, invalidity benefits are not tax exempt. The settlement is made with the following year's tax assessment. By making advance payments, you can avoid a high tax bill.
A maximum of 3.5% is deducted from the invalidity benefit for the pensions sector (applicable to employees only).

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Invalidity benefit payments and taxes

From the second year you are incapacitated for work, you will be granted the 'invalidity'status. This has nothing to do with an impairment or disability. This simply indicates your long-term incapacity for work status. This 'Invalidity' status will affect your benefit. You will receive an invalidity benefit from then on. You are then also eligible for claiming additional allowances, such as the fixed sum for third-party assistance and past-service bonus.

There is no withholding taxwithheld on invalidity benefit payments. Just as with other types of replacement income, you will automatically receive a tax deduction.

Past-service bonus and third-party assistance

The past-service bonus is taxable, but no payroll tax is withheld on it. You must declare the amount of the past-service bonus on your annual tax return.

The fixed sum for ‘third-party assistance’ is not a taxable benefit payment. So, you do not have to report it on your annual tax return.

Partial return to work and taxes

Even if you are only returning to work on a part-time basis, this will affect your taxes. Little or no payroll tax will be withheld from your benefit payments. Therefore, if you receive both benefits and salary, you will receive a higher tax bill.

Are you expecting your tax bill to be higher than usual? Then we recommend that you make advance payments of the estimated tax supplement every quarter. To do so, estimate the amount of the tax you will owe with  Tax-Calc. This is the government's anonymous online calculation tool. If you make a sufficient number of advance payments, you will be entitled to a bonus and end up paying less taxes!

Want more information on pre-payments? Then visit the Federal Public Finance Department website. Or contact your regional tax department.

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Helan Independent Health Insurance Fund is the insurance agent (n° CDZ 5006c) for ‘MLOZ Insurance’, the VMOB of Independent Health Insurance Funds, (Register of Legal Entities in Brussels, 422.189.629, recognised under no. CDZ 750/01 for branches 2 and 18). View the data sheet and the General Terms and Conditions. Belgian law applies to the insurance contract. The term of the contract is whole life. In the event of any complaint, contact the complaints department of Helan Health Insurance Fund or the insurance ombudsman. For more information about purchasing this/these product(s), please contact Helan Health Insurance Fund. Helan Onafhankelijk ziekenfonds, Boomsesteenweg 5, 2610 Wilrijk, 0411.696.011, RPR Antwerpen, www.helan.be.