One of the most common questions IT consultants in Belgium ask themselves is whether to work under umbrella payroll (managed payroll) or through their own company (SRL/ISOC). Both structures have distinct advantages and the right answer depends on your situation, your risk appetite and how much time you want to spend on administration.
What is umbrella payroll?
Umbrella payroll, known in Belgium as managed payroll, is a structure where you work as a freelance IT consultant but are legally employed by an umbrella company such as BSH Consulting. The umbrella company invoices your client, deducts a management fee defined contractually (indicative 8%) and pays you a net salary each month.
You benefit from full employee status, including social security, paid holidays, unemployment insurance and all protections under Belgian labour law, while keeping the freedom to choose your own missions and negotiate your own daily rate.
Tip
What is an own company (ISOC/SRL)?
An SRL (Société à Responsabilité Limitée) is a Belgian private limited company. As a consultant, you invoice your clients through your own company, pay corporate tax (ISOC) on profits and extract revenue either as a director salary, dividends or a combination of both.
The Belgian corporate tax rate is 20% on the first €100,000 of taxable profit for qualifying small companies and 25% above that. To benefit from the reduced 20% rate, at least one director must draw a minimum gross salary of €45,000 per year (€3,750 per month).
Net salary comparison
For a fair comparison, consider a consultant billing at €500 per day over 20 working days per month, single, no dependants.
Umbrella Payroll
€4,156
net monthly
Own Company ISOC (max)
€5,411
net monthly, full dividend distribution
The ISOC figure assumes full dividend distribution which is not always optimal in practice. More importantly it does not account for the hidden costs of running your own company.
The true cost of your own company
| Cost item | Umbrella Payroll | Own Company (SRL) |
|---|---|---|
| Setup cost | €0 | €1,300 to €1,800 |
| Accounting fees | Included in fee | €3,000 to €5,000/year |
| VAT declarations | Handled by umbrella | Quarterly, paid to accountant |
| Corporate tax filing | Not applicable | Annual, certified accountant |
| Social security | Included (employee) | ~20.5% on net taxable income |
| Annual accounts | Not applicable | Filed with NBB annually |
| Admin time | Zero | 4 to 8 hours per month |
| Management fee | Defined contractually , indicative 8% | €0 |
Warning
Pros and cons
Umbrella Payroll, pros
- Full employee status: social security, unemployment insurance, paid holidays
- Zero administrative burden
- Paid within 5 days of timesheet approval
- No setup cost, no fixed overhead
- Access to certified fiduciaries
- CP200: double holiday pay and 13th month
Umbrella Payroll, cons
- Management fee defined contractually , indicative 8%
- Lower net compared to ISOC at high revenue
- Less flexibility for deductible expenses
ISOC, pros
- Higher net potential above €10,000/month
- Deductible company expenses
- VVPR bis: dividends at reduced rate after 3 years
- Capital accumulation in company
ISOC, cons
- €1,300 to €1,800 setup cost
- €3,000 to €5,000/year accounting fees
- 4 to 8 hours per month administration
- No unemployment insurance between missions
When to choose umbrella payroll
- Starting your freelance career
- Monthly revenue below €8,000 to €10,000
- You value security and zero admin
- Transitioning from employment to freelancing
When to choose ISOC
- Monthly revenue consistently above €10,000
- Stable client base with no significant gaps
- Planning to stay independent 3 to 5 years
- Significant deductible expenses available
Rule of thumb
Calculate your own numbers
The best way to make this decision is to calculate the exact net salary for both options based on your own daily rate, marital status and extra legal benefits.
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