Working on the side in 2021
What remains of working on the side like we knew it in 2018? The Constitutional Court annulled this scheme in 2020. Therefore, as from 2021, we fall back on the 'old scheme'.
How it was
In 2017 a tax and social security contributions exemption was introduced for private individuals working on the side and for work in associations. In 2018 this scheme was opened up for activities in the sharing economy.
But the Constitutional Court was of the opinion that free working on the side was unfair competition for entrepreneurs engaged in this kind of business (e.g. gardeners, small jobs, ..). The Court decided that the government should stop this as from 1 January 2021. And so it was.
How it is now
The tax and social security exemption for jobs on the side as a private individual is completely gone.
Obviously, you will not immediately become liable to tax if you give your neighbor a helping hand and get something in return. However, it may be different if you conclude a contract with your neighbor that you e.g. maintain his garden for a certain period of time. There is a chance that the tax authorities will qualify this income as miscellaneous income, which is taxed at 33%.
If you promote yourself even more, and you start to deploy larger resources, you even risk that the tax authorities will see this activity as a professional activity, making the income taxable as professional income.
Volunteers in associations
Volunteers can, as it was in the past, work for an association, but in principle they cannot receive any compensation for this.
However, expense allowances are allowed. These can be set at a fixed rate, but then they cannot exceed certain thresholds: currently these thresholds are 35,41€ per day and 1.416,16 € per year. Higher thresholds apply for certain activities. If the reimbursement you receive is higher than these thresholds, this is considered as salary and you will be progressively taxed on it.
Volunteers in sporting associations
Additionally, a law of 24 December 2020 provides for a special tax scheme for association work. However, this exception is limited to sports clubs!
This type of income from association work is taxable as miscellaneous income. Only half of the income is taxable (there is a flat-rate 50% expense allowance) and the rate is 20%.
But as mentioned, the scope is rather limited. Only the following activities qualify:
1. animator, leader, monitor... who provides sports initiation and/or sports activities;
2. sports trainer, sports instructor, sports referee, jury member, steward, terrain manager-equipment master, signalman at sports competitions;
3. sports infrastructure concierge;
4. support on a small-scale basis with regard to administration, management, logistical responsibilities;
5. small-scale assistance in drafting newsletters and other publications in the sports sector;
6. training, lectures, and presentations in the sports sector.
There are a number of other limitations to keep in mind. The person must be over 18 years old, must receive a minimum wage and have not been completely unemployed in a period before the on-the-side jobs.
Additionally, there is a maximum income that you can earn in this way, i.e. 1/12 of 3.830 € per month (amount to be indexed). For 2021, this amounts to just under 6.390 € or 532.50 € per month. For the above activities 1 and 2, the maximum amounts to 1.065 euros per month.
If the threshold of 6.390 euros is exceeded (possibly in combination with the income from the sharing economy - see below), then the income is entirely considered as professional income.
This special scheme applies for only 1 year and therefore ends on 1 January 2022.
Income from the sharing economy
Almost simultaneously with the new law for associations, a new legal scheme was also introduced for income from the sharing economy. The system is largely the same as that of 2016.
The most important elements of this renewed scheme are:
there is a flat-rate deduction of 50%;
the rate on this income is 20%;
the preferential regime only applies to recognized platforms for the sharing economy (income from non-recognized platforms is taxable as miscellaneous income at 33%);
recognized platforms for the sharing economy must also deduct withholding tax as from 1 February 2021;
all sharing platforms (recognized and non-recognized) must inform their employees about the tax and social law obligations.
For income from the sharing economy and association work together, an annual gross income threshold of 6.390 € per calendar year applies. This is the maximum amount for the allowances and due to the 50% lump sum cost deduction, only half of it is taxable. There is no monthly limit for income from recognized platforms.
Not only taxation for the employee
The current on-the-site jobs scheme not only has tax consequences for the person who does the odd jobs, helps or earns extra money. Those who do not comply with the conditions or thresholds are confronted with higher tax rates and social security contributions. But the association also becomes an actual employer with all kinds of social obligations and of course also social contributions.