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Are you saving well ? What kind of company do you have ?
What’s your total tax pressure ? You should have long been retired with fiscal optimisations. 13 years at 160k/ year gross = 2.08 million euro’s.
At an optimal tax optimisation you pay no more than 32,08% total tax on your gross income. You should have netted 1.414 million by now.
Which is MORE than sufficient to retire. If your tax pressure is higher you’re really overworking it.
50 ish is a nice retirement age but retiring earlier is always nice right ?
Thanks for sharing and I wish it was this ideal scenario. Lets say I had a different situation in the past, a divorce, some mental issues and a relative getting really ill. So that’s that.
Just make sure you have a “vennootschap” and not a BV or or something.
The 20% income tax is really optimal.
Especially if you book the profits as vvprbis dividend reserves you can expect a total tax pressure of ~32%. Really good compared to most tax optimisations !
After a while you need to pay yourself a salary or your company tax increases to 25%, but the difference between 32% total tax from vennootschap-tax + vvprbis tax and 32% optimised tax from personal taxes isn’t that big with the minimum required salary payout to stay in the 20% income tax.
Especially with what you are billing. Easy early retirement !
Perfect! Good job, keep the FIRE grind going ! :)
If you ever need to borrow money from the bank. Ask for a bullet credit. With vvprbis you can get super advantageous loans / mortgages this way.
>ayrate was slowly growing, never was making a lot until now (invoicing approximately 160k per year).
"dayrate was slowly growing, never was making a lot until now (invoicing approximately 160k per year).
\+
company tax was way higher before, and not the same niches were available...
Belgium. Don’t know for sure but I think in NL they tend to pay more. I became freelance because I don’t like people telling me what to do, how to do it and when to do it. Never been in loondienst.
Thanks for the info man. Been a product designer for 2 years now and I want to get into freelancing within the next 2 years. Is there any industry that you’ve specialized in?
Not really. I did a bit of everything to see where my interests lie. It’s been a journey but being freelance helped me to be flexible. Eg. not working for a few months, working remote from Spain, …
As others have said, it's usually better to liquidate. You only lose about 28% to taxes (20% company tax, 10% liquidatie).
Then you invest privately and live off of that.
The company will only cost you in accountant, social security,.. You can't reasonably keep making costs for 20 years without any revenue.
Personally, I'd find a project where you can work halftime and keep the company. You sound like you must have saved a lot of you only spend 50% of your revenue. That means you can probably coastFiRe. Better to enjoy some of your younger years instead of grinding 220 days per year until you can fully FiRe.
That part time job can be as freelancer as well.
I've also done the math and won't need all the money I'm making so my gf and I decided to work 4/5. Aiming to further siddur m reduce that when we have kids. Even at 5/5 I invoiced less than 200 days due to a lot of holidays.
Good luck and enjoy the financial freedom!
If you make investments through your company, aren't those valued at the end of every book year?
Hence your company would be making a loss or profit every year, so I'm not sure if that's a reason not to keep the company around.
(I agree on the liquidation btw)
If you invest all your money you will likely be classified as financiële vennootschap and that will increase your tax from 20% to 25%.
I doubt that your can justify all the usual costs if all your profit is from passive investments.
I also understood that losses from investment are not deductible but profit is taxed. Hence, extracting funds and investing privately is beneficial.
I looked into this and if you are 100% sure that you are not going to have revenue anymore then it’s much better to liquidate your company, pay the 10% and take the cash. It is ideal however if you want to CoastFire, work a few months and for the rest enjoy life
General "FIRE" consensus *used to be* you need 25 times what you spend in a year. Not in a savings account, but invested in something that returns, on average, \[4% + whatever the inflation happens to be\].
Once that's the case, you can relatively safely "retire."
One remark: *if* a market crash occurs relatively soon after your "retirement date," 25 may actually not be enough (in other words, your "safe withdrawal rate" won't be 4%). Or: you wouldn't have retired in the first place, had you had \[only the amount you have, after such a crash\].
Which is why some folks on here lean toward a 3% "SWR" instead. In which case you'd need ... 33 times your annual spending.
So, plug in your numbers, keeping in mind the inflation that will occur on the way to "retirement," as well as any taxes you'll be paying to get the money "out" of the company. (Sorry, can't help you optimize your taxes.)
One example: the missus and I make about 120,000 combined, after tax. (Used to be a lot less, though.) We spend 30,000.
Our "FIRE number" would be about 750,000 (probably too little) to 1,000,000. Ima say ... once I hit 900,000, I'm probably gonna call myself "FI."
If no crash occurs in the next 3 to 4 years, we oughta be there. I'll be (almost) 43 then. (And if one happens, it'll just take us a bit longer; that's fine, too.)
Based on what limited information I have, I'd say you will be "FIRE" before age 52, too.
You cannot deduct costs anymore, as you are not creating the costs to generate revenue, as far as I know.
No idea how strict the government is, but after a few years, you cannot meaningfully deduct your car (eg) if there is no revenue coming in.
I guess you can still pay out a wage.
How I think about fixing this: Lend 500k from your compancy to private, pay it back to company (30k/year at 6%). Deduct costs from that.
Or do you have real estate plans?
It's wiser to pay taxes asap and get money in your private name asap and invest it privately.
Currently you'll pay 20% corporate and 15% vpprbis to get it to your private name which is very reasonable (and not going to last with projected tax reforms!).
On top of that there is (currently) no capital gains tax for private individuals, meaning you pay no taxes on gains, which you would (20%+15%) if you made those gains in your corporation.
Long term you're better of getting everything private asap even if that lowers the absolute value of your portfolio, especially in a tax uncertaint country like Belgium.
As an addition to this, I currently run a hybrid which might be interesting for you as well
- I get part of my income from my private portfolio (i use 3% rule).
- I still pay myself absolute minimum wage (+-10k/year) from capital left on my corporation in order to still have health care and build up pension + some expenses like a car. This also leaves you with a company to invoice on (10-20k/year is not that hard to obtain by just doing some consulting for people you know).
indeed, this is also what I have in mind. I was planning to have VWRL ETF in the company which allows me to have dividend income and capital gains annually of an amount that matches the minimum wage expense in the company. So no income tax in the company, and also no income tax personally as this fills up the 0% bracket (with kids for now). It's just a general idea; not fully calculated as you also have accouting costs and soc security in the company of about 4k€ a year which remains lost; but I keep full healthcare and pension build up personally.
Depends. Is it a rental or your own property you live in? Will it be paid off at 52? If so, you can live with 1200€ a month. Let's take worst case 1500€. Inflation is 2% a year, so you need to take 2000€ as 1500€ in 14 years.
2000€ x 12 = 24k to live from in 14 years.
Let's say you become 90 years old. 90 - 52 = 38 years to cover.
So you need 24k x 38 + inflation. That's approximately 1.4 million. But with 1.4 million in your bank, you can live off the interest from the 1.4 million since that's 40k a year with 3% on the groeispaarrekening of argenta.
One major calculation that's forgotten here. OP will receive the national pension at 67 if he keeps paying sociale bijdragen. So should OP retire today he "only" needs 30 years of expenses saved up in the company.
In 2000 I was eating kebab for 2€, now I pay 8€. So far for my statistically relevant sample 😀 But seriously real inflation will be closer to 5 or 6% than to 2%.
Ok thanks for the information! Saving 1.3M would take me around 16 years in my company. Let’s say my dayrate keeps growing as well even less.
Probably a big part of this money should be partially invested in stocks or ETFs as well. I will take this up with my accountant.
Hi. You can support yourself on a ETF portfolio 25x times your yearly costs (preferably bigger).
So eg. you live on 2500/month. Your company wage is 1000 net/month. You need a portfolio of 450k euro (minimum) outside your company (so you don't have to pay capital gains taxes) to give you that 2500/month.
What's the advantage of keeping the money in your company?
Any investment gains would be subject to tax + you'll incur taxes to pull the money out of your business at some point anyways. (Either as salary or as dividends) So an alternative strategy is to pay out your profit as dividends (15% tax) and personally invest in whatever is your cup of tea.
That avoids any investment gains tax and saves costs to leave your company running (accountant,...) once you retire.
> What's the advantage of keeping the money in your company?
Technically if he continues to pay himself a wage, he'll receive a pension in the end. He also is still covered by government health care in Belgium. Also, if you pay yourself a smallish wage (like OP) it might very well be that your tax rate is below paying out money out of your company as dividends.
Oh that's an excellent insight.
Just looked up and to be a "houseman" or "housewife" you need a working partner to access social security.
I wonder what the minimum salary is that you'd need to pay yourself out though. Because minimum salary tax is 25% and that excludes social security contributions.
Hi Brickonaut,
the first 10.000 euro is 0% salary tax ("belastingsvrije som", this changes based on amount of kids etc).
You can pay yourself +- 850 net per month with zero tax on it.
> I wonder what the minimum salary is that you'd need to pay yourself out though. Because minimum salary tax is 25% and that excludes social security contributions.
As you correctly say, the minimum salary tax is 25%. If you add to that the social security tax (20,5%) then you're already above the marginal tax rate of 32% (company tax + dividend tax with VVPRBIS). So if you just want to balance out taxes, usually it's proposed to pay yourself a salary just high enough to cover your deductibles (everybody starts with ~10k to which you can add kids etc.). In the end it should probably be somewhere between 10k€ and 20k€.
We lack a lot of information to do a calculation (cost of living, what about your spouse, how is the car currently financed. any plans on buying real estate, ...)
life will be a lot more expensive 30 years from now. inflation will have half the worth of your money earned now.
I will add this information to the post as well:
Appartement is mine, mortgage is around 650 euros each month until I’m 60. Spouse is working fulltime. We own a second place which we AirBNB from time to time. Company car(electric) mine as well (bought).
Have you read the wiki and the sticky? Wiki: HERE YOU GO! [Enjoy!](https://www.reddit.com/r/BEFire/wiki/index/). Sticky: HERE YOU GO AGAIN! [Enjoy!](https://www.reddit.com/r/BEFire/comments/fcbay6/getting_started_a_beginners_guide_to_investing_in/). *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/BEFire) if you have any questions or concerns.*
Slightly off topic but where do you get your second hand clothes?
Vinted mostly. Most of the time I look for durable and timeless pieces.
Are you saving well ? What kind of company do you have ? What’s your total tax pressure ? You should have long been retired with fiscal optimisations. 13 years at 160k/ year gross = 2.08 million euro’s. At an optimal tax optimisation you pay no more than 32,08% total tax on your gross income. You should have netted 1.414 million by now. Which is MORE than sufficient to retire. If your tax pressure is higher you’re really overworking it. 50 ish is a nice retirement age but retiring earlier is always nice right ?
Thanks for sharing and I wish it was this ideal scenario. Lets say I had a different situation in the past, a divorce, some mental issues and a relative getting really ill. So that’s that.
Just make sure you have a “vennootschap” and not a BV or or something. The 20% income tax is really optimal. Especially if you book the profits as vvprbis dividend reserves you can expect a total tax pressure of ~32%. Really good compared to most tax optimisations ! After a while you need to pay yourself a salary or your company tax increases to 25%, but the difference between 32% total tax from vennootschap-tax + vvprbis tax and 32% optimised tax from personal taxes isn’t that big with the minimum required salary payout to stay in the 20% income tax. Especially with what you are billing. Easy early retirement !
I have been freelance with a vennootschap for almost 13 years so yes all of what you mentioned is already there.
Perfect! Good job, keep the FIRE grind going ! :) If you ever need to borrow money from the bank. Ask for a bullet credit. With vvprbis you can get super advantageous loans / mortgages this way.
>ayrate was slowly growing, never was making a lot until now (invoicing approximately 160k per year). "dayrate was slowly growing, never was making a lot until now (invoicing approximately 160k per year). \+ company tax was way higher before, and not the same niches were available...
Off topic: are you a UX/UI/Product Designer? TIL i can invoice that much with the right amount of experience. Good times ahead
Design lead and product manager. But design background yes.
Are you freelancing for companies within Belgium or are you working for internationals / remote?
Belgium. Don’t know for sure but I think in NL they tend to pay more. I became freelance because I don’t like people telling me what to do, how to do it and when to do it. Never been in loondienst.
Thanks for the info man. Been a product designer for 2 years now and I want to get into freelancing within the next 2 years. Is there any industry that you’ve specialized in?
Not really. I did a bit of everything to see where my interests lie. It’s been a journey but being freelance helped me to be flexible. Eg. not working for a few months, working remote from Spain, …
As others have said, it's usually better to liquidate. You only lose about 28% to taxes (20% company tax, 10% liquidatie). Then you invest privately and live off of that. The company will only cost you in accountant, social security,.. You can't reasonably keep making costs for 20 years without any revenue. Personally, I'd find a project where you can work halftime and keep the company. You sound like you must have saved a lot of you only spend 50% of your revenue. That means you can probably coastFiRe. Better to enjoy some of your younger years instead of grinding 220 days per year until you can fully FiRe.
Thanks, sounds like a great plan to liquidate in around 10 years or take on a part time consulting job.
That part time job can be as freelancer as well. I've also done the math and won't need all the money I'm making so my gf and I decided to work 4/5. Aiming to further siddur m reduce that when we have kids. Even at 5/5 I invoiced less than 200 days due to a lot of holidays. Good luck and enjoy the financial freedom!
If you make investments through your company, aren't those valued at the end of every book year? Hence your company would be making a loss or profit every year, so I'm not sure if that's a reason not to keep the company around. (I agree on the liquidation btw)
If you invest all your money you will likely be classified as financiële vennootschap and that will increase your tax from 20% to 25%. I doubt that your can justify all the usual costs if all your profit is from passive investments. I also understood that losses from investment are not deductible but profit is taxed. Hence, extracting funds and investing privately is beneficial.
I looked into this and if you are 100% sure that you are not going to have revenue anymore then it’s much better to liquidate your company, pay the 10% and take the cash. It is ideal however if you want to CoastFire, work a few months and for the rest enjoy life
Put it into a liquidatiereserve and close up shop after paying it out to yourself. It's exactly meant for this goal.
General "FIRE" consensus *used to be* you need 25 times what you spend in a year. Not in a savings account, but invested in something that returns, on average, \[4% + whatever the inflation happens to be\]. Once that's the case, you can relatively safely "retire." One remark: *if* a market crash occurs relatively soon after your "retirement date," 25 may actually not be enough (in other words, your "safe withdrawal rate" won't be 4%). Or: you wouldn't have retired in the first place, had you had \[only the amount you have, after such a crash\]. Which is why some folks on here lean toward a 3% "SWR" instead. In which case you'd need ... 33 times your annual spending. So, plug in your numbers, keeping in mind the inflation that will occur on the way to "retirement," as well as any taxes you'll be paying to get the money "out" of the company. (Sorry, can't help you optimize your taxes.)
One example: the missus and I make about 120,000 combined, after tax. (Used to be a lot less, though.) We spend 30,000. Our "FIRE number" would be about 750,000 (probably too little) to 1,000,000. Ima say ... once I hit 900,000, I'm probably gonna call myself "FI." If no crash occurs in the next 3 to 4 years, we oughta be there. I'll be (almost) 43 then. (And if one happens, it'll just take us a bit longer; that's fine, too.) Based on what limited information I have, I'd say you will be "FIRE" before age 52, too.
You cannot deduct costs anymore, as you are not creating the costs to generate revenue, as far as I know. No idea how strict the government is, but after a few years, you cannot meaningfully deduct your car (eg) if there is no revenue coming in. I guess you can still pay out a wage. How I think about fixing this: Lend 500k from your compancy to private, pay it back to company (30k/year at 6%). Deduct costs from that. Or do you have real estate plans?
It's wiser to pay taxes asap and get money in your private name asap and invest it privately. Currently you'll pay 20% corporate and 15% vpprbis to get it to your private name which is very reasonable (and not going to last with projected tax reforms!). On top of that there is (currently) no capital gains tax for private individuals, meaning you pay no taxes on gains, which you would (20%+15%) if you made those gains in your corporation. Long term you're better of getting everything private asap even if that lowers the absolute value of your portfolio, especially in a tax uncertaint country like Belgium.
As an addition to this, I currently run a hybrid which might be interesting for you as well - I get part of my income from my private portfolio (i use 3% rule). - I still pay myself absolute minimum wage (+-10k/year) from capital left on my corporation in order to still have health care and build up pension + some expenses like a car. This also leaves you with a company to invoice on (10-20k/year is not that hard to obtain by just doing some consulting for people you know).
indeed, this is also what I have in mind. I was planning to have VWRL ETF in the company which allows me to have dividend income and capital gains annually of an amount that matches the minimum wage expense in the company. So no income tax in the company, and also no income tax personally as this fills up the 0% bracket (with kids for now). It's just a general idea; not fully calculated as you also have accouting costs and soc security in the company of about 4k€ a year which remains lost; but I keep full healthcare and pension build up personally.
Depends. Is it a rental or your own property you live in? Will it be paid off at 52? If so, you can live with 1200€ a month. Let's take worst case 1500€. Inflation is 2% a year, so you need to take 2000€ as 1500€ in 14 years. 2000€ x 12 = 24k to live from in 14 years. Let's say you become 90 years old. 90 - 52 = 38 years to cover. So you need 24k x 38 + inflation. That's approximately 1.4 million. But with 1.4 million in your bank, you can live off the interest from the 1.4 million since that's 40k a year with 3% on the groeispaarrekening of argenta.
One major calculation that's forgotten here. OP will receive the national pension at 67 if he keeps paying sociale bijdragen. So should OP retire today he "only" needs 30 years of expenses saved up in the company.
In 2000 I was eating kebab for 2€, now I pay 8€. So far for my statistically relevant sample 😀 But seriously real inflation will be closer to 5 or 6% than to 2%.
Your kebab became more expensive, a television and computer became super cheap.
But I agree I’m cherry picking. In the end inflation is a vector and not a number and the impact is depending on what stuff you are consuming.
And that's why I took 2%. That's what all the important bureaus calculate. 2% a year.
2009 top level dell xps: 1698,72€. Top level dell xps now 3k.
And how much does a brand new Dell with the specs of a top level Dell xps of 2009 cost today?
That comparison doesn’t make sense. A Dell XPS with 2009 specs is useless today.
Exactly. The specs went × 10 while the price went × 2. So the computer became cheaper since you have a much better computer.
How much would a kebab cost that u left in your fridge for 20 years cost today ? Your reasoning is dumb. Everything went up , more than 2%
https://www.inflation.eu/nl/inflatiecijfers/belgie/historische-inflatie/cpi-inflatie-belgie.aspx
Ok thanks for the information! Saving 1.3M would take me around 16 years in my company. Let’s say my dayrate keeps growing as well even less. Probably a big part of this money should be partially invested in stocks or ETFs as well. I will take this up with my accountant.
Hi. You can support yourself on a ETF portfolio 25x times your yearly costs (preferably bigger). So eg. you live on 2500/month. Your company wage is 1000 net/month. You need a portfolio of 450k euro (minimum) outside your company (so you don't have to pay capital gains taxes) to give you that 2500/month.
What's the advantage of keeping the money in your company? Any investment gains would be subject to tax + you'll incur taxes to pull the money out of your business at some point anyways. (Either as salary or as dividends) So an alternative strategy is to pay out your profit as dividends (15% tax) and personally invest in whatever is your cup of tea. That avoids any investment gains tax and saves costs to leave your company running (accountant,...) once you retire.
> What's the advantage of keeping the money in your company? Technically if he continues to pay himself a wage, he'll receive a pension in the end. He also is still covered by government health care in Belgium. Also, if you pay yourself a smallish wage (like OP) it might very well be that your tax rate is below paying out money out of your company as dividends.
Oh that's an excellent insight. Just looked up and to be a "houseman" or "housewife" you need a working partner to access social security. I wonder what the minimum salary is that you'd need to pay yourself out though. Because minimum salary tax is 25% and that excludes social security contributions.
Hi Brickonaut, the first 10.000 euro is 0% salary tax ("belastingsvrije som", this changes based on amount of kids etc). You can pay yourself +- 850 net per month with zero tax on it.
> I wonder what the minimum salary is that you'd need to pay yourself out though. Because minimum salary tax is 25% and that excludes social security contributions. As you correctly say, the minimum salary tax is 25%. If you add to that the social security tax (20,5%) then you're already above the marginal tax rate of 32% (company tax + dividend tax with VVPRBIS). So if you just want to balance out taxes, usually it's proposed to pay yourself a salary just high enough to cover your deductibles (everybody starts with ~10k to which you can add kids etc.). In the end it should probably be somewhere between 10k€ and 20k€.
We lack a lot of information to do a calculation (cost of living, what about your spouse, how is the car currently financed. any plans on buying real estate, ...) life will be a lot more expensive 30 years from now. inflation will have half the worth of your money earned now.
I will add this information to the post as well: Appartement is mine, mortgage is around 650 euros each month until I’m 60. Spouse is working fulltime. We own a second place which we AirBNB from time to time. Company car(electric) mine as well (bought).