Early Retirement

How to pay less taxes in 2021 by spending the right way in 2020

With an average wage in Belgium of 3489 EUR per month or 41868 per year that means a slight majority of the Belgians will pay 50% taxes on their wage or 20934 EUR! No wonder that we are looking for ways to lower these taxes. And ways to lower there are! For the government offering lower tax rates is a friendly way to steer people’s behavior in the right direction, for us its a way to bring one of the highest tax rates in the world down a little.

Investing in stocks that give a dividend – 240 EUR

The Belgian state has a 30% tax rate on all dividends. However not all people know that dividends from stocks are free of taxes for the first 800 EUR. That means you will pay 30% taxes or 240 EUR for every 800 EUR of dividends but you will be able to get this money back.

Keep in mind this is only for regular stocks, so ETFs or Funds do not fall under this category! If you are looking to invest in stocks then check out DEGIRO which is the broker I use and recommend. Find out why I moved to DEGIRO.

Retirement saving: 315 EUR

Every year you can deposit 1260 EUR and withdraw 25% or 315 EUR from that. This is my longest running tax withdrawal post. I started with this right after I had purchased my first property. The earlier you start doing this the bigger the effect will be. When you reach the official retirement age you will be quite happy that you had invested 1260 EUR every year. Keep in mind its just 1260 EUR, you will not feel it that much.

My retirement savings account

Buying off educational years: 4173 EUR

For people interested in stopping with work before the official retirement age in Belgium buying off the years you studied is almost a must have. Buying off these years is quite expensive but it will increase your income after 67 quite a lot, especially if you stop working before 55. Be aware that after 30/11/2020 it will become a lot more expensive if you graduated over 10 years ago. You can actually do the calculation yourself on mypension yourself and see if it is worth it for you.

An example of a calculation. To the left the amount I would get when I work until 67 (1934 EUR/month), to the right the amount if I work until 50 (1446 EUR / month – that I get from 67)

Keep in mind that if you plan to work the MAX number of years before your retire this will not give a benefit, this is only useful for people who want to reach financial independence before the official retirement age.

You can buy off max 5 years at 1560 EUR per year. You can get a tax advantage of that of, depending of your income, 50% + community tax (lets say this is 3.5% average in Belgium). Assuming you studied for 5 years and have an average income you can subtract 4173 EUR from your taxes in 2021.

For anyone that plans for Financial Independence Retire Early this really is a must have, it will give you much more financial security after 67 even if you retire at 50.

After I bought of the years they appeared in mypension as”worked years” (in yellow)

Long Term saving : 717 EUR

Since 2020 you can no longer subtract taxes from purchasing your first house. This regional Tax Withdrawal was canceled both in the regional taxes as in the Federal. However there is a way to still get taxes back from real estate purchases called “Long term saving”. This is a Federal tax withdrawal post that is meant to “save long term”. You basically can save 2390 EUR per year, and subtract 30% taxes of that or 717 EUR.

Now if you still have to purchase a home you can save for the long term with your bank (ask your bank for details), and most banks allow you to use your long term saving to cover your debt insurance in case you pass away and your loan is not paid off yet. Most banks force you to take this insurance, which everyone knows but what you might not know is that most banks also allow you to cover this with whatever is in your long term savings account.

If you already purchased a home you can use it for the debt insurance of your second home, but also you can actually subtract the interest of the loan of your second house as the Federal government also considers this as a method to do long term saving!

Investing in Startups

Another method to pay less taxes is to invest in Startups. I have invested in startups myself. Keep in mind it needs to be a recognized Belgian platform such as spreds for example. What most people don’t know is that you can actually subtract 45% off your taxes for the smallest startups. But keep in mind this is a very risky investment. I would recommend to do it only with small amounts with money you can afford to lose, and more as a hobby or things you really believe in and would want to use yourself.

Please keep in mind that these investments are very long term and it can take 5-10 years before you see anything back. Although I consider all my investments long term, for stocks you do have a much higher liquidity in the unlikely event you need to sell.

My investments on spreads


If you make a donation make sure its at least 40 EUR and to a recognized institution. If you do it this way you can deduct 45% from your taxes. While I am sure this is not the main reason people donate if you have the choice to donate to an organisation on the street or do it online on the website its better to use the website so you are sure you will get some money back the next year and you supported your favorite charity!

Service Cheques -210 EUR


My remaining service cheques

Another method in Flanders to get some taxes back is service cheques. Service cheques are cheques you can use for services such as cleaning in your home or ironing of your clothes. For the first 500 cheques you can subtract 30%. A cheque costs about 9 EUR so you can substract 2.7 EUR. per cheque. So for example assuming you let someone clean your house for 3 hours every 2 weeks you will be able to subtract 210 EUR. Of course it will still cost you 702 EUR in a year.

What we see in this withdrawal post is that the benefit has been dropping every few years so it might not be so interesting anymore for a single person household. The major reason for me to do this was an investment in my time. By investing in my time I was able to spend time on other things such as blogging or doing sports that actually do make sense.


For those living in Brussels there is a similar system. Altough the tax refund is much smaller, you are able to subtract only 15% or 1,63 EUR per service cheque and this for the first 163 cheques. I still think for a family or couple its worth doing this, although I am not sure for a single household.


Those living in Wallonia are the worst of. They can only substract 0.9 EUR per cheque of 9 EUR.

My personal tax plans

I wanted to be open with what I personally spend, although all the items above are things I have done in the past or am considering, what we can see so far is that the withdrawal for 2019 is quite small with 1267 EUR, but this year I am on my way to get 3678 EUR back from the Tax man!

 Spend in 2019Tax Benefit 2019Plan 2020Expected 2020Comment
Stocks0000Right now I prefer to invest in ETFs
Pension Saving12603151260315I will continue to invest the MAX every year
Buy off educational years0062403363I bought these off in February 2020
Long Term Saving00TBD TBD Q4 2020
Tax Shelter16007200 For now I will not invest more here
Donations5022,5TBD I want to donate more this year
Service Cheques720210TBD The Tax benefit drops every year so I canceled it in May
Total 1267,5 3678 

Interested to know more? Check out some other articles on my blog, or follow me and stay up to date of the most recent news!


7 thoughts on “How to pay less taxes in 2021 by spending the right way in 2020

  1. Nice that you share this financial tax plan. I decided long time ago to forego the Long Term financial saving. A tax benefit is not a goal per se for me. The main reasons being an unreliable fiscal government, money being tied down for a long time and only possible to do it in a tak21 (I could not find a tak23) with high entry fees. I figured out I prefer to keep the money in a taxable account and invest it myself. It now blends in with my FIRE portfolio and I can access it whenever I want.
    I do pension saving (not to the full potential) because you can be fuly exposed to the stock market. And the entry fee is compensated by the tax reduction.


    1. Yes agree I still have doubts for the long term saving, last year I didn’t do it and this year Im not sure. The pension saving is only 1250 Eur per year and the 25% is nice enough to do it


  2. Wow. Where I live in the US if I made the same amount converted to dollars at the current exchange rate my total tax burden for state, federal and FICA (social security pension &Medicare) would only be 16% if I took zero steps to reduce taxes. That’s amazing that it equates to over 50% there.


    1. To be fair, on our final tax return, you can see how much your actually (average) tax burden is and for me, a single up until last week (:D) my average tax rate was 33.6%. You get quite a bit of extra legal benefits and these are calculated on your tax return as well.


      1. You’re making a mistake with the personal income tax. The brackets work progressive, so you pay 25% on the amount €0-€13.440 ; 40% on the amount €13.440,01 – €23.720 ; and so on. + there is a tax-free part as wel (€8.990 for income in 2020).
        That – the other tax benefits that you do (mortgage, pension saving, …) + communal tax (x% on the complete amount of federal tax) amounts to the 33,6% average tax rate.


  3. Great overview, I looked into a few of those but in the end I only used the dividend tax deduction. One thing I didn’t look into was buying off your study period. This is something I might actually do, so thanks for the info!


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