New Bonus Reward System in Belgium
By Kris Bollen, Konsilanto CVBA
Since January 2018, employers can pay a tax-friendly profit premium to their employees. Because the premium offers many advantages, it can count on much support.
The profit premium system allows companies to distribute all or part of the profit of an accounting year to their employees. This is done by decision of a general meeting of shareholders.
The premium is exempt from personal income tax as it is a system of profit sharing. The premium is only subject to a liberating tax of 7%. On the other hand, the profit premium is not deductible as a cost from the corporate tax income. Consequently, a corporation tax of 25% must be taken into account. In addition, the employer will be exempt from social contributions on this premium as it is not considered as a salary. The employee, however, must make a solidarity contribution of 13.07%. To prevent abuse, a number of conditions were imposed:
- The profit premium is an additional remuneration component. It may never be introduced to replace an existing salary component, premium, or other benefit.
- The total amount of the profit premium may never exceed 30% of the total gross salary cost.
Important to note is that the profit premium has a collective character. As an employer, you can opt for an identical premium whereby all employees receive the same amount or the same percentage of their salary. Or the employer can choose for a categorised premium whereby a different amount or percentage can be allocated to each category of employees. In any case, it is not possible to assign this individually per employee.
The advantage of the profit premium is that it enjoys favourable tax treatment and sets simple conditions. It is a reward system every company should look into.
Kris BollenGGI member firm
Accounting, Tax, Advisory, Corporate Finance, Fiduciary and Estate Planning
T: +32 3 443 75 50
Konsilanto is a full-service accountancy firm. They offer an integrated service to entrepreneurs and business organisations, alongside their core activities in accountancy and tax consultancy services. In particular, they try to assist international companies with payroll services in Belgium.
Kris Bollen is Partner at Konsilanto. In his approach to the services Konsilanto offers, he gives particular attention to delivering high-quality consultancy services and to elucidating the various facets within business practices. The general approach to the stakeholders of Konsilanto is based on open dialogue and mutual commitment.
Published: Labour Law Newsletter, No. 08, Spring 2020 l Photo: Ralf Gosch - stock.adobe.com