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Which type of bonus is the best choice to reward your employees? Pro-Pay provides you with a short overview of both bonuses in this newsletter. Since a couple of years, employers can offer their employees a tax friendly non-recurring, result-related bonus, also referred to as CLA n° 90. Starting January 1 2018, the government has introduced a new kind of tax friendly bonus, called the profit participation bonus. It is noteworthy that both bonuses are not taken into account for the wage norm. You can grant these bonuses in other words also when the salary cost in your company cannot increase any further. The non-recurring result-related bonus Since a couple of years, employers in Belgium can grant their employees a bonus in the scope of the Act of December 21, 2007 and the collective labour agreement n° 90 (CLA n° 90). This benefit enjoys a favourable treatment when it comes to taxes and social security contributions. Thus the allocated benefit is not subject to withholding tax, is tax deductible as a business expense and is not taken into account for the calculation of the indemnity in lieu of notice and the holiday pay. It is however subject to a special employer’s contribution to the social security of 33% and a solidarity contribution of 13,07% for the employee. There are some conditions linked to the allocation of the benefit of which the most important ones are the following: The benefit cannot exceed a certain threshold: Social threshold = 3.313 EUR (amount 2018) per employee per calendar year. The amount is subject to a solidarity contribution of 13,07 % for the employee. Fiscal threshold = 2.880 EUR (amount 2018) which is exempt from taxes. The benefit must be related to collective results or objectives; The result or objectives must apply to a company, a group of companies or a well-defined group of employees; The results or objectives must be clearly outlined, transparent, determinable/measurable and verifiable. Examples of objectives are: achieving an actual turnover during the reference period, decreasing the error range, decrease the complaints from customers, obtaining an ISO-norm or another license … At the time of introducing the bonus plan, it should be uncertain whether the results or objectives will be achieved; The bonus plan should meet certain formalities such as drafting an act of adhesion or concluding a collective labour agreement. The new profit participation bonus The new bonus allows to grant the employees as from January 1, 2018 a tax friendly non-recurring profit participation bonus. For this type of bonus there are some conditions as well linked to the allocation of which you will find the most important ones here below: The company is subject to corporate taxes or to taxes for non-residents in Belgium; The allocation is only possible based on (part of the) profit; If the employer grants an identical amount or percentage to all employees, the only formality is a decision of the General Assembly and a written notification by the employer. If the employer wishes to grant different bonuses to different categories of employees, an act of adhesion or a collective labour agreement on company level will be required. This bonus is not a deductible cost for the employer. There are no social security contributions due from employer’s side. The employee on the other hand will pay a solidarity contribution of 13,07% and withholding taxes of 7%. The total amount of the bonuses may not exceed 30% of the total wage mass of the concerned fiscal year. Which bonus to offer to your employees? The best choice of bonus to grant to your employees, depends on what you wish to reward. Would you like to link the bonus to the achievement of certain goals or rather not? Would you like to reward all employees or just the one certain category? Of maybe you would like to combine both bonuses? Even that is possible. If your company is not subject in Belgium to corporate taxes or taxes for non-residents, the allocation of the new profit participation bonus is not possible. Introducing a non-recurring result-related bonus on the other hand is possible. Contact your Payroll Business Partner for further assistance.

The non-recurring, result-related bonus or the new profit participation bonus?

Which type of bonus is the best choice to reward your employees? Pro-Pay provides you with a short overview of both bonuses in this newsletter.

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three-at-work

New mandatory provisions in the Limosa declaration

Employees who are not subject to the Belgian social security and who come to work in Belgium on a temporary or part-time basis, need to be able to present proof of the Limosa declaration before starting their employment activities. It is the responsibility of the employer of these posted employees to apply for the Limosa declaration. The Belgian client on the other hand, has the obligation to notify the authorities if proof of the Limosa is missing.

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Regionalising target group policy: Decree of the Brussels government published

The government of the Brussels-Capital Region was willing to make use of its authority to implement its own target group policy.

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discount target group reduction

Regionalising target group policy: proposals and actions

The target group policy in Belgium is being regionalised in the framework of the Sixth State Reform.
Flanders is the first to launch three of its own target group reductions, starting on 1 July 2016. Employees recruited after this date fall under the new target group policy. Read more

What to look out for when employing a student in the summer holidays

What to look out for when employing a student in the summer holidays

Student employees are authorised to work in Belgium for a limited period each year. Employing students can be interesting for employers as a lower rate of social security is charged on their wages. Read more

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Setting Up A Business In Belgium: What Needs Your Attention?

Like any other countries, you can possibly set up a business in Belgium as a legal entity or as a single proprietor. So, you can have your own easy to operate and profitable business you are dreaming of.

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Tax shift in Belgium for employers and employees

Tax shift in Belgium for employers and employees

Payroll provider Pro-Pay made a summary of the tax shift that will be implemented in Belgium as from 2016. Labour costs are set to decrease while consumption will be more heavily taxed. The key changes include lower employers’ social security contributions, higher social security reductions for new employers, tax rate cuts for employees,…

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Cross-border employment

Workshop Belgian/Luxembourg cross-border employment – What about social security and income taxes?

Invitation to a workshop on November 24th, 2015 in Brussels. After this workshop you will be fully up-to-date regarding Belgian/Luxembourg cross-border employment formalities.

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