Gifts and gift vouchers provided to an employee by the employer do not count as remuneration and are therefore exempt from social security contributions, subject to certain conditions. A Royal Decree dated 3 July 2018 increases the exempt amounts retroactively as of 1 January 2017.
Background
In principle, any benefit valuable in money or in kind is considered as remuneration for social security purposes where:
- the benefit is provided to the employee in return for the work carried out in accordance with the employment contract; or
- the employee can claim the benefit from the employer, either directly or indirectly, by virtue of his/her employment.
The legislator gives the Government power to put limits on what should be understood as remuneration and thus to exclude certain valuable benefits from the calculation basis for social security contributions.
In this respect, gifts awarded by employer to the employee are not deemed to be remuneration, and are therefore exempt from social security contributions, provided that certain conditions are met.
The gifts need to have been offered in connection with Saint Nicholas Day, Christmas or New Year's Day; in relation to an honourable distinction, or on the occasion of the employee's retirement, wedding or civil union. Gifts can be offered in kind, in cash or in vouchers.
What's new?
A Royal Decree of 3 July 2018 (Belgian Official Gazette 6 July 2018) increases the amounts exempt from social security contributions. It thereby implements the 2017–2018 Interprofessional Agreement.
This increase takes retroactive effect as of 1 January 2017. As of that date, the following gifts are exempt from social security contributions:
|
Occasion |
New amount, |
Former amount |
|---|---|---|
| Saint Nicholas Day, Christmas, New Year's Day |
|
|
| Honourable distinction |
|
|
| Retirement (excluding bridging pension) |
|
|
| Wedding or civil union |
|
|
Please note that gifts having a value that exceeds the applicable amount are reclassified for their full amount as remuneration on which social security contributions are due. Gifts presented on the occasion of a wedding or a civil union are an exception to this: when the value of such gifts exceeds EUR 245, social security contributions are only due on the value in excess of that amount.
Whether these conditions are complied with must be assessed on the basis of the awarding system the employer applies, and not on the basis of the amount awarded to each employee individually. For instance, if an employer gives each of its employees EUR 100 as a gift, all of these gifts will be deemed to be remuneration, even if some of the employees have two or more dependent children.
Additional conditions
Gift vouchers need to fulfil a number of additional conditions in order to be exempt:
- they can only be exchanged at companies which have entered into a prior agreement with the issuer,
- their validity must be limited in time, and
- they cannot be paid out in cash to the beneficiary.
These additional conditions remain unaffected by the Royal Decree of 3 July 2018.
Tax treatment
In its circular letters no. 28/2002 of 16 October 2002 and no. 242/588.226 of 22 September 2008, the tax administration accepts that gifts provided for one of the above occasions can be deducted by the employer as professional disbursements.
From the employee's perspective, such gifts are exempt from taxes.
The tax administration uses the following scales:
| Occasion | Amount |
|---|---|
| Saint Nicholas Day, Christmas, New Year's Day |
|
| Honourable distinction |
|
| Retirement (excl. bridging pension) |
|
| Wedding or civil union |
|
These scales have not yet been harmonised with the amounts in the Royal Decree of 3 July 2018. The Minister of Social Affairs and Public Health has confirmed that she will ask the Minister of Finance to take the necessary steps with respect to tax harmonisation.
This also remains unaffected by the Royal Decree of 3 July 2018.
What about gratuities?
Gratuities need to be distinguished from gifts.
For a benefit to qualify as a "gratuity", the National Social Security Office requires that the following conditions be met:
-
the employer must award the benefit spontaneously in connection with a special event
- in the company (e.g. the company's 50th anniversary), or
- in the employee's personal life (e.g. heavy fire damage to the employee's house);
- there cannot be a tradition in the company of awarding such benefits;
- the employee cannot claim the benefit as a right to which he/she is entitled; and
- there can be no direct link to the employment relationship.
If these cumulative conditions are not met, social security contributions will be due.