Now that 2002 is drawing to a close, this Headline goes into some of the personal income tax changes that will have effect from income year 2003. The Personal Tax Headline team also takes this opportunity to wish you every happiness in 2003.

The new wage withholding tax rules (Royal Decree of 25 October, 2002) applicable from 1 January 2003 will take into account the following changes (implemented by the personal tax reform Act of 10 August 2001 and other measures):

- the special crisis contribution is to be completely abolished (no more contribution for income year 2003 instead of the maximum contribution of 1% for income year 2002);
- the lump-sum business expense is to be increased (25% instead of 23% of earned income for the first bracket of EUR 3,750);
- the marginal income tax rate is to be decreased from 52% to 50%;
- the average local tax rate is to be increased (to 6.7%) and the non-resident additional tax rate is to be increased to 6.7%.

New registration duty, inheritance tax and donation duty rules and rates in the Brussels Capital Region have been voted and should be published in the Official Gazette before the year-end. We will address these topics more in detail in a future Headline.

New stock option rules will also apply – see our PTX Headline of 26 November 2002(*).

Luncheon vouchers:
The maximum tax-deductible employer’s contribution in luncheon vouchers would be increased to EUR 4.91 per voucher, while the minimum employee’s contribution would remain unchanged at EUR 1.09 (not yet published).

New PC plan legal tax framework (still to be published in the Official Gazette and detailed by Royal Decree):
The employer’s contribution to private PC purchases is tax-exempt for the beneficiary (employee) and deductible for the employer provided the following conditions are met:
- the contribution of the employer in the employee’s PC purchase may not exceed 60% (excluding VAT) of the purchase price or EUR 1,250 (to be indexed) per package (PC, accessories, internet connection and business software (no games!));
- the employer must organise a firm-wide plan that is open to all employees;
- the employer may never own any of the materials.
Please note, however, that nothing has been planned from a social security viewpoint to date, and that both employer and employee social security contributions should be due on the employer’s share in the private PC purchase.

(*)http://www.hrconsulting.be/headline.html?ph=200211261436