Context

Employees purchasing employer shares or mother company shares that are negotiated on a stock exchange at a discounted price through of a stock purchase plan (other than in the scope of article 609 of the Belgian Corporations Law), are taxed on a benefit in kind. As a rule, the benefit in kind is equal to the excess of the fair market value of the shares at the “Purchase Date” over the actual purchase price. This excess qualifies as taxable employment income taxed at progressive rates and is, in principle, also subject to Belgian RSZ/ONSS social security contributions.

From an income tax perspective, for publicly traded shares that are non transferable for a two years period from the purchase date, the fair market value of the shares that may be taken into consideration to determine the taxable amount at the “Purchase Date” is deemed to be 83.33% (“100/120th” tax rule) of the share’s market price at the “Purchase Date” (Com. I.B./Com.I.R. 36/14 to 36/18).

By contrast, the social security authorities had not yet officially addressed the possibility of applying an equivalent exemption for social security purposes.

News

The position of the National Office of Social Security has been clarified in its “Algemene onderrichtingen voor de werkgevers / Instructions générales aux employeurs”. The value of the share to be taken into consideration to determine the benefit subject to RSZ/ONSS contributions may also be 83.33% of the share’s market price at the “Purchase Date” provided the shares are non-transferable for a period of at least two years.

Hence the social security authorities have aligned their valuation method to the one applied by the tax authorities.

Social security instructions:

FR: http://news.hrservices.be?lk200405131
NL: http://news.hrservices.be?lk200405132