Now that 2010 is drawing to a close, this Headline highlights some recent changes in the field of personal income taxation and social security that will have an impact in 2011.

The HRS Headline team also seizes this opportunity to wish you all the best for 2011.

1. Non-recurring bonus scheme 2011

The non-recurring bonus scheme system, which entered into force in January 2007, provides that bonuses paid under certain conditions do not qualify as remuneration (please see our Headline of 2 December 2007). They depend on the achievement of predetermined non-recurring and non-structural objectives.

The system will be slightly amended in 2011. Among the announced changes, it must be noted that, from 1 April 2011, the employers will have to use standard forms to introduce their plan. Two separate documents have been drawn up (a collective agreement and a “deed of accession” (toetredingsakte/acte d’adhésion) by the industrial partners in the National Labour Council .Those documents will be the only documents admissible.

The benefits arising from such bonus schemes are tax and social security exempt up to a yearly amount per employee of EUR 2.358 for bonuses related to 2011.

2. Company cars: 2011 computations

As you know, the private use of a company car by an employee results in a taxable benefit for the individual. Since 1 January 2010, this taxable benefit in kind is computed on the basis of a fixed number of privately driven kilometres (5.000 or 7.500) multiplied by the CO2 emission level of the car, multiplied by a coefficient depending on the type of fuel.

For 2011, these coefficients amount to:
0,00216 for cars on petrol, LPG or natural gas, and
0,00237 for diesel cars

In any case, the number of private kilometres per (full) year may not be smaller than 5.000, and a minimum of EUR 0,10 per kilometre is always applicable (also for electric cars).

There is no personal social security contribution on this benefit in kind, but a CO2 solidarity contribution is due by the employer on company cars used for private purposes by employees who are subject to Belgian social security contributions.

For 2011, this monthly contribution is calculated as follows:
Petrol and LPG cars: [((CO2 emissions x EUR 9)-768)/12]x 1,1298
Diesel cars: [((CO2 emissions x EUR 9)-600)/12]x 1,1298
Electric cars: EUR 23,53
A minimum monthly contribution of EUR 23,53 EUR is invariably due.

3. EU Regulation 883/2004 on Social Security and its Implementing Regulation 987/2009: important changes and interpretations

Based on our contacts with the social security authorities, we would like to draw your attention to the following changes:
- Effective 1 January 2011, the new Regulation 883/2004 and its Implementing Regulation 987/2009 apply to third country nationals.
- The former interpretation that the EU Regulation does not apply to simultaneous employment within the EU for a non-EU employer can no longer be upheld.
- A new Posting Guide regarding – amongst other matters – the difference between a simultaneous employment and a secondment has been agreed and would imply that, from an employment of 5% in other EU Member States, the employment is governed by the reference rules on simultaneous employment rather than by the secondment article.

Please visit our website for a detailed explanation: http://www.pwc.com/be/en/hr-law-newsletter/index.jhtml

4. New Corporate Governance rules

The Belgian Parliament passed the Corporate Governance Act earlier this year. Its purpose is to ensure sound corporate governance and executive pay policies within Belgian listed companies. It requires them to set up independent remuneration committees, include a remuneration report in the corporate governance declaration in their annual reports and, subject to certain exceptions, comply with strict provisions on how executives’ variable pay is fixed and paid. In addition, severance payments are basically limited to 12 months.

The implementation deadlines are strict:
- A corporate governance declaration (CGD) is required for the current financial year (i.e. 2010).
- The remuneration report must be included in the CGD and Belgian listed companies will need to have a remuneration committee for the first financial year starting after publication of the Act in the official gazette, meaning financial year started after 23 April 2010.
- New rules on severance will apply to agreements signed or extended 10 days after the publication of the Act, meaning on or after 3 May 2010.
- New rules on equity-based payments and bonuses apply to financial years starting on or after 1 January 2011.

5. France 2011 Budget Law impacts on pension capital paid from abroad

The French Parliament recently approved the government’s Finance Bill (Loi de Finances) for 2011.

The law introduces a change in the taxation of pension capital paid to a French resident tax payer as from 1 January 2011. The new rule introduces clarity in the French legislation making these capital payments taxable in France. This will also have an impact on the tax treatment of pension capital paid from abroad.

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