Reimbursements by the employer of expenses, incurred by an employee within the scope of his employment, are exempt from tax to the extent that they can be supported by appropriate documentation.

The tax exemption of a lump-sum reimbursement of such expenses may also be allowed provided the lump-sum amount is determined based on reasonable criteria.

In this respect, daily lump-sum allowances paid in reimbursement of short-term business travel expenses abroad will be exempt from tax to the extent they do not exceed the daily lump sum allowances that are paid by the Federal Public Service Foreign Affairs to its civil servants while on mission abroad.

New list available on our website

The new list of daily lump sum allowances applicable as from 1 April 2013 has been recently published in the Official Gazette and is available on our website at the following address: http://www.hrservices.be/daily-lump-sum-allowances

For income year 2013, this reference CO2 emission for petrol driven cars is now set at 116 g CO2/km (instead of the 115 g CO2/km basis for income year 2012).

This modification will cause the annual benefit in kind of having a petrol company car to slightly decrease for income year 2013 in comparison with the same taxable benefit for income year 2012.

Note that the reference CO2 emission for diesel cars has not been modified and remains at 95 g CO2/km.

The above modification is effective as of 1 January 2013. However, for practical considerations, the wage withholding tax will only be adapted as from 1 April 2013.

Firstly, the Federal Government has decided to apply a uniform (withholding) tax rate to liquidation bonuses as from 1 October 2014. Indeed, as from that date, the proceeds from a partial or full liquidation of a Belgian or foreign company (liquidation bonus) will be subject to a 25% instead of the current 10% (withholding) tax rate.

The taxable amount of a liquidation bonus (which is classified as a dividend for Belgian income tax purposes) will still be the difference between the cash distribution to the shareholders and the capital actually paid up. Until the aforementioned date, a transition period will be available during which shareholders can continue benefiting from taxation at a 10% (withholding) tax rate.

Moreover, in the case of a capital increase by way of incorporation of taxed reserves, the 10% withholding tax rate can also be applied until 1 October 2014. In the case of a future decrease of capital, the incorporated reserves will be taxed regressively. After 5 years, no further taxes will be due.

Furthermore, the Government has decided to gradually reduce the moveable withholding tax on dividends related to shares of SMEs (Small and Medium sized Entities) from 25% to 15% over a 4-year period. This means that whoever establishes a new SME or invests in an SME (via a contribution in cash) will have to pay 25% withholding tax on the dividends received during the first two years. As from the third year of investment, the shareholder can benefit from a reduced tax rate of 20%. Finally, as from the fourth year, only a 15% withholding tax must be paid on the amount of dividend distribution.

Please note that it remains to be seen to what extent these measures will be implemented as, currently, no draft legislation is pending before Parliament in this respect.

One of those proposals concerns the modification of the tax treatment of stock options in Belgium. The Belgian tax authorities argued that a) the current system is often used improperly, b) the actual value of the stock options usually exceeds the taxable (lump-sum) value (resulting in a rather low overall tax burden) and c) the value of non-quoted options can often not be determined unambiguously.

Therefore, the tax authorities have suggested modifying the Belgian legislation on the basis of the following principles:

• the stock options should be taxed at the time of exercise or transfer of the options (instead of at the time of grant);
• the taxable value of the stock option should be aligned with its actual value in the hands of the beneficiary.

In an opinion issued in February 2013, the High Council of Finance formally disagrees with the reasoning of the Belgian tax authorities. Although it recognises the complaints of the tax administration, the High Council does not pin much faith on the proposed measures.

Furthermore, it refers to the existing anti-abuse provisions which are available to the tax authorities in the case of improper use of the taxation rules. Finally, the High Council emphasizes that the general profile of the Belgian income tax system should be examined and that an overall view is advisable (rather than a piece by piece approach) when simplifying the Belgian tax system.

The above is unrelated to another proposal to change the stock options legislation, which we reported in our HRS Headline of 20 July 2012.  This proposal, which was an initiative of individual members of Parliament, is currently still pending in the first Chamber of Representatives.

General principle

The first registration of a foreigner in the district of Antwerp has recently been centralised at one relocation office. As a consequence, all foreigners willing to reside in one of the below listed communes within the district of Antwerp, will have to visit the centralised office located in 2600, Berchem.

• Antwerpen
• Berchem
• Berendrecht
• Borgerhout
• Deurne
• Ekeren
• Hoboken
• Merksem
• Wilrijk

Today, a registration fee is already applicable to foreigners who wish to register themselves for the first time at any town hall in Belgium.

The district of Antwerp is however of the opinion that the current registration fee does not cover the costs they have to make and has thus come to an agreement to increase the amount to EUR 250,00 per new registration (per family member).

According to them, the new fee is fair compared to the registration fees charged by our neighbouring countries:

• In France the first registration fee amounts to EUR 260,00 and EUR 143,00 is asked for the extension of that registration;
• In the Netherlands the first registration fee can add up to EUR 960,00 and EUR 375,00 for an extension.

In addition, starting 1 April 2013, also the fee to obtain the Belgian electronic residence card will increase up to EUR 20,00 per card.

The fees charged for the expedited procedures have been reduced to EUR 141,00 for the 3 day procedure and to EUR 205,00 for the 2 day procedure.

The first registration fee (EUR 250,00) will be charged on top of the fee applicable for the electronic residence card (EUR 20,00).

Field of application regarding the first registration fee

The increased registration fee of EUR 250 will be charged to:

• every foreigner who registers for the first time in the district of Antwerp;
• every foreigner who registers on the basis of family reunification;
• every foreigner who registers after regularisation.

An exemption is foreseen for:

• foreign students visiting Belgium in the context of an international collaboration;
• foreigners having successfully concluded asylum procedure;
• non-EU nationals who obtained an unrestricted right of stay in an EU member state.

Our point of view

Until now, the district of Antwerp is solely increasing its first registration fee. Of course this decision provokes enormous critics by other administrative authorities both in Belgium and abroad.  Many other districts are coping with the same problem but hope to solve this differently. As a consequence, foreigners will attempt to avoid the district of Antwerp and this will obviously be a burden for the surrounding areas.

Furthermore, by implementing this first registration fee, discrimination is created between Belgian nationals and other EU nationals.  According to EU legislation, European citizens should be able to register in any EU country under the same conditions as a national of the same country would.

The latter has raised many questions and is currently being reviewed by the competent authorities. An additional exemption of this first registration fee might be invoked for EU nationals, but still has to be voted and confirmed.

This additional possibility can come into play when the following conditions are met: (1) the benefit has been taxed in the hands of the beneficiary, (2) the beneficiary fully agrees with the taxation and (3) the assessment notice has been issued within the 3-year assessment period.

In the future, 3 ways to deal with secret commissions may be legally possible:

• The general rule: implementation of the special tax of 309%, both the special tax as well as the secret commission will be tax-deductible costs for the company.
• The first exception: no secret commissions’ tax will be applied when the company demonstrates that the recipient duly and timely reported his taxable remuneration in his individual tax return. The secret commission will still be a tax-deductible cost for the company.
• The second exception: when the recipient did not duly and timely report the taxable remuneration received, but, with his consent, a tax charge is levied within an assessment period of 3 years on the income not properly reported, no secret commissions’ tax will be applied. The commission itself will qualify as a disallowed expense for the employer.

This pre-draft legislation is intended to implement certain tax measures in the Economic Recovery Plan (Relanceplan) 2012, one of which is to increase the partial exemption for transferring wage withholding taxes for R&D, from 75% to 80%.

The proposed tax bill still has to be tabled in parliament.

For employees, the special contribution has to be reported in the social security return of the fourth quarter of 2012. This return has to be filed by the end of January 2013 (or 14 working days later if this is handled by a payroll agency). The payment is due at the same time.

For company directors, the payment has to be made to the National Institute for the Social Security of the Self-employed by 28 February 2013 (bank account number: BE06 6790 0247 5722). Via its website, www.rsvz.be, the reference to be used for the bank transfer can easily be generated using your company number.

In our December 2012 pension alert, we described the manner in which the calculation needs to be done.

Most pension providers (insurers and pension funds) will normally contact their clients, insofar as they exceed the ceiling, to alert them of this new obligation. In some situations, however, some action is required on the part of the company.

An example of this is a situation where an employee/director is a member of two or more pension plans that are managed by different pension providers and where the ceiling is not exceeded in any of the plans individually. In that case, none of the pension providers will notify the client. It will be entirely up to the company to check whether the sum of the contributions paid into all pension plans combined for that employee/director does not exceed the ceiling. PwC is available to assist, also with the related calculations.

As the pension database is administered by a body called Sigedis (www.sigedis.be), the Belgian authorities will be able to check whether the so-called ‘Wijninckx bijdrage’ has been paid when due. That is why we wish to alert our clients to the need to proactively check whether the ceiling is exceeded, in particular if the company has pension plans in place with more than one pension provider.

The protocol amends the treaty provisions dealing with the following types of income: interest, royalties, employment income, directors’ fees and pensions.

For example, with respect to pension income which is paid or attributed for the first time as from 1 January 2013, the protocol now attributes the taxation rights to the country of source as opposed to the country of residence (which was the competent State under the old rule).

In addition, Belgium now has the right to levy local taxes on income earned by a Belgian resident taxpayer, even if it concerns UK-sourced income that is exempted from Belgian federal income tax. Furthermore, the provisions on exchange of information have been updated as well.

Current situation

A Belgian employer who employs an individual who is subject to Dutch employees’ insurance and health insurance, has the obligation to affiliate with the Dutch tax authorities and pay Dutch employer contributions for the employees’ insurance and health insurance (“premie WW”, “premie WIA” and “inkomensafhankelijke premie ZVW”). If this individual has two legal employers (split contract) – of which the other is located in the Netherlands – both employers need to be affiliated and pay Dutch employer contributions for the employees’ insurance and health insurance on the salary paid. To the extent that the total amount of the Dutch employer contributions transferred by both employers to the Dutch tax authorities exceeded the maximum contribution, the excess was – under the current legislation – refundable after the end of the income year.

Situation as of 1 January 2013

As of 1 January 2013, the abovementioned refund procedure (in the case of excessively paid Dutch employer contributions) will be abolished. As a result, every legal employer will have to pay (his portion of) the Dutch employer contributions for employees’ insurance and health insurance on the salary paid to the employee.

Consequently, in the case of a formal salary split, foreign employers must register in the Netherlands, which may lead to situations where the total maximum amount of Dutch employer  contributions for employees’ insurance and health insurance will be exceeded and even paid multiple times, without any possibility for a refund.