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| Headline news of Tuesday 17 February 2009 : |
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Economic recovery plan – Bill of law
On 3 February 2009, the Belgian Government introduced the bill of law providing economic recovery measures in the Chamber of Representatives.
The proposed economic recovery measures are divided in different sections: Finance, Social affairs, Work and Energy. In this flash, we will briefly comment on the following 3 measures that are included in the Finance section:
- tax treatment of luncheon vouchers;
- reduction of tax charges in the form of an increase of the exemption to pay withheld wage taxes to the Belgian Treasury (overtime, employment during night time and in shifts, general tax reduction, and research & development);
- extension of the exercise period for stock options without tax charge.
Tax treatment of luncheon vouchers
Under certain conditions, luncheon vouchers are considered as a social benefit exempted from social security contributions and income taxes. On the other hand, social benefits are not deductible for the employer.
According to the bill of law, the maximum contribution from the employer so that the provision of luncheon vouchers is considered as a social benefit, which is currently EUR 4.91 per voucher, is increased by EUR 1, to EUR 5.91.
As an exception to the rule that social benefits are not deductible for the employer, the bill of law introduces the deductibility of EUR 1 per luncheon voucher for the employer (luncheon vouchers provided to employees) or the company (luncheon vouchers provided to company directors), provided that the provision of luncheon vouchers is considered as a social benefit.
Exemption to pay withheld wage taxes to the Belgian Treasury
With respect to overtime, the bill of law extends the exemption for the employer to pay a portion of the withheld wage taxes to the Belgian Treasury for the first 65 hours of overtime per employee to the first 100 hours as from 1 January 2009, and to the first 130 hours as from 1 January 2010.
For companies and institutions employing researchers and developers, the bill of law increases the exemption to pay 65 percent (since 1 July 2008, this percentage is applicable to all categories of researchers and developers) of the withheld wage taxes to the Belgian Treasury to 75 percent of the withheld wage taxes as from 1 January 2009.
With respect to employment during night time and in shifts, the bill of law increases the exemption to pay the withheld wage taxes to the Belgian Treasury for an amount equal to 10.7 percent of the taxable remuneration including shift premiums (but excluding holiday pay, year-end bonus and arrears) to an amount equal to 15.6 percent of the said taxable remuneration. The exemption with respect to employment during night time and in shifts will be subject to the condition that the employees for whom the employer claims this exemption are employed during night time or in shifts for at least one-third of their work time of the month for which the exemption is claimed. These measures would enter into force on 1 June 2009.
For employers falling in the scope of the Act of 5 December 1968 regarding the collective labour agreements and the joint industrial committees and for recognized employment agents lending manpower to the aforementioned employers, the exemption to pay the withheld wage taxes to the Belgian Treasury for an amount equal to 0.25% of the gross remuneration before deduction of employee social security contributions will be increased to an amount equal to 0.75 percent of same remuneration as from 1 June 2009, and to an amount equal to 1 percent of same remuneration as from 1 January 2010.
Extension of the exercise period for stock options
The bill of law will authorize companies to extend the exercise period for employee stock options granted in the period from 1 January 2003 to 31 August 2008 by a maximum of 5 years without additional taxation for the beneficiaries.
Such extension will be subject to the following conditions:
- The extension should be made with the consent of the beneficiaries before 30 June 2009;
- The extension without additional tax charge is applicable to options not exceeding a fiscal value of EUR 100,000. To compute this threshold of EUR 100,000, all stock options granted in the period from 1 January 2003 to 31 August 2008 by one and the same company to one and the same beneficiary should be taken into consideration;
- The extension agreement should be notified to the tax authorities before 31 July 2009.
The Belgian corporate law provision that limits the exercise period for warrants to maximum 10 years will not apply if the exercise period for stock options is extended in accordance with the aforementioned rules.
Bill of law
Please note that none of the above economic recovery measures have been enacted (i.e. none have entered into force). We will inform you once this bill of law has been adopted by our law-makers.
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