Employees’ Profit Participation – Royal Decree project
Context
As you know, on 9 June 2001 the Act of 22 May 2001 regarding employees’ participation in the company capital or company profit was published in the Official Gazette. This special tax regime applies to qualifying employee profit participation plans introduced as from 29 December 2001(date of publication in the Official Gazette of four Royal Decrees needed for its entry into force). For more information about this regime, we refer to our PTX Headline dated January 8, 2002.
News
In the Press Release by the Prime Minister following the Belgian Cabinet Meeting of 1 March 2002, it was confirmed that the Government approved a new royal decree project in this respect. The purpose of the new royal decree project is to set objective criteria of differentiation among the employees to determine the amount of profit that will be paid out to them. Based on this Press Release, the chosen criteria would be similar to those applicable in Social Law to differentiate, within a company, the different employee remuneration packages. Furthermore, the new royal decree project sets a maximum differentiation ratio of 1 to 10. We will keep you informed when the royal decree is published.
Posted: March 6th, 2002Tags: employees, profit participation, PTX, royal decree
Employees’ Profit Participation as from 29 December 2001
Context
On 9 June 2001 the Act of 22 May 2001 regarding employees’ participation in the company capital or company profit was published in the Official Gazette.
The Act aims to promote the introduction of employee profit participation schemes which are optional for the employees themselves. This will be achieved by companies or groups of companies via a special collective bargaining agreement or via a similar procedure to that for changing the internal works regulations. Employees will be able to receive a part of the after-tax profits either in cash or in shares with normal voting rights.
There will be two limits on how much profit can be paid out to employees: the applicable limit is the lower of 10% of the total salary cost of the company or 20% of the net (after-tax) profits for the year.
Where profits are distributed directly and immediately in cash, the only levies due will be a ‘solidarity contribution’, paid by the employee and equal to the normal personal social security contribution (13.07%), and a special tax withholding of 25%.
If the employee receives shares, this benefit will only be subject to a special tax withholding of 15%, provided the blocking period (a minimum of between two and five years) is adhered to.
News
The above-mentioned special tax regime applies to qualifying employee profit participation plans introduced as from 29 December 2001(date of publishing in the Official Gazette of four Royal Decrees needed for its entry into force). Furthermore the first distributable profits are those of the book year that closes on 31 December 2001 at the earliest.
The fiscal provisions enter into force as from income year 2002.
Posted: January 8th, 2002Tags: employees, profit participation, PTX
Year-end PTX headline
At the occasion of the year-end 2001 this headline contains some of the personal income tax changes that will have effect as from income year 2002.
Wage withholding tax (Royal Decree of November 21, 2001)
The wage withholding tax rules applicable as from January 1, 2002 will take into account the following changes:
- The further abolishment of the special crisis contribution (maximum 1% for income year 2002 instead of maximum 2% for income year 2001);
- The increase of the lump-sum business expense (23% of earned income for the first bracket of EUR 3,750, instead of 20%);
- The decrease of the marginal income tax rate of 55% to 52%.
As from April 1, 2002 the wage withholding tax scales will be indexed.
Radio and television license fee in Flanders
According to a draft decree approved by the Flemish parliament, the income tax discount of BEF 2,500 (single person) or BEF 5,000 (married) granted by the Flemish government for income year 2000 will not be continued for income year 2001 (tax year 2002).
On the other hand, the Flemish government has on 30 November 2001 approved a draft decree with respect to the abolishment of the radio and television license fee in Flanders as from 1 January 2002. The draft decree is currently under review by the State Council and will be voted on early in 2002 with retroactive effect from January 1, 2002.
Posted: December 20th, 2001Tags: PTX, rules, scales, withholding tax