Confirmation of the tax treatment of the “surrender” of pay by managers
| Context
In financial and insurance companies and some holding companies, the management boards are usually made up of leading, experienced managers from a variety of sectors in the world of business. It is contracted that the managers’ pay for such honorary positions is surrendered either to the company for which they principally act as managers or to an asset management company (a so-called patrimoniumvennootschap / société de patrimoine) of which they and/or the members of their families are the main shareholders and/or directors. The tax authorities have issued a practice note (Practice note no. Ci.RH.244/599.047 of 18.8.09) confirming the tax treatment as set down in the answer to the parliamentary question from Mrs Pieters (question no. 133 of 25.11.99). Tax treatment In principle, pay that managers receive for such honorary positions constitutes taxable income in their hands. It has to be recorded in the individual manager’s name on a form 281.20 and wage withholdings are due on it. If a manager can show that it is an actual, express condition of his main office or the retention thereof and the income he receives by virtue thereof that he should surrender a certain portion of the pay he receives for such honorary position, he can in his/her annual tax return deduct the net amount surrendered by claiming it as a business expense for the year in which it was surrendered. The surrender has to be evidenced by means of an individual form 281.50. Nonetheless, in certain cases and upon the taxpayer’s making an (irrevocable) election via an enclosure to his/her income tax return, it is accepted that, for practical reasons, pay that managers receive for their honorary duties and assign to third parties need not be reported on a form 281.20 provided the pay received is surrendered in its entirety, directly and in terms of a pre-existing contract. In that case, the surrendered pay is not subject to wage withholdings. link to the practice note: |
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Posted: October 5th, 2009Tags: tax treatment
Different tax treatment of married persons and unmarried cohabitants is discriminatory
Context
Article 131 of the Belgian income tax code provides for a basic tax-free allowance for residents of Belgium and for nonresidents with an abode in Belgium or assimilated. The basic tax-free allowance amounts to EUR 4,095 (for income year 2001: EUR 5,350) for single persons and EUR 3,250 (for income year 2001: EUR 4,240) for each partner of a married couple.
Unmarried cohabitants are currently considered as single persons for Belgian income tax purposes and therefore each benefit from the higher basic tax-free amount of EUR 4,095 (for income year 2001: EUR 5,350).
News
The Belgian Court of Arbitration decided on 6 November 2001 that the above-described different tax treatment of married persons and unmarried cohabitants cannot reasonably be justified and is thus discriminatory. However article 131 of the Belgian income tax code itself is not in breach of the constitutional principle of non-discrimination, but the fact that the Belgian income tax code does not provide specific provisions for unmarried cohabitants means that they are treated as single persons from an individual income tax viewpoint.
It should be noted that the Belgian income tax reform of 10 August 2001 (http://www.taxreform.be for further information) provides for one basic tax-free allowance of EUR 4,095 (not indexed) for all residents of Belgium and all aforesaid mentioned nonresidents, regardless of the family status (single, married or unmarried cohabiting) as from 1 January 2004, so that the current discrimination between married couples and unmarried cohabitants will then end.
Posted: November 14th, 2001Tags: cohabitants, married, tax, tax treatment, unmarried