Home office expenses - New flat-rate indemnity

13 Sep 2016

In its new administrative instructions for the third quarter of 2016 published on 30 August, the National Social Security Office (NSSO) announced that the maximum indemnity for home office expenses has been increased from EUR 119.61 to EUR 122.01 per month.

Some workers are required, given their function, to execute part of their work at their domicile on a structural and regular basis. Their employer may grant them an indemnity to cover the costs they incur in this context.

The NSSO has determined the amount that is acceptable as an indemnity for home office expenses. In its “new administrative instructions 2016/3”, this lump sum rises from EUR 119.61 to EUR 122.01 per month.

The indemnity is intended mainly to offset the costs related to heating, electricity, maintenance of the work place, office equipment, etc.

This means that from the NSSO’s point of view, this flat-rate indemnity, which is borne as an expense by the employer, is not considered as remuneration and, therefore, is exempt from any social security contributions (employer’s and employee’s contributions).

However, the NSSO requires that such employees execute their work at home on a structural and regular basis. Also, there has to be a designated room at home for working in. For employees who have a work place with their employer, the indemnity will only be accepted when it appears from their function that they work at home on a regular basis.   

Furthermore, the NSSO clarifies that for workers subject to the Act on Working Time, the indemnity will not be accepted if they execute the legal maximum working hours determined by law almost exclusively at the designated work place of the employer. 

From a tax point of view, the tax administration is not legally bound by the “administrative instructions” of the NSSO. In practice however, the tax administration seems to align with the flat-rate indemnity approved by the NSSO and to qualify this indemnity as a non-taxable reimbursement of costs to be borne by the employer.

Finally, please note that a different monthly indemnity, to a maximum of 10% of the gross remuneration of the employees involved (in proportion to the performances at home), may be granted with exemption from social security contributions to employees in a home working or telecommuting arrangement in a strict sense – this arrangement needs to be formalised within the company by clearly specified rules.

> Action point
In order to reimburse the home office expenses your employees incur (apart from home work and telecommuting in a strict sense), it is now possible to take into account the new amount of EUR 122.01 per month validated by the NSSO.  This amount would also be justifiable from a tax point of view.