- 24 Jun 2011
In its circular of 23 May 2011, the Belgian tax authorities tuned their position with regard to seniority premiums following the recent clarification issued by the National Office of Social Security (NOSS).
For the seniority premium to be exempted from social security contributions and tax, a number of conditions must be met.
The NOSS had already indicated that the seniority premium can only be granted twice in an employee's career: a first time at the earliest in the calendar year in which the employee completes 25 years of service and a second time at the earliest in the calendar year in which the employee completes 35 years of service.
For reasons of consistency, the tax exemption must also be conditional to the fact that the premium is granted at the earliest at 25 or 35 years of service, without it being required that it is granted at the moment this seniority is acquired.
A seniority premium which is awarded for the first time to celebrate 30 years of service thus meets the conditions for tax exemption.
It remains of course important that the premium is linked to the seniority of the employee. Premiums awarded for reasons other than seniority remain excluded from the beneficial tax regime.
The (new) exemption applies retroactively to seniority premiums awarded or paid as of 1 January 2006.