The special tax status of foreign executives: an additional social security exemption

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Date:
18 Feb 2013

<p>The ONSS/RSZ has approved an additional exemption from social security contributions for foreign executives based on the percentage of the so-called 'travel exclusion'.</p>

additional social security exemption

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The ONSS/RSZ has approved an additional exemption from social security contributions for foreign executives based on the percentage of the so-called 'travel exclusion'.

According to a Tax Administration's circular of 8 August, 1983, foreign executives may, under certain conditions, benefit from a favourable tax regime.

Accordingly, they may benefit from a tax exemption:

  • for costs proper to the employer (living costs, housing costs, tax equalization) calculated on the basis of the Tax Administration Technical Note and the exemption for which is limited to €11,250 per year (if the executive is occupied by an operational company) and to €29,250 per year (for executives who are researchers or who have coordination functions); and
  • for the part of the salary that corresponds to work accomplished outside Belgium. That is what is called the 'travel exclusion' or 'exemption for days spent abroad'.

The ONSS/RSZ very recently confirmed to us in writing that it grants, since 1 January 2012 (!) an additional exemption based on the percentage of the 'travel exclusion'.

The additional ONSS/RSZ exemption consists of an increase in the exempted costs calculated on the basis of the Technical Note, starting from the maximum cap of €11,250. Researchers and executives working in a coordination centre are, therefore, excluded from this additional exemption.

For instance: A foreign executive has a travel exclusion of 30%. He benefits from the exempted amount of €11,250. The total exemption from social security contributions is, in this case, equal to €11,250/70% x 100% = €16,071.43.

> Action point:

In the calculations of the payroll for foreign executives, account must be taken of the additional exemption from social security contributions that will increase along with the 'travel exclusion' percentage.