Tax exemption social liabilities - Royal Decree published

The Act of 26 December 2013 regarding the introduction of harmonised dismissal rules introduces among others a tax exemption "social liabilities" as of 2019.

For each individual employee who reaches a seniority of five years after 1 January 2014 under the harmonised dismissal rules, the employer can exempt a certain part of his profit or assets from taxes. This part is fixed at three weeks' remuneration per started year and at one week's remuneration after 20 years of seniority under the harmonised dismissal rules.

However, the exempted amount has to be added to the profits or gains at the moment the employee concerned leaves the company (for whatever reason). Given that the exemption only starts after five years of seniority under the harmonised dismissal rules, the measure therefore will only have an actual tax impact as from 2019.

A new Royal Decree modifying the RD/TIC 92 regarding the determination of the maximum amount of the exemption regarding the social liabilities now fixes the maximum calculation basis for the exemption.

Up to a gross monthly remuneration of 1.500 EUR, the social liabilities are completely taken into account; on the remuneration scale between 1.501 EUR and 2.600, only 30% is taken into account; for remuneration in excess of 2.600 EUR, the social liabilities are not taken into account.

The amounts will be linked to the index and adjusted, in consultation with the social partners, so the budgetary cost in 2019 will amount to maximum 250.000.000 EUR.

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This regime will only apply as of 2019. Only a limited part of the social liabilities will be exempted then.