Tax and social security

The new tax circular 2021/C/67 of 20 July 2021 on the exemption of social liabilities due to the single employment status of blue- and white-collar workers, which is an addendum to the previous circular 2019/C/138 of 20 December 2019, resolves a number of ambiguities in the application of social liabilities.

The Act of 26 December 2013 on the introduction of a single employment status introduced, among others, a tax exemption for “social liabilities” as of 2019. This is a balance-sheet provision to cover future (additional) dismissal costs resulting from the introduction of the single employment status, which, among others, unified the notice periods.

This legislation allows the employer to exempt from corporation tax a certain part of its profits or gains per individual employee who has reached a certain seniority (i.e., five years as from 1 January 2014) in the single employment status. That part is set at the salary of three weeks per started year and at the salary of one week after 20 years of seniority in the single employment status

However, the exempt amount in corporate tax must be added back to the profits or income when the employee concerned leaves the company (regardless of the reason). Since the exemption starts after 5 years of seniority in the single employment status, the measure only had an actual tax impact as of 2019.

A Royal Decree of 4 April 2019 now sets the maximum basic salary. Up to a gross monthly salary of EUR 1,500, social liabilities are taken into account in their totality; in the salary band between EUR 1,501 and EUR 2,600 only 30% is taken into account; the salary band above EUR 2,600 is not taken into account.

A first tax circular of 20 December 2019 provided several clarifications on the social liabilities. In an addendum to this first circular, the tax administration further explains this system and also revisits previously held opinions.

The most important modification is that the tax administration no longer requires the employees in question to be subject to the Belgian social security system. The applicable legislation did not require this, but in the first circular, the tax administration did include this condition. The tax administration is now (retroactively) reversing its position.

Furthermore, it is clarified that the single and double holiday pay of blue-collar workers and the double holiday pay of white-collar workers are excluded from the calculation basis of the reference remuneration.

Finally, things are clarified around the 281.78 certificate. This is the certificate that has to be submitted annually via Belcotax in order to be able to use the social liabilities.

Action point

The new fiscal circular on social liabilities has introduced a number of clarifications. The most important change is that it is no longer required that the employees in question are subject to the Belgian social security system.