Telework allowances - New tax circular

On 14 July 2020, the  tax authorities published Circular 2020/C/100 on costs to be borne by the employer for remote working. In practice, this circular created many uncertainties and existing unclarities were not resolved. On 26 February, after consultation with the NSSO, the tax authorities have published a new, more elaborate tax circular (Circular 2021/C/20) that replaces the circular of 14 July 2020 and clarifies a number of unresolved questions.

The tax circular of 14 July 2020 was intended to create a clearer framework regarding the lump-sum allowances that can be granted in the framework of structural and regular telework (also outside of corona telework). The intention was to provide a number of clear rules in this respect and to avoid the ruling service being overwhelmed with ruling requests regarding telework indemnities.

However, existing unclarities were not resolved, certain provisions were in conflict with those of the NSSO and more and more employers approached the ruling service for rulings. The tax circular of 14 July 2020 indicated that a home-working allowance could only be granted if the employee worked at least five days per month from home (whereas the NSSO accepts on average one homeworking day per week) and that it was not possible to grant a different lump sum based on the function category unless a ruling was obtained. Furthermore, it was not made clear which costs were or were not covered by the lump sum.

The new Circular 2021/C/20 of 26 February 2021, which was established in discussion with the NSSO, responds to the criticism of its predecessor:

For example, for tax purposes, it is no longer required that an employee work five days a month from home for such work to constitute “structural and regular homeworking”. As is the case for social security purposes, one day a week on average will suffice.

On the basis of an objective justification, it will now be possible to grant different amounts for home office work if the differentiation is based on the function category of the employees or the actual circumstances in which the home office work is organised, without the requirement for a ruling.

However, to the extent that such differentiation is aimed at granting to a specific function category a higher reimbursement of lump allowances without proper justification, or that a “function category” is created for the same purpose, this will not be accepted.

To avoid discussion on this matter, it is still recommended to obtain a ruling.

A non-exhaustive list of the costs covered by the lump-sum allowance (currently EUR 129.481) for home offices is now provided: use of space at the employee’s home for office work (including rent and any depreciation of the space); printer and computer equipment (this does not mean the printer and computer themselves but for  example paper, a USB stick, mouse pad, ink, etc.); office supplies (folders, notepads, pens, etc.)   utilities such as water, electricity and heating; - maintenance, insurance, property tax; and coffee, water and snacks.

An exhaustive list of costs not covered by the lump-sum allowance is now also provided:

• office chair, office desk, desk cupboard, functional desk lamp;
• a second computer screen;
• printer/scanner;
• keyboard;
• mouse, foot mouse, trackpad or trackball;
• headphones;
• specific equipment needed by persons with disabilities to work smoothly with the computer.

An additional important aspect in the circular letter is that the making available by the employer of the equipment/furniture not covered by the lump-sum allowance is explained in detail, as is the case for the reimbursement thereof by the employer to the employee.

Certain general “rules” are provided, such as the requirement that only “normal” equipment is covered by the circular (e.g., no luxury office furniture, no equipment that is clearly not used professionally, etc.).

The circular confirms explicitly that a one-off reimbursement of this equipment is possible (but may also be spread over time), with three important remarks:

• when the professional activity or home working is terminated before the normal life span of the investments expires and the employee does not have to reimburse the employer for the actual residual value (or part of it), then the actual residual value of the investment (or the difference between the real residual value and the reimbursement by the employee) must be taxed as a benefit in kind at that time;
• a list of common “depreciation periods” is provided for;
• the above-mentioned items may not be replaced prior to their “depreciation” (e.g., an office chair may only be replaced every 10 years).

A similar reasoning applies to the making of such equipment available.

If the employer provides a laptop/PC, but the employee uses his own peripheral equipment for professional purposes (a second screen and/or a printer/scanner), then the employer can, for a maximum of 3 years, compensate EUR 5 per device for the professional use of the private devices (so, maximum EUR 10 per month).

If the employer already grants a monthly lump sum of EUR 20 for the professional use of the private laptop/PC, no additional lump sum can be granted for the professional use of the private peripherals.

The circular will come into force from March 1, 2021, with the understanding that the administration will take into account the principles contained in the circular for the situations of home work that have occurred from 01.01.2020. Finally, we note that the circular letter does not affect current rulings.

1 The government has decided to increase the maximum amount of EUR 129,48 per month to a maximum amount of EUR 144,31 per month for April, May and June 2021.

Action point

We strongly recommend that you evaluate your current practice regarding the lump-sum reimbursement of home office expenses in view of this new circular. One of the main concerns is that a differentiation in lump-sum allowances must be based on objective factors.