Benefits granted by a foreign group company: tax changes

Do your employees or managers receive benefits granted by a foreign group company? Keep in mind that you are now obliged to withhold withholding tax and state the benefits on a tax sheet. The Parliament recently approved of these changes but the act has yet to be published in the Belgian Official Gazette.

Context

In an international group of companies, foreign parent or sister companies sometimes grant benefits (remunerations or benefits of all kinds such as, for example, RSUs, stock options, etc.) directly to employees or company managers employed by a Belgian subsidiary or sister company. Until now, the granting of these benefits did not generally lead to any obligations in the tax field in Belgium, such as the withholding of withholding tax or the mentioning of the benefits on the tax sheet. Neither for the Belgian employer, nor for the foreign group company.

If no withholding tax is withheld and the benefits are not mentioned on a tax sheet, the benefits escape taxation if the employees or managers concerned do not spontaneously mention the benefits themselves on their tax return.

For this reason, a new withholding tax obligation was introduced for the Belgian employer. From now on, he will also have to mention the benefits on a tax sheet.

Obligation to withhold withholding tax on wages

As from 1 March 2019, the Belgian employer is obliged to withhold withholding tax on the benefits granted by a foreign company connected to the Belgian company within the meaning of Article 11 of the Companies Code.

This obligation only applies if the benefits are granted because of or as a result of the employment of the employee or manager with the Belgian company.

Obligation to state the benefits on a tax sheet

For the months of January and February 2019 there is no obligation to withhold withholding tax. Note, however, that the benefits granted by a foreign associated company during this period to the employees or managers of a Belgian employer must be mentioned on a tax sheet.

Benefits granted as from 1 March 2019 must automatically be mentioned on a sheet as they are subject to withholding tax.

The model of the sheet will be drawn up by the FPS Finance and must be submitted electronically before 1 March 2020.

We are glad to help you

We recommend you to ask assistance when introducing the new tax obligations. And don't forget that, on a social level, the NSSO recently extended the interpretation of the concept of 'wage' (consult our infoflash of 23 January 2019). Feel free to contact us for more information. You can send your questions to legalpartners@partena.be.

Source: Draft bill containing fiscal, anti-fraud, financial and various provisions, Doc.parl. Chamber 2018-2019, no. 3424.