Company smart phone and split bill: clarification from the tax authorities

Some time ago, the Minister of Finance decided that an employee pays no taxes on the benefit of the company smartphone in the event of a split billing system. In a recent circular, the FPS Finance explains this position.

Position of the Minister of Finance

If an employer uses a split billing system for the mobile telephone and Internet subscription, the private use of the mobile telephone (the device) does not give rise to a benefit of EUR 36/year. This is what the Minister of Finance decided in an answer to a parliamentary question. You will find more information about this subject in our Infoflash of 20 March 2018.

As announced, the FPS Finance is now providing additional clarification in a circular.

What is a split billing system?

This system implies that the employee receives an invoice directly and separately from the provider for the private use of the mobile telephone and Internet subscription.

A system in which the employer directly receives an invoice for the professional and private use of the telephone and Internet subscription and the employee reimburses the costs of the private use to the employer (e.g. through deduction from the net wage) does not constitute a split billing system.

Split billing system in accordance with serious standards and criteria

Only to the extent that the split billing system is established in accordance with serious standards and criteria and thus corresponds to reality, there is no benefit for the mobile telephone.

Consequently, in the event of a split billing system with a threshold above which any use is deemed to be private use, the employer must provide proof that he set this threshold in accordance with serious standards and criteria.

Example:

An employer makes a smartphone with a mobile telephone and Internet subscription available to an employee. For both subscriptions, he sets thresholds above which any use is deemed to be private use. For the mobile telephone subscription, the threshold is set at EUR 10/month. The threshold for the mobile Internet subscription is set at 2 gigabyte/month. The employer set these thresholds in accordance with serious standards and criteria. The employee receives directly and separately an invoice from the provider for the private use. Such a system constitutes a split billing system. Therefore, making available the smartphone and the mobile telephone and Internet subscription does not give rise to any benefit in kind.

Example:

An employer makes a smartphone with a mobile telephone subscription available to an employee. If the employee wants to have a private conversation, he must first enter a specific number before entering the telephone number. In this way, professional conversations are distinguished from private conversations. The employee receives directly and separately an invoice from the provider for the private use. Such a system constitutes a split billing system. Therefore, making available the smartphone and the mobile telephone subscription does not give rise to any benefit in kind.

If the employer cannot provide proof that he set the threshold in accordance with serious standards and criteria, the private use of the mobile telephone and the mobile telephone and Internet subscription will eventually give rise to a taxable benefit in kind. The private use costs that the provider invoiced separately and directly to the employee in the split billing system may then be deducted from the benefit in kind as an own contribution.

Split billing system for both the telephone and Internet subscription

If the employer makes both a telephone and an Internet subscription available, the position is adopted on condition that the split billing system applies to both subscriptions.

If the split billing system only applies to one of the two subscriptions made available, the position is not adopted.

Example:

An employer makes a smartphone with a mobile telephone and Internet subscription available to an employee. The employee may use these subscriptions for private use. For the mobile telephone subscription, the employer sets a threshold of EUR 10/month above which any use is deemed to be private use. The employer set these thresholds in accordance with serious standards and criteria. He does not set a threshold for the mobile Internet subscription (i.e. there is no split billing system for this subscription). The employee receives directly and separately an invoice from the provider for the private use of the mobile telephone subscription. In this case however, a mobile Internet subscription is made available which consequently gives rise to a taxable benefit of EUR 60/year. There is also a taxable benefit of EUR 36/year for the private use of the smartphone. The position that there is no benefit for the smartphone only applies when there is a split billing system for both the telephone and the Internet subscription.

And on a social security level?

It remains to be seen whether the NSSO will take the same position with regard to the company smartphone and the split billing system.

We will follow the discussions and inform you as soon as there are new developments.

Source: Circular 2018/C/63 on the benefits in kind for the personal use of a PC, tablet, Internet connection, mobile telephone or fixed or mobile telephone subscription.

Author: Peggy Criel

12/06/2018