Company smartphone: taxable benefit when applying a split billing system?

The Minister of Finance recently adopted a strange position on the taxable benefit of the company smartphone. Why strange? According to the Minister, an employee does not pay taxes on the benefit of the company smartphone in the event of a so-called split billing system.

Context

Since 1 January 2018, new flat-rate valuations apply to the personal use of a mobile telephone, Internet connection and telephone subscription provided free of charge. These flat-rate valuations are applicable on a tax level as well as on a social security level:

The value of the smartphone without a split billing system

If the employer provides the employee with a smartphone which has a mobile telephone subscription and an Internet connection the employee may be used for private purposes, the benefit for the employee amounts to EUR 144 per year (= EUR 36 + EUR 60 + EUR 48) or EUR 12 per month.

Parliamentary question

The Minister of Finance was asked whether the company smartphone (or mobile phone) gives rise to a taxable benefit of EUR 36/year when an employee receives a direct invoice from the provider. The invoice will then cover the costs for the private use of the telephone subscription and/or the Internet connection (a so-called split billing system).

Surprisingly, the Minister replied that, in such a case, the device does not give rise to a taxable benefit provided that:

• the actual and full personal use of the telephone subscription and/or Internet connection is borne by the employee;
• the provider sends an invoice directly to the employee for this personal use;
• the threshold applied, i.e. the amount above which each use is deemed to be private use, is set in accordance with serious standards and criteria. In other words, the amount corresponds to reality.

The Minister therefore refers to situations in which the employer sets a threshold that covers the professional use of the smartphone. When this threshold is exceeded, the employee will receive an invoice from the provider.

Consequences

What if the cost oftelephone subscription and/or the internet connection do not exceed the threshold? In that case, only professional use is involved. It goes without saying that the device then does not give rise to a taxable benefit.

What if the threshold is exceeded? In that case, the part exceeding said threshold will cover the costs of the private use of thetelephone subscription and/or the internet connection. The costs for the private use of the device are not paid by the employee. In that sense, it is surprising that the Minister accepts that the private use of the device does not give rise to a taxable benefit.

The position of the Minister will be further explained by the FPS of Finance in an addendum to the circular 2017/C/82.

And on a social security level?

The Minister of Finance only takes a position on the tax treatment of the benefit. On a social security level, this point will be further examined by the management committee of the NSSO. It remains to be seen whether the NSSO will follow the position of the Minister of Finance.

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

Sources: Full Report, Parliamentary Committee on Finance and the Budget of 06 February 2018, CRIV 54 COM 812, 2; Royal Decree of 2 November 2017 amending the 'Code des impôts sur les revenus 1992', with regard to the section of the benefits in kind that provided free of charge for the personal use of a PC, tablet, mobile phone, Internet connection or telephone subscription (1), Belgian Official Gazette of 13 November 2017. Circular 2017/C/82 on the benefits in kind for the personal use of a PC, tablet, Internet connection, mobile phone or fixed or mobile telephone subscription provided free of charge.

Author: Peggy Criel

20/03/2018