With end-of-year festivities approaching, many companies will undoubtedly want to express their sympathy to their employees by giving them gifts in kind, in cash or in the form of vouchers. These gifts may, under certain conditions, be exempt from taxes and social security contributions, provided that certain conditions are met.
WHAT ARE THE CONDITIONS?
In order to qualify for social security and tax exemptions in 2018, gifts must be granted under the following conditions:
End-of-year festivities (St Nicholas, Christmas or New Year)
The annual amount does not exceed 40 Euro per employee (increase from 35 Euro to 40 Euro for social security purposes since 2017 and for tax purposes since 2018). Per dependent child of the employee, an additional amount of maximum 40 Euro per year can be granted if the employee takes full or partial care of the child. This increase for tax purposes only applies when it concerns a gift that is granted on the occasion of Saint Nicholas.
All employees must enjoy the same benefit
In addition, the following rules apply to gift vouchers:
- They may only be exchanged with companies that have concluded an agreement in advance with the issuers of these vouchers.
- They must have a limited period of validity from the date on which they are delivered to the employee.
- They may not be paid out in cash, either entirely or partially, to the beneficiary.
WHAT BENEFIT FOR THE EMPLOYER?
The gifts that meet the above conditions are tax-deductible as professional expenses by the employer. The maximum amount that can be deducted in 2018 is 40 Euro per year and per employee. This new amount will apply from 01 January 2018.
Gifts that do not meet the above conditions cannot be deducted by the employer as professional expenses for tax purposes.
WHAT HAPPENS IF THE APPLICABLE AMOUNT IS EXCEEDED?
If the value of the gifts exceeds the above amounts, social security contributions shall be due on their total value. Moreover, if these gifts cannot be considered as low-value benefits (see above), they shall constitute a taxable wage for the employee.
Sources: Circular 2018/C/125 on gifts in kind, in cash or in the form of payment vouchers; Royal Decree of 3 July 2018 amending article 19, § 2 14 of the Royal Decree of 28 November 1969 implementing the Act of 27 June 1969 amending the Decree-Law of 28 December 1944 on social security for employed persons, Belgian Official Gazette of 6 July 2018.