The end of the year, a time of good cheer/1!

Next to granting gifts or gift vouchers, a lot of companies traditionally arrange Christmas or New Year festivities for their staff. A drinks reception may be held at the office or a dinner party may take place at a restaurant.

Below, we focus on the social and tax aspects of the benefits that workers enjoy as a result of these annual celebrations.

I. Social aspect

The social contributions are calculated on the basis of the worker's wages (1). 
The legal concept "wages" includes:

• the wages in cash the worker is entitled to from his/her employer in respect of his/her employment (2);
• the benefits assessed in cash the worker is entitled to from his/her employer in respect of his/her employment (3).

The concept "wages" applies if the following conditions are satisfied:

• the benefit must be assessed in cash;
• the worker must be entitled to the payment of the benefit;
• the payment must be borne by the employer;
• the payment must be granted as a result of the employment.

Taking the foregoing into account, non-individualized benefits are not considered as wages to the extent they cannot be assessed in cash for each individual worker. This category mainly comprises the benefits that are granted under a collective mechanism  that does not allow to determine the benefit that each worker receives. 

In this case, an office drinks reception organized by the employer or a dinner party at a restaurant as part of the seasonal festivities can be considered as benefits granted on a collective basis, for which the benefit each worker individually receives cannot be determined. Because the benefits cannot be individualized, they cannot be assessed in cash for the worker. As a consequence, such benefits do not fall within the concept of "wages" as regards social security and therefore they are not subject to social security contributions.

II. Tax aspect for the worker

As an example of a collective social benefit that is exempt for workers, the administrative commentary on the WIB (Income Tax Code) in particular mentions attendance at Christmas and New Year's parties for staff (4). 

As a consequence, the workers' attendance at the office drinks reception or the dinner party at a restaurant offered by the employer as part of the seasonal festivities are in principle exempt social benefits.  As such, they are exempt from tax (and therefore they are not subject to withholding tax) on the part of the worker.

Sources: (1) Article 23 of the Act of 29 June 1981 establishing the general principles of social security for employed workers; (2) and (3) article 2 of the law of 12 April 1965 on the protection of the workers' wages and Cass., 20 April 1977, J. T. T. 1977, p. 180-185; (4) Com. WIB 92 no. 38/25 and 38/27.3°.

FR/NL

Author: Patricia Weber - Isabelle Caluwaerts

20/08/2015