Reimbursement of employee expenses: four steps

Last week newspapers reported that a large Belgian enterprise got into difficulty with the tax authorities as a result of the reimbursement of expenses to its employees.

You offer lump sum expense allowances to some of your employees. Does this mean that you can no longer grant such allowances or that you must forget the idea of introducing such a system? No. Instead, you can prepare your company for an audit by the tax or the social security authorities. We are glad to examine together with you how you can enhance the existing system. Coherence and transparency are of central importance here.

Step-by-step plan

Four simple and logical steps to help you:

Step 1 - Determine which categories of employees will be eligible

Keep in mind the nature and level of the different employee categories at your company. Not all employees are eligible for a flat-rate allowance.

Step 2 - Determine which expense categories will be covered by the flat-rate allowance

The allowance should consist of a number of different elements. For instance costs associated with working from home or the use of a company car.

Step 3 - Determine the amount of the flat-rate allowance

Keep in mind the standard amounts of the Belgian social security and the ruling practices of the tax authorities. Also consider the job's position in the company hierarchy and the employee's salary.

Step 4 - Implementation

The best way to implement a flat-rate allowance system is to draft a company policy and to add an addendum to the employment contract.

You can introduce a ruling request with the tax authorities, however this is not always necessary.

Getting started

You conclude that expense allowances are a quick and easy way to increase your employees' net income? Yet, somehow it seems too easy - and it is. Instead, you can give your employees a fixed-rate allowance but you must be able to justify it. The reimbursement you offer must be realistic. Do not use it as a way of giving your employees a bonus. The lump sum allowance is intended to reimburse employees for professional expenses they have incurred.

Coherence and transparency are key words. Not only in relation to the public authorities, but also for your employees. This is the only way you can develop a satisfactory staff policy.

More information?

Mail to legalpartners@partena.be or call 02/549 30 20.