Provision of heating and/or electricity: important tax change for 2022

From 1 January 2022, the flat-rate tax assessment resulting from the free provision of heating and electricity for purposes other than heating is subject to an additional condition: it will only apply when the person granting the benefit also provides the immovable property for which the benefit is granted.

Context

The government is preparing a comprehensive tax reform to modernize and simplify the tax system. With regard to personal income tax, the government agreement aims at simplification, including a gradual shift from alternative forms of remuneration to remuneration in euros.

When an employee's private expenses are covered by the employer, through the granting of remuneration in kind, the employee is taxed on this benefit of any kind, which must therefore be assessed. Some of these benefits are assessed on a flat-rate basis (without taking into account their real value) and this is the case, in particular, for the provision by the employer of heating and electricity for purposes other than heating. This flat-rate assessment allows the employee to benefit from heating and electricity in a tax-efficient way (sometimes through a cafeteria plan).

This type of wage flexibilization goes against the government's intention.

What will change?

Pending the tax reform, the government has decided to limit the flat-rate assessment of the benefit in kind for the free provision of heating and electricity. The flat-rate assessment will only apply in cases where electricity and/or heating are provided free of charge together with the provision of a dwelling free of charge. This additional condition will apply to benefits granted from 1 January 2022.

In concrete terms, in 2022

For the income year 2022, the flat-rate tax assessments resulting from the free provision of heating and electricity for purposes other than heating shall only apply when the person granting the benefit also provides the immovable property for which the benefit is granted.

Flat-rate assessments for 2022 (amounts still unofficial) of the benefits resulting from the free provision of heating and electricity when the person granting the benefit also provides the immovable property for which the benefit is granted:

In other cases, i.e. where the person granting the benefit does not also provide the immovable property for which the benefit is granted, the benefit resulting from the provision of heating and/or electricity will be assessed at its real value for the beneficiary.

Source:  Royal Decree of 19 December 2021 amending Article 18, § 3, the RD/CIR92 on the flat-rate assessment of benefits of any kind for the free provision of heating and electricity, Belgian Official Gazette of 27 December 2021