Saint Nicolas and the end-of-year festive season are coming up. During this period, many companies want to express their sympathy towards their workers by granting them gifts or gift vouchers. Under certain conditions these gifts and gift vouchers will receive a more favourable social security and tax treatment.
Remark: In this Infoflash we will only go further into the gifts and gift vouchers which are granted on the occasion of the end-of-year festive season.
I. Social aspect
In principle, the gifts and gift vouchers that a company grants to its workers constitute a wage on which social contributions shall be due.
However, gifts in kind or in cash or in the form of payment vouchers, the so-called 'gift vouchers', granted on the occasion of Saint Nicolas, Christmas or New Year, are exempt from social security contributions provided that the total annual amount does not exceed EUR 35 per worker, increased by EUR 35 for each dependent child of the worker concerned (1).
The National Social Security Office (NSSO) presupposes that a child is dependant on the worker when the latter effectively bears the full or partial burden of the child.
Furthermore, according to the general instructions for employers given by the NSSO , the question whether these conditions are met will have to be judged on the basis of the system that the employer uses for the granting and not on the basis of the amount granted to each worker. For example, if an employer grants a gift or gift voucher of EUR 100 to all of his workers, social security contributions shall be deducted from all of these gifts or gift vouchers, even if some workers have two or more dependent children.
The value of the gifts in kind is determined on the basis of the price the employer has paid, VAT included.
Moreover, the gift vouchers must meet the following conditions:
- they can only be exchanged in businesses that have concluded a prior agreement with the voucher issuing company;
- they must have a duration which is limited to one year as from the date of being granted to the worker;
- they cannot be paid out in cash, neither entirely or partially, to the beneficiary.
If the value of the gifts or gift vouchers exceeds the above amounts, social security contributions shall be due on the total value.
II. Fiscal aspect
1. On the part of the worker
The gifts or gift vouchers which an employer grants to his workers in principle constitute an advantage of any kind that is acquired with a view to or following the exercise of the professional activity. In that regard, they are therefore liable to withholding tax and other taxes.
As an exception to that principle, certain benefits which are designated as 'social benefits' are exempt from taxes (and therefore are not liable to withholding tax) (2). It regards minor benefits which are granted by the employer in order to improve the relationship with the staff and strengthen the bond between the staff and the company (3).
Are regarded social benefits (non-exclusive list):
- occasional gifts given as a token of recognition or kindness following fortunate or unfortunate events that are not directly related to the professional activities (e.g. toys for the children, a gift on the occasion of a distinction or an anniversary etc.) (4);
- payment vouchers of any nature - except luncheon vouchers - (e.g. gift vouchers, surprise vouchers, culture vouchers, book vouchers, sport vouchers, purchase vouchers, etc. ) which have a low value and are granted by a company to its members of staff with a strong social aim and not as a proper wage for performed work (5).
The amount of € 50 can serve as a reference for the concept of 'minor benefit' (6).
Important remark - The gifts, or gift vouchers which meet the deductibility conditions on the part of the employer are also exempt from taxes for the worker, even if the value of these benefits exceeds EUR 50 (see point 2 below).
2. On the part of the employer
The social benefits referred to in article 38, 11° of the 'WIB 92' (Income Tax Code 1992) which an employer grants to his workers, are not deductible as business expenses on his part (7).
However, the employer can deduct the gifts in kind, in cash or in the form of gift vouchers (surprise vouchers, book vouchers, sport vouchers, culture vouchers, purchase vouchers etc.) as business expenses if the following conditions are met (8):
- all workers shall enjoy the same benefit;
- this benefit shall be granted on the occasion of one or more festivities or annual events, such as Christmas, new year, the festivity of Saint Nicolas, customary festivities within a specific business sector (for example Sint-Elooi or Sint-Barbara ), an anniversary, etc.;
- the total amount granted shall not exceed EUR 35 per year and per worker on the occasion of festivities or annual events. This amount shall be increased by EUR 35 for every dependant child of the worker if the benefit is granted on the occasion of the festivity of Saint Nicolas or another festivity of the same social nature.
- the gift vouchers shall only be exchanged in businesses that have a prior agreement with the voucher issuing company. Furthermore, they shall have a validity which is limited to one year as from the date of being granted to the worker. Finally, they cannot be paid out in cash, neither entirely or partially, to the beneficiary.
III. Gifts/Gift vouchers and individual account
The individual account must state the value of the gifts and the gift vouchers offered to the workers on the occasion of end-of-year festive season (9).
Therefore, we kindly request employers who are affiliated to the Partena Payroll Office to inform their Payroll Consultant of the amount of the above-mentioned benefits.
Sources: (1) Article 19, § 2, 4° of the Royal Decree of 28 November 1969 on Social Security; (2) Article 38, 11° WIB 1992 ; (3) Com. WIB 92 no. 38/24; (4) Com. WIB 92 no. 38/25; (5) Com. WIB 92 no. 38/27; (6) Circular letter no. Ci.RH.242/554.090 (AFER 28/2002) dated 16.12.2002; (7) Article 53, 14° WIB 92; (8) The above-mentioned circular letter of 16.12.2002; (9) article 16, §1, 8° of the Royal Decree of 8 August 1980 regarding the retention of social documents.
Auteur: Patricia weber - Isabelle Caluwaerts