The caps set by the NSSO (social security) and tax authorities on non-recurring company performance-related benefits will be indexed on 1 January 2015.
The industry agreement for 2007-2008 between management and labour established a bonus system commonly known as "CTC 90" or "non-recurring performance-related benefits".
The system allows workers to be paid a social security- and tax-concessionary bonus under certain conditions.
Social security cap
A bonus awarded under CTC 90 is not classed as pay liable to social security contributions if it does not exceed the social security limit set per worker per calendar year.
A 13.07% solidarity levy will, however, be deducted from the amount paid to the worker; while the employer will have to pay a special employer’s levy of 33% on the bonus.
If the bonus actually awarded exceeds the limit, ordinary social security contributions will be due on the excess portion.
The social security cap in 2014 is € 3,131. This limit is indexed annually. The amount as of 1 January2015 will be €3,130(subject to official confirmation) – i.e., €1 lower than the 2014 amount
The bonus awarded under CTC 90 is exempt from personal income tax up to an annual ceiling of €2,722(2014 amount). If the tax cap is not exceeded, no PAYE will have to be deducted at source from the bonus awarded.
The annual limit is indexed annually: as of 1 January2015 it will be €2722 (subject to official confirmation) – i.e., no change in 2015.
You can get bespoke support in introducing a bonus system and answers to legal queries from our legal department on email@example.com.
Auteur: Peggy Criel