The year-end is synonymous with a buzz for companies - time to bring this year to a successful conclusion and start planning the next one. But one of the essential things to do is make advance tax payments.
You still have a few weeks left to do the right thing, that is almost certain to have a positive impact on the financial health of your company. Invariably, this involves optimising the use of your resources. In translation, that means reducing your tax base by making use of existing, perfectly legal mechanisms to reduce your tax bill. But remember one crucial thing - don't compromise your cash flow. Otherwise you would be shooting yourself in the foot. But let us be more specific....
Pay your taxes in advance? Absolutely!
Advance payments are a necessary step for avoiding a tax increase of... 6.75%. This is why the tax authorities have set up four windows in the year for paying your taxes in advance. The earlier you start, the greater the benefit to you. Didn’t make any payments in 2019? Better late than never, so don't let the last deadline pass: December 20 next. How does it work?
- The idea is to determine the amount of your taxable income for this year in order to estimate your approximate tax liability. You are then ready to make your payment to the tax authorities;
- Note that if you have waited until the last deadline of 2019, you will have to pay more than the amount due to fully offset the increase. Remember this again next year...
- You should also know that if you are ‘too generous’ with the tax authorities, you are not entitled to any benefits. However, any excess will be refunded to you.
Convinced? Here is a specific example:
- Imagine that your company is liable for 200,000 euros in taxes in 2019.
- If you don’t make an upfront payment until the end of the year, you will be charged an additional 13,500 euros in increases (200,000 x 6.75%).
- But, because you’re on the ball, you act before 20 December and pay the 200,000 euros in advance. You will then ‘neutralise’ a total of 9,000 euros (200,000 x 4.50%) of the additional 13,500 euros. That’s a significant saving...
A slight problem - no cash?
If we look at our example again: paying out 200,000 euros in cash by 20 December is certainly no easy task. The answer is bank financing. This option offers you the opportunity to take advantage of low rates to spread your disbursement out over several months. As a result, you avoid tax increases without having to draw on your working capital. Also note that the interest on the credit is tax deductible as a business expense. What else?
Other major expenses are on the horizon for December 31, including your end-of-year bonuses. Like the May/June payouts, this one-off cost has a heavy yet recurrent impact on your cash flow - which also means that you can easily prepare for it. As with payments in advance, it’s good practice to finance them in order to smooth them out over time. It will benefit your cash flow, and it’s also useful from a tax point of view.
5 actions to take — immediately — for a successful end to the tax year
Your success is not only based on the quality of your products or services. Without effective tax and financial optimisation, you risk losing valuable profits... Over to you!
The end of the calendar year is approaching. This is the holiday season, but it’s also the time for closing the annual accounts. As with your presents, don't wait until the last moment to ‘pamper’ your business, especially since you have a number of financial and tax levers at your disposal to give 2019 a good send off. You have a few months left to make some accounting adjustments, optimise your results and look after your employees - all without ever neglecting your cash flow. The objective: to be ready for the evening of December 31. Ready to take action?
1. Reduce your tax bill
You are certainly familiar with the mantra: true optimisation often means reducing your tax base. In other words: reduce the size of the slice on which your taxes are calculated. How? Thanks to the tax ‘gifts’ provided by the legislator. Several solutions exist, from the most known to the most original. Take the time to analyze, compare and possibly combine them to get the most out of them.
2. Review your investment planning
Is your annual profit sure to exceed expectations? Good news, but beware of the backlash from the tax authorities. If you had investments planned for 2020, it may not be too late to bring them forward to 2019. It’s one way to reduce your tax base. On top of that, you could (in specific cases) take advantage of the special (and temporary) 20% deduction. You should also know that next year will mark the end of digressive depreciation for any new investment... Think about it!
3. Pay your taxes in advance
This is the indispensable principle of tax pre-payments. The fact is that each year you have four windows during which you can pay your dues in advance. The benefit? You avoid a surcharge, which is getting increasingly harsher - 6.75% for companies (in 2019). The dates to note are April 10, July 10 and October 10 and December 20 at the latest for the last payment of 2019.
4. Pamper your employees
The holiday season means presents. It’s the perfect time to reward your staff for their efforts. And Belgium provides all sorts of possibilities for offering that little extra that makes all the difference. Tax-efficient solutions such as salary bonuses linked to collective objectives or allocated in the form of warrants. Win-win solutions!
5. Preserve your cash flow
Finally, remember that December means significant but predictable expenses, such as year-end bonuses. Just like other recurring and one-off expenses (holiday pay, for example), it’s often worth spreading them out over time by setting aside funds for them. It’s an ideal - and tax-efficient - way to avoid drawing on your cash flow.
Who will be the first employee to be rewarded in your company? You?
A truth, repeated over and over again, remains... a truth. The wage cost in Belgium remains a burden for companies. The good news is that you have other ways to reward your staff.
A one-off cash bonus is expensive... and what the worker gets is often disappointing. Fortunately, much more interesting options have flourished. Salary bonus, profit-related bonus or warrant? Individual or collective extras? Performance-related or not? It's à la carte! Indeed, companies have a wide range of solutions for rewarding their employees. They are an excellent lever for strengthening team motivation or attracting (and retaining) new talent. Not to mention that each system has its own advantages - particularly in terms of taxation - for the company. All you have to do is choose...
1. Warrants - the route to optimisation
This first option allows you to individually grant a financial security to employees. This gives them the right to buy or sell shares at a predefined price (under certain conditions). Workers are free to resell their warrants the next day at their current market value or wait and resell them later with the hope of an increase in value. They may also decide to convert them into units of the underlying mutual fund (SICAV). This is a flexible, simple tool to set up to optimise your staff's salary. The other advantages are that
- your employees receive a much higher net amount than with a cash bonus, because they only have to pay professional withholding tax,
- and, for the employer, no social security contributions are due. Better still, you can deduct the warrants for tax purposes.
2. The profit bonus: a share of the company's results
A newcomer in the Belgian landscape, this is a collective benefit, so all the company's employees must therefore profit from it. The profit-sharing bonus is not linked to individual results, but may be discretionary (based on function or seniority). In this case, a company agreement is required. A sine qua non condition: the company must make a profit... If so, you can freely determine the amount granted, but the sums may not exceed 30% of the total payroll. No national security contribution is due, but this extra is subject to the Isoc...
3. The CCT 90 bonus plan: collective objectives achieved
The name may not be snappy but the “non-recurring results-linked benefit” covers an add-on based on the achievement of collective (and uncertain) objectives linked to clear criteria. The bonus must also be the subject of a company agreement or an act of accession. In practice, you cannot exceed 3,383 euros gross (for 2019) per worker... equivalent to nearly 2,940 euros net. While the bonus is 100% tax deductible for the employer, a special contribution of 33% must be added...
You have plenty of choice. The key is to establish an optimised bonus strategy - for the company and its employees.
Kilometervergoeding voor elektrische fiets niet altijd fiscaal vrijgesteld
Werknemers die met de fiets naar het werk rijden, kunnen een fietsvergoeding krijgen tot 22 eurocent per kilometer. De regeling geldt in principe ook voor elektrische fietsen. Sommige modellen zoals de speed pedelec, vallen echter uit de boot.
De elektrische fiets wint terrein: ruim één op vier verkochte tweewielers is een elektrisch exemplaar. Steeds meer mensen gebruiken hun fiets ook om te pendelen. Werkgevers kunnen hun fietsende medewerkers een fietsvergoeding uitbetalen. Tot 0,22 EUR per kilometer is die vergoeding fiscaal onbelast. Het moet dan wel gaan om een “klassieke” elektrische fiets:
- met een maximumsnelheid van 25 km/u;
- met een motor van maximum 250 watt;
- met trapondersteuning, wat betekent dat de fietser ook moet trappen, er mag dus geen sprake zijn van een autonome motor.
Niet voor speed-pedelecs
Die voordelige regeling geldt dus niet voor speed pedelecs, zeg maar de Formule 1-versie van de elektrische fiets. Speed pedelecs kunnen snelheden tot 45 km/u halen. Sinds 1 oktober moeten bestuurders daarom een helm, rijbewijs en verzekering hebben.
Voor alle duidelijkheid: pendelaars die gebruik maken van een speed pedelec kunnen wel degelijk een kilometervergoeding krijgen van hun baas. Maar die uitkering wordt dan wel beschouwd als een belastbaar inkomen. De werknemer zal dus zowel RSZ als bedrijfsvoorheffing moeten betalen. Op die regel bestaat één uitzondering: medewerkers die kiezen voor een forfaitaire aftrek van hun beroepskosten. Zij hebben recht op een fiscale vrijstelling van maximum 380 EUR.
Wat met bedrijfsfietsen?
Werkgevers kunnen hun medewerkers een fiets ook ter beschikking stellen. Alle kosten die daaruit voortvloeien, onder andere het onderhoud, zijn vrijgesteld van belastingen. Voorwaarde is dat de medewerker de fiets daadwerkelijk gebruikt voor zijn woon-werkverkeer, al zijn zuivere privé-verplaatsingen ook toegestaan. Deze regeling geldt alleen voor de klassieke elektrische fietsen. Speed pedelecs vallen (opnieuw) niet onder deze fiscale vrijstelling.
Why is the European Justice sounding the death knell on "fairness tax"?
The Advocate General of the Court of Justice rules that the "Fairness Tax" contradicts European tax rules. What is the impact on Belgian companies and the State budget?
Since the 2014 tax year, national companies and Belgian subsidiaries of foreign companies have been subject to fairness tax (or "fairness tax"). Introduced by the Di Rupo government, this separate contribution of 5.15% is applied to the distribution of dividends which are not subject to the normal rate of corporation tax. At issue here is the application of the deduction of deferred tax losses or deductions for venture capital.
What is at stake?
When it was introduced, the government wanted to subject companies who paid little or no tax to a minimum tax, by using tax deduction mechanisms. Issue: when this tax was introduced, questions were raised about the compatibility of the legislation with tax law in the European Union.
In February 2014, the Belgian subsidiary of Fortum Project Finance (Finnish company) brought an appeal against this tax before the Constitutional Court. The Constitutional Court asked the European Court of Justice three questions:
- Does the fairness tax constitute a withholding tax prohibited by the parent-subsidiary European directive?
- Do dividends collected by Belgian companies not exempted in Belgium contravene the directive?
- Does the different treatment of Belgian companies and Belgian subsidiaries of foreign companies contravene the freedom of establishment in the European Union?
A compatible... but problematic tax
The European Court of Justice finally gave its verdict, but the opinion still needs to be qualified in certain respects. The Advocate General of the European Court of Justice in effect deemed the fairness tax "contrary to European regulations", but he considered the measure to be compatible with the principle of free establishment laid down in the texts and treaties. The problem resides precisely around the directive governing parent companies and their subsidiaries in Belgium, the objective of which is an exemption from withholding tax (under certain conditions) for dividends paid by subsidiaries to parent companies, which the fairness tax calls into question.
A highly political issue too
"A skeleton comes out of the closet", commented the Minister of Finance Van Overtveldt after the opinion of the Advocate General. For him, the consequences could be enormous, particularly from a budgetary point of view, without so far giving the slightest indication of these. He added that he has "always had many doubts" about this tax, "a doubt confirmed by the Court." The government has stated that it is currently leaning towards a reform of corporation tax, in a tense atmosphere between the partners of the current majority, particularly to make "this tax fairer for SMEs."
The Socialist Party, for its part, continues to defend this minimal tax through thick and thin. The leader of the Socialist Group in the Chamber of Representatives, Laurette Onkelinkx, in L'Avenir, suspects that the Minister is benefitting from a "technical remark from the Advocate General to give a tax break to the multinationals" and that "this minimum tax should be maintained, (...) a matter of fiscal justice and decency with regard to the efforts required by the population."
- Tax optimisation? Absolutely! But without burning a hole in your cash flow...
- 5 actions to take — immediately — for a successful end to the tax year
- Who will be the first employee to be rewarded in your company? You?
- Kilometervergoeding voor elektrische fiets niet altijd fiscaal vrijgesteld
- Why is the European Justice sounding the death knell on "fairness tax"?