The fiscal rules on workers' taxable benefits are changing. The system will be simplified and the taxes on these benefits will be reduced. Here are all the details.
PC, portable computer, smartphone, tablet, internet connection: the new benefits tax system that comes into force in January firstly corrects an anomaly. It will allow the considerable fall in the price of these items in recent years to be taken into account and, now, in the value of the benefit that their free provision constitutes.
Up to now, the taxable base could be calculated as a fixed sum (PC and internet access) or based on the value (e.g. a mobile phone). However, tablets were not then taken into account: now they will be. For smartphones, no distinction was made between use of the device and use of the internet connection which nevertheless constitute two separate benefits. Here as well, a correction will be applied.
What will change specifically? Each device provided will now constitute a benefit in kind. Access to the internet using different media will no longer constitute a single benefit in kind. A new taxation table will be applied with a fixed sum for each item.
The new applicable system concerns the estimate of the benefit in kind for private use: this is without prejudice to the employer's own costs. Furthermore, if the company applies an "organised system" - like the split billing of a telecoms invoice - with a distinction between private and professional use, it will be accepted as such.
Finally, these new fixed sums applied by the Federal Public Service Finance will also be taken into account by the administration of the NSSO for calculating worker and employer social contributions. Thus everyone should make a financial gain through the direct taxation or the drop in the level of contributions thanks to these corrections.
3 smart fringe benefits
A pension scheme, hospitalisation insurance and devices remain fixed items within the remuneration package. A creative approach means that the cost of these is manageable.
Company cars, group insurance, various types of cheques, an internet connection at home, working part-time or even childcare through the employer – each of these is an example of fringe benefits. Although the social and tax regulations for each benefit type are different, they do have one common characteristic: employees love them. Let's look at three of the most popular benefits in more detail:
Devices – the ideal fringe benefit?
Hip, handy and sought after: smartphones, laptops or tablets have everything needed to be a dream fringe benefit. Employees are delighted and they are a benefit which employers can perfectly justify. Communication plays a key role in any company. However, the challenge is ensuring that costs are kept at a reasonable level. How should you approach this?
- Set your employees a maximum amount for their mobile phone usage. Whoever exceeds the limit, pays the difference. A third of companies offering staff a mobile phone employ such an arrangement. On average, the employer ends up paying €25 to €50 per month, but for more senior roles, this amount will often be significantly higher.
Mobile phone operators have also developed special packages in order to process the administration relating to split-bill arrangements. For any amounts below the limit, they send the bill directly to the employer. The employee is billed directly for any extra usage.
- Ask your employee to pay back a fixed amount each month by way of a salary deduction. This way, you as an employer can recover a part of the costs and also restrict the taxable benefit as far as your employee is concerned.
The "normal" taxable benefit amounts to €12.50 per month for a mobile phone or a smartphone, €15 per month for a laptop or tablet and €5 per month for mobile internet or broadband internet at the employee's home. If the employee completely repays that benefit, then they are no longer liable for taxes on the personal privilege resulting from the benefit.
Saving for later – the supplementary pension scheme
According to a survey by SD Worx, 81% of Belgian employers are contributing to a supplementary pension for their employees, who are increasingly coming to greatly value this benefit. This is not only due to lenient tax treatment, but also due to the growing focus on the pension issue. If you, as an employer, also wish to do this, then you have a number of different possibilities.
- Group insurance or pension scheme
With a collective pension scheme, you build up, with fixed, monthly payments, supplementary pension capital for your employees. Sector or company CLAs increasingly require such a scheme to be set up, with or without being "social" in nature. Despite this, premiums for non-statutory pension accrual usually remain relatively modest.
If you want to do something extra for your staff's pensions, then a supplementary pension scheme also offers fiscally attractive opportunities for paying out a classic bonus or end-of-year premium. Tax and social deductions on pension payments are minimal, whereas around half of a normal bonus will disappear.
- Personal pension scheme benefits
You also have the possibility of further optimising the pension scheme of your most valuable employees – think of managers or self-employed company executives for instance – on an individual basis. This can be done thorough so-called personal pension scheme benefits. Very strict rules apply to this, including respecting the 80% rule. This states that the employer contribution for this non-statutory pension, together with the statutory pension, may be no higher than 80% of the employee's last normal annual gross salary.
Furthermore, for your wage-earning employees, a ceiling of €2,340 (the amount for 2016) is also in force, per employee and per year. Finally, take account of the fact that personal pension scheme benefits cannot be created in the 36 months preceding (early) retirement.
Hospitalisation insurance: affordable care
Nowadays, hospitalisation insurance is almost indispensable. Employees also especially value this particular benefit. Three points to consider:
- As an employer you are obliged to inform your employees that they are entitled to personally continue the collective policy if they leave the company. With individual continuation in later life, however, the premium can be very expensive. In order to avoid the premium for a future transition already being too high, your employees can take out a waiting policy in order to pre-finance their future premium. You are also obliged to inform affiliates of this. With such a waiting policy, upon later transition, your employees pay a premium based on their initial affiliation age.
- In agreement with your insurer, you confirm whether your employees are or are not obliged to affiliate themselves to the collective hospitalisation scheme. Ensure that you establish hospitalisation insurance as a voluntary fringe benefit that your employees may replace with another optional benefit of their choosing. If insufficient employees are affiliated to the collective policy, the premium for each employee may increase.
- The premium which you as an employer pay for a collective hospitalisation insurance scheme is a benefit which is exempt from tax. For you as an employer, however, these costs are not tax deductible.
Performance-related salary bonuses increasingly popular
CLA 90 performance-related bonus schemes are on the increase. Last year, 15% of administrative workers and 12% of manual workers received this type of bonus. As an employer, you could effectively combine such a bonus scheme with just about any objective and clearly measurable goal which you would like to see achieved within your company.
Examples are profit increase, cost reduction, a reduction in average delivery time, reducing the number of accidents at work or sick days, etc.
It is important to note that collective goals must be the focus here and that all employees (or a clearly defined group) must be involved in the scheme.
The advantages of a bonus scheme
Paying out a little extra through such a bonus scheme has some important advantages. Let's cover the main ones:
- If the maximum amount is respected – €3,219 per employee in 2016 – at the social level, the paid-out bonus is only subject to the 33% special employer contribution and a 13.07% employee deduction. The tax burden is also minimal.
For example: An "ordinary" bonus that generates €1,000 net for the employee, costs the employer €2,695.90. For a performance-related bonus, the cost falls to €1,503.80.
- For the employer, the bonus is fully tax-deductible as an operating cost.
- The salary bonus does not count in the calculation of holiday pay and the end of year premium.
- A performance bonus can never become an acquired right. It is given once and you are never obliged to repeat it the following year.
- Performance-related salary bonuses fall outside the government's ruling. This way, it's perfectly legal for you to provide your employees with a little extra.
A flexible salary as an alternative
A new trend which has grown in response to economy measures is "flexible rewards". This means that employees can adapt their remuneration package to suit their personal needs.
Due to the crisis and the current tendency to freeze salaries, increases are often difficult to implement. However, through making salaries more flexible you can improve employee satisfaction. The starting point of a flexible reward scheme is simple: a summary is made of each employee's total salary package and the budget which corresponds to this. On the basis of this, certain salary components can be exchanged for other benefits from a "shop".
So far, this idea has seen little application in the market, mainly because it is difficult to organise in a fully statutory way. Human Resources company SD Worx has succeeded in creating a legally supported "cafeteria scheme", which offers employees the possibility of choosing independently from a number of fringe benefits.
"Fixed salary flexibility is not always simple, since pay scales are often linked to sector or company CLAs," explains SD Worx's Kathelijne Verboomen. "But variable bonuses and fringe benefits normally lend themselves to it very well. Within a flexible reward system, the budget for a salary bonus can, for instance, be allocated to an extra car or car wash budget, non-statutory holiday days, a laptop, tablet or smartphone, an electric bike, a babysitting service for sick children, etc. Non-statutory holiday days are particularly fashionable at the moment.
On the other hand, we are also seeing that employees who don't wish to have a car, prefer to reduce their car budget in return for other benefits, or cash. We've noticed this following the replacement of a company car or a promotion. Employees who are promoted – and therefore enter into a higher car category – but are still satisfied with the car they have can use the extra budget in another way."
Digital transformation: your action plan
33% of IT decision-makers don't have a clearly defined strategy for digital transformation, a survey reveals. Why is this and how can this situation be rectified effectively?
In the fast-moving consumer goods market, technology is now radically reshaping competitive dynamics in the marketplace, for both consumers and distributors. This has irrevocably changed how people buy things. In the results of its "Fast-Moving Consumer Goods" survey, Progress reveals the current paradox: digital transformation is crucial, but implementation is slower than desired.
"60% [of IT decision-makers] admit that their organization is still largely in denial about the need to transform digitally."
Where exactly does the problem lie?
More than half of IT decision-makers see this process as something daunting that will take a long time. 66% feel that their marketing and IT teams are not in alignment to deliver on the project. 64% find it difficult to keep up with the ever-changing digital landscape. When it comes down to it, two departments clash on the distribution of tasks and budgets: IT versus Marketing. The good news? 96% of companies have plans to act within the year.
The key elements of your action plan
1. Begin with an inventory
Achieving digital transformation involves customer satisfaction, the ability to alter the focus of the business and rollout of a flexible platform, but you shouldn't throw out the baby with the bathwater. The transformation should be initiated after taking stock of the company's assets, in the form of an inventory.
Then you should visualize possibilities for change to consider the future of your business, no longer as a traditional firm, but as an ambitious digital hub.
2. Inspiration to think big
The founders of Google say that they have always sought to reject a traditional management approach by adopting two basic principles, which apply perfectly to digital transformation: focus on satisfying users and hire "smart creatives". This can be achieved through the LEAN method.
3. The will and the time
The company has to recognize that digital change is permanent in order to be relevant. It requires the creation of new experiences and the definition of new paradigms that can overthrow traditional models but are ultimately beneficial: 41% of CIOs notice an increase in market share post-transformation, with 37% of employees becoming more motivated as a corollary.
4. The vision and the tools
In order to improve and optimize the customer experience, you have to work on the speed, responsiveness, security and standardization of distribution channels. Mobile devices are widely favoured (62% according to the survey) for analytics, data connectivity, e-commerce, content and the Cloud.
A full copy of the report can be downloaded for free from the publisher's website.