A royal decree published in Belgium’s official gazette on 28 April 2023 gives employers the possibility of granting a one-time tax-free payment known as the “purchasing power premium” to employees. Subsequently, on 4 May 2023, the social security authorities released guidelines (Dutch | French) confirming the practicalities of the scheme, which are comparable to those of the COVID-19 premium that was introduced in the period 2021 to 2022.
Details
The Belgian federal government previously agreed that remuneration in Belgium could not be increased in 2023 or 2024, other than for the mandatory indexation. However, to enable companies to increase the purchasing power of employees, a specific one-time premium can be granted as from 1 June 2023 until 31 December 2023 in the form of a consumption voucher valid until 31 December 2024. The voucher must not be either partially or fully convertible into cash.
For companies where the purchasing power premium is provided for in a (sub)sectoral collective labour agreement (CLA) (“sectoral purchasing power premium”) the premium per employee may not exceed:
- EUR 500 (net of employee tax) for companies who made “high profits” in 2022; and
- EUR 750 (net of employee tax) for companies who made “exceptionally high profits” in 2022.
For companies where the purchasing power premium is provided for in a company CLA (“company purchasing power premium”), the maximum amount is EUR 750 per employee and the only criterion is that the company achieved “high profits” in 2022.
It is possible to combine a sectoral purchasing power premium with a company purchasing power premium; however, the total of both premiums cannot exceed EUR 750.
Practicalities
The terms “high profits” and “exceptionally high profits” are not defined, so must be determined by the social partners and clearly stated in a CLA.
The premium can be paid in all industries and companies when an agreement has been concluded between the employer and employee representatives regarding the implementation of such a premium via a CLA, or via a written individual agreement if no CLA is in place or the CLA does not usually apply to the category of personnel concerned.
The decision to grant a purchasing power premium must be made and entitlement to the premium determined prior to 1 January 2024 and included in a CLA or written individual agreement concluded by 31 December 2023.
Tax and social security treatment
The premium will not be taxable for the employee but will be 100% deductible for the employer provided that the above conditions are met.
The royal decree excludes the premium from regular social security contributions, but a specific employer social security contribution of 16.5% will be due. The necessary legislation imposing the specific contribution is yet to be issued.
If the conditions are not met, the premium granted will be treated as remuneration taxable at progressive income tax rates and subject to regular employee and employer social security contributions.
Key contacts
Stijn Demeestere
Stijn Demeestere joined Deloitte’s Global Employer Services in 2013 before becoming head of Deloitte Legal - Lawyers’ People Law team in 2015. In 2020 he took on the additional role of Talent Partner. As he always wanted to advise and defend the rights of people, becoming a lawyer was a natural choice. Stijn has garnered ample expertise in all legal HR matters and particularly specialises in dismissal law (both individual and collective), maximising flexibility in salary and working conditions, the specific HR needs of top executives (social status, contract drafting) and various types of business reorganisations (M&A, cross-border mergers, outsourcing). Stijn particularly enjoys strategic communications and negotiations at individual and collective levels (social unrest, strikes), finding the spot where flexibility can be introduced against the rigid background of employment law, and is in his element when he can defend or plead in court. The contentious matters he handles are, amongst others, disputes over protected employees, white-collar crime, harassment, and the dismissal of high-level employees following allegations of misconduct. He advises HR directors of large and medium-sized companies, always looking for the right balance and where possible a cost-effective amicable settlement for the client in case of a dispute, and otherwise looking into tailoring individual schemes to the benefit of the company and working out how they can be applied to remuneration, different types of employment. Stijn combines a dry sense of humour with sharp analytical skills. He is regularly interviewed by De Tijd, had a weekly column in Jobat and is frequently invited as speaker at HR Fora. In addition, Stijn has written many books on topics such as protected employees and anti-discrimination as well as articles on, amongst others, the new dismissal legislation, outplacement and the bridge pension. Stijn is recognized by Chambers and Legal 500.
