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Personal Taxes

What happened with the tax penalty of 5%?

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In a previous article we already discussed the tax penalty of 5% for corporations who don’t pay the minimum of 45.000 euro to at least one of their managers. This measure was applicable since 1 January 2018. The goal of this measure was to avoid that self-employed allocate their activities in corporations to avoid taxes.

However, experts criticized that this measure was in fact a double sanctions for SME’s. A SME’s who didn’t payed the minimum remuneration of 45.000 was not only excluded from the advantageous tariff (20% on the first 100.000) but also were obliged to pay an extra tax of 5%. The measure was also very complex. Therefore, has the legislators decided to abolish this tax penalty immediately.

Sources (Dutch): IAB Studiedienst, Delbo advocaten

How to calculate the exemption of social liabilities in 2019?

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Because of the introduction of unification of servants and workers, the total costs for some companies increased significantly. Therefore, the government introduced the exemption of social liabilities on 1st of January 2019. This also applies for employers who were not negatively influenced by the unification law.

How will this exemption be calculated? It is calculated as three weeks’ worth of remuneration per year of service. This amount is limited up to 100% of the remuneration on the first scale of €1.500, 30% of the second scale until €2.600 and does not apply to remunerations above €2.600. On top of this, starting from the 21st year of service, the number of additional weeks will be limited to one. This exemption will be spread over 5 years with 80% in the first year and 20% in the remaining years. The exemption can only be applied if the employee enters his/hers 6th year of service.

To be taken into consideration for this exemption, the employers has to hold a normative list of his employees and have a positive taxable result.

Source: Fiscal pro, number 4 (2019)

Allocating advantages from offshore? Pay attention!

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Many international corporations allocate their so-called RSU’s to their Belgian employees. A RSU, or restricted stock unit, is a free share that will be distributed definitely later. For instance, after reaching a certain objective. Because RSU’s are only definite somewhere in the future, the employee was only obliged to take it into account in his personal taxes in the year that it became definite.

Also, since there were not special regulations concerning these RSU’s, corporates were not obliged to hold a fiche. With the introduction of a new KB, this will no longer be the case. In addition, the NOSS has also changed his definition of remuneration. This means that these RSU’s are now also subject to NOSS.

Should you pull up the remuneration of the manager/director to €45.000. 

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There is a lot of discussion whether or not it is a good idea to increase the salary of the manager to at least €45,000. According to the new legislation non-compliance will lead to a tax penalty.

If the salary is insufficient for the reduced rate, then the company will not be able to apply the reduced rate in corporate income tax. In addition, there will be an additional special tax of 5% in 2018 and 2019 (10% from 2020) on the difference between the threshold of €45,000 and the effective granted remuneration. This additional special tax is deductible.

But is it necessary to lift the remuneration up to €45,000? This depends on several factors. The Bibf has made a nice piece that  we do not want to withhold (in Dutch).

Would you like to see the calculations be applied to your file, please reach out to your file manager.

What with your salary if you are a business leader in two companies?

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There is such thing called the ‘ fine ‘ on wage deficit (5.1%), this appears if the company does not meet the minimum remuneration of €45,000, or at least the taxable profit as a remuneration to the business leader if this is lower than €45,000.

If you are the manager of two or more (connected) companies then there is a special arrangement. According to this scheme, a total remuneration of €75,000, instead of the number of companies multiplied by €45,000, is sufficiënt.

Imagine you are a manager in two connected companies. In one company you have a remuneration, in the other you don’t. In this case, it is not always wise to have a salary in both companies (and thus avoid the fine) as this can result in a higher income tax. It might increase the persons taxes is greater amount than avoiding the fine.

An illustrative example:

You are a manager in two companies, a bvba and a nv. From the bvba you retrieve a wage of €55,000, from the nv for the time being, nothing. Set the nv has a taxable profit of €100,000. To meet the requirements you would also have to pay a wage of at least €20,000 to avoid the fine. However the fine only is €1,020 (5.1% of 20.000) while the increase in personal tax amounts to €10,800.

Source: Tipsenadvies-belastingen.be (2018)

Encouragement ‘thorough renovation’ of the house

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Bart Tommelein Flemish Minister for Energy wants to engage in energy-efficient homes in Belgium. Hereby he introduces the word “benoveren”, which stands for “better renovation”. Within this scope, the Flemish Energy Agency published the brochure “BENOveren: what, why and how” out.

 

“One who isolates his home in several places resulting in a decrease of the power consumption below a certain limit, receives a discount on the property tax. In some cases, the property tax is even avoid,” said the minister in the De Zevende Dag.

Concretely, it would meant that who can reduce their energy level up to E60 does not have to pay property tax for the next five years after renovation.

Even individuals who would not carry out the renovation works at once will be able to make optimal use of the tax rebate following the Minister. “The Flemish government provides in a possibility to borrow cheaply or for free during the next three years so that individuals can renovate”

Roof insulation: end of the tax reduction

The tax reduction for roof insulation will no longer be applicable from January 1, 2017.

A transitional measure is foreseen: who places an order and pays an advance before end of 2016 and actually pays the invoice at the latest on December 31, 2017, will still benefit of the tax reduction.

Insulation grants in 2017: what will change on Flemish level

The reform of the energy grants stood for a while on the program, but now it is a fact : as from 2017 these grants will differ significantly!

As from 2017 the energy subsidies in Flanders change. The Flemish government approved the plans of Annemie Turtelboom Energy Minister.

  1. Individual grants have been adjusted Premiums for roof and glass are decreased, incentives for heat pumps Roof insulation premiums are downsized from six to two
  2. The number of grants is reduced
  3. A new premium to carry out throughout energy-efficient renovations is implemented

 

These changes will enter into force as of 01.01.2017 (date of final invoice). Until 31/12/2016 everything remains the same.