Premiums granted for an anniversary can be an income tax-exempt benefit

The Belgian tax ruling authority (Dienst Voorafgaande Beslissingen in Fiscale Zaken or DVB) has, in a recent ruling of 18 August 2020, indicated that the one-off premium that an employer grants its employees in the framework of an annual personnel party to celebrate the anniversary of the company and to increase social cohesion can be qualified as a social benefit exempt from income tax.

In the ruling the DVB indicates that the following social benefits are exempt from income tax (in accordance with article 38, § 1, 11° WIB 92):

• benefits for which it is not possible, due to the method of allocation, to determine the amount actually obtained by each recipient;
• benefits which, although individualizable, do not have the nature of actual remuneration; and
• minor benefits or occasional gifts received in respect of, or in connection with, events not directly related to the professional activity.

Secondly, the DVB refers to certain administrative commentary, which indicates that social benefits are benefits with a low importance that are granted by the employer for an obvious social purpose, whereby the granting of this benefit is voluntary or compulsory and does not take place via a social fund, with the aim of improving the relations between the staff members and strengthening the bond between them and the company.

Granting a one-off premium to all employees on the occasion of an anniversary can, according to the DVB, be considered a social benefit in the sense of article 38, § 1, 11° WIB 92. This premium is not, however, deductible as a professional cost for the employer who grants this premium.

We note that the scope of any ruling is individual and the decision of the DVB is only binding for the employer who has requested the ruling. Nevertheless, the ruling is an indication of the point of view of the Belgian tax ruling commission. To obtain certainty on a concrete situation, an employer can submit a ruling to the DVB, whereby it will assess on a case-by-case basis whether a granted premium is to be considered as an exempt social benefit.

Also, the National Office for Social Security considers that presents given on special occasions (eg when a company reached its 50th anniversary) are not remuneration. This requires nevertheless that it does not concern a tradition and that the workers have in no way a legal entitlement to the present. The instructions to the employer by the National Office for Social Security do not specify any fixed maximum amount that is possible.