New tax and social security obligations for foreign entities when granting benefits to Belgian beneficiaries

In application of the Law of 11 February 2019 Belgian companies are obliged to fulfil the reporting obligations when its employees are being offered benefits (such as, but not limited to restricted stock units (RSU)) directly or indirectly by a foreign group company. This new obligation applies to benefits granted as from 1 January 2019.

Belgian companies are also obliged to apply the normal rules on salary withholding tax for such grants made as from 1 March 2019. Please note these obligations apply even if the Belgian company does not actively intervene, and even if it does not bear the cost of the benefit.

This means the Belgian companies will have to monitor grants made by a foreign group company and make sure they comply with these new tax rules.

Almost at the same time of this new tax law, the Social Security Authority (in its “Administrative Instructions” for the third quarter of 2018) changed its position on the definition/interpretation of the notion “chargeable to the employer”. It considers that it suffices that the granting of a benefit is the result of activities performed in the execution of the employment contract with the employer or is related to the function the employee holds with the employer.

Before the change of position, benefits granted directly or indirectly to employees of a Belgian company by a foreign group company, were not considered chargeable to the Belgian employer and therefore not subject to social security contributions. This change implies that social security would  be due on these types of benefits, such as, but not limited to RSU’s.

To consult the article by Brigitte Lievens in “Over De Grens” (in Dutch only) click here.