Jingle bells - year-end presents for employees
Dec 07, 2021
It’s the most wonderful time of the year: the days are getting colder and the first Christmas trees are popping up. This marks the perfect occasion to recall the possibility for you to give your employees year-end presents that are exempt from social security contributions and income taxes.
Social security principles
According to the Belgian social security regulations, presents (be they in kind, in cash or in the form of a gift voucher) are not considered as salary if they are provided on the occasion of Saint Nicholas, Christmas or New Year and if their value doesn’t exceed EUR 40 per employee per year. This threshold can be increased by another EUR 40 per year for each dependent child.
If these conditions are met, the present will not be subject to social security contributions. If the above thresholds are not observed, the present’s entire value - not just the part that exceeds the threshold - will become subject to social security contributions.
Tax principles
In their administrative guidelines, the tax authorities apply the same principles. Presents - be they in kind, in cash or in the form of a gift voucher - that are provided to employees on the occasion of Saint Nicholas, Christmas or New Year and that do not exceed EUR 40 per employee per year are deductible for the employer as business expenses and are not taxable for the employees. This threshold can be increased by another EUR 40 per year for each dependent child.
If the present’s value exceeds this threshold, its entire value will no longer be deductible as a business expense. In addition, the employee will in principle be taxed on the entire value of the present as well.
Conclusion
If you’d like to celebrate the holiday season by giving your employees a year-end gift and if you keep to a maximum value of EUR 40 per employee per year (with the possibility to increase this value by another EUR 40 per year for each dependent child), you’ll be able to deduct the entire value of the presents as a business expense. In addition, your employees will benefit from full exemption from social security contributions and income taxes.
If you have additional question or are looking for more guidance on remuneration topics in general, do not hesitate to reach out; we would love to hear from you.
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