Author: Erik Van den Eynde
Under certain conditions, you can apply for temporary unemployment for the employees you can no longer employ full or part time due to the Corona crisis. By introducing this temporary unemployment benefit, you temporarily suspend the employee’s employment contract. The Belgian government has introduced a simplified procedure, which originally ran until 6 April but has since been extended until 31 May 2020. Please note that this is only one measure taken by the Belgian government and that there are still measures to which you may have recourse. Furthermore, we cannot stress enough that the Belgian government regularly adapts these measures.
Not every employer can claim this temporary unemployment. Only those employers who are directly affected by Covid-19, as a result of which the employees can no longer perform their duties at all or only partially, can make use of this specific procedure. Examples are: a shop has been closed, sales representatives can no longer visit customers and do not have enough tasks to perform at home, orders are no longer coming in,…
Not all employment contracts should be suspended. Only those employees who cannot work more or less because of their position are eligible for this. If, as an employer, you wish to apply for temporary unemployment, you can do so via a simplified procedure until 31 May 2020. This means that you let your Payroll Business Partner know which days the employees will work and which days they will be unemployed. Pro-Pay takes care of the necessary electronic declaration of these days of unemployment so that the NEO knows to which benefit the employee is entitled.
It is possible to suspend the employment contracts either completely (the employee no longer works) or partially (the employee still works one or more days per week). If partial unemployment is chosen, the employer determines how many days the employee can still work. The employees do not have to agree to this. Of course, they do have to be informed about the days they still have to work and which days they will be unemployed. This notification to the employees can take any form, an e-mail may be sufficient in some cases.
Workers who are temporarily unemployed must contact either their trade union (if they are affiliated to it) or the “Unemployment benefits fund” in order to open a file and obtain unemployment benefits. You can open a file at the “Unemployment benefits fund” online. The union or the help fund will then pay the unemployment benefits into the worker’s bank account on a monthly basis. Unemployment benefits amount to 70% of the gross monthly salary. However, the gross wage is limited to EUR 2,754.76. In addition, the unemployment office pays EUR 5.63 per day of unemployment. On both amounts 26.75% withholding tax is withheld.
In some sectors, there is an additional obligation to pay a supplement on top of this unemployment benefit. In addition, it is possible to pay a supplement voluntarily. This supplement can be granted free of social security contributions on condition that the total of the unemployment benefit + the supplement(s) does not exceed the taxable salary that the employee would have earned if he had worked.
If the employees are partially unemployed, they receive their normal salary for the days they work. Temporary unemployment days will be assimilated for pension purposes. Currently, there is no equivalence for the accrual of holidays and holiday pay, but according to various press releases, there would be a legislative initiative to put this on an equal footing.
With regard to the assimilation of end-of-year bonuses and other benefits granted at sectoral level, it will be necessary to examine what has been agreed within the Joint Committee. It cannot be ruled out that agreements will still be concluded in the sectors to assimilate this exceptional period to effective performance if this was not already the case.
Attention: if the employees only work at home and previously received an expense allowance because they had a mobile function, this expense allowance can no longer be granted. Instead, the government has increased the monthly reimbursement for office expenses (see further down).
The authorities grant a two-month deferment of payment of the withholding tax on earned income.
• Payment period withholding tax on earnings February 2020 extended to May 13, 2020
• Payment period withholding tax on earnings March 2020 extended to June 15, 2020
• Payment period withholding tax on earnings April 2020 extended to July 15, 2020
• Payment period withholding tax on earnings 1st quarter 2020 extended to June 15, 2020
In addition to this deferral, you can also apply to receive an exemption from default interest or remission of fines, or request a repayment plan. Such an application must be submitted before June 30, 2020. Note: this does not happen automatically! Contact your Payroll Business Partner for assistance.
As far as the employer’s contributions for social security are concerned, different support measures apply. Companies that are closed on government order can benefit from an automatic deferment of payment of social security contributions until December 15, 2020.
Companies that are not obliged to close but that suffer from the Corona crisis economically can apply for a deferment of payment of social security contributions until December 15, 2020 provided they submit a motivated application file with the social security authorities. Apart from the deferment of payment, an amicable payment plan is another option offered by the NSSO to companies in difficulties.
Office Costs and NSSO
Employees who work from home on a structural and regular basis can receive compensation from their employer for this. Since the costs related to working from home are relatively small and difficult to prove, the NSSO accepts that these costs are estimated on a flat-rate basis. For a number of costs, including the compensation for homeworking, the NSSO itself has fixed lump sums, as well as the conditions that apply to the granting of these lump sums.
The fixed compensation that the NSSO uses for office costs covers the costs of heating, electricity, small office equipment, insurances,… The allowance may be granted to employees who do not have a workplace with the employer or – if they do have a workplace with the employer – when their position shows that they work from home on a regular basis.
Employees who previously did not work from home, but are now forced to do so by the Covid-19 measures, can also be granted this compensation without the employer having to conclude a formal teleworking agreement with the employee. This is also possible if the employee works partly from home and is temporarily unemployed.
In addition to this maximum amount of €129.48, the employer can also compensate the following matters on a lump-sum basis:
∞ €20 per month if the employee uses his/her own PC for professional purposes;
∞ €20 per month if the employee uses his/her private internet connection for professional purposes.
Of course, these lump sums can only be granted if the office and internet costs are not reimbursed to the employee in any other way. Please note that the NSSO also uses other fixed amounts for forms of teleworking and homeworking besides the fixed amount for office costs, which are not discussed in this newsletter.
The Tax Authorities
The reimbursement of €129.48 for office expenses can be granted free of social security contributions if the conditions for granting the allowance have been met. The tax authorities do not have a similar official position regarding a fixed amount for office costs, but often follow the position of the NSSO on this matter.
However, if you want certainty from a tax point of view about the application of a fixed amount for the reimbursement of office costs, a ruling must be requested from the tax administration. The ruling service of the tax authorities has provided a simplified procedure specifically for obtaining a ruling for the reimbursement of telework during the corona crisis.
Up until then, Belgian employers did not have a tax withholding or reporting obligation for remuneration granted by a foreign parent or affiliated company, if the Belgian employer was not involved in granting that remuneration. The only exception to this rule was the obligation to report stock options meeting the conditions of the Stock Option Law of March 26, 1999. The employee, however, was obliged to report the foreign income in his personal tax return.
The current introduction of the withholding obligation with the taxes being paid at source through payroll is part of the battle against social and tax fraud. Where in the past, Belgian employers sometimes weren’t even aware of foreign remuneration (mostly equity) being granted to their employees by a foreign affiliated company, more communication between the Belgian employer and its foreign affiliated companies will be necessary in the future.
Starting retroactively on March 1, 2019, all taxable remuneration paid by foreign parent companies and/or affiliates will need to be taxed through payroll as it becomes subject to withholding taxes. Withholding taxes are to be declared on a monthly basis and to be paid on a monthly or a quarterly basis. Given the fact that the Law has entered into force on March 1, 2019, there is no withholding obligation for the foreign remuneration granted in January and February 2019. Please note however, that the taxable benefits of these months will need to be reported in the 2019 tax forms that need to be submitted to the Belgian tax authorities before March 1, 2020.
All remuneration paid by foreign parent companies and/or affiliates to Belgian employees will need to be reported by the Belgian employer to whom the foreign company is linked. The reporting will take place via the yearly tax form 281. This form includes the taxable earnings of employees/directors. The employer is obliged to provide the form to his staff, that should use the details mentioned on the form to file their tax returns.
Belgian Social Security on Foreign Remuneration
As a general principle in the Belgian legislation, social charges are due on salary. One of the conditions that needs to be fulfilled for a benefit to be considered as salary is the fact that the benefit needs to be chargeable to the employer. This condition is laid down in the Act of 1965 on the protection of salary. Up to the 3rd quarter of 2018, the Belgian social security authorities believed that benefits were not “chargeable to the employer”, if the employee could not claim the benefit from the Belgian employer in a financial or a legal way (e.g. because the right to the benefit was contractually agreed upon). In other words: if the advantage was granted to the employee by a foreign affiliated company without any intervention of the Belgian employer, no social charges were due.
However, according to the administrative instructions of the National Social Security Office (NSSO) issued in the 3rd quarter of 2018, social security contributions are now due on all benefits that relate to the work performed by the employee in the execution of his/her employment contract with the employer or that relate to the function of the employee carried out for the employer. This principle applies even without any intervention of the (Belgian) employer in the payment/grant of the benefit.
According to most of the Belgian authors specialized in the matter, this point of view of the NSSO is too much, as it interferes with the definition and notion of salary as laid down in the Act of 1965 on the protection of salary. However, as this new point of view has been published in its recent instructions, chances are that the NSSO will enforce its point of view and that we’ll have to wait for the first court cases before any changes might be introduced.
■ Belgian employers should inform their foreign headquarters or affiliated companies of the change in the Belgian regulations even if they are currently not aware of any remuneration granted or paid to their Belgian employees by a foreign affiliated company;
■ Employers should inform Pro‐Pay or their payroll office of the foreign remuneration that will be subject to withholding taxes. In case of doubt about the taxability of certain remuneration or the timing of taxation, employers should seek the advice of a specialized tax consultant;
■ Employers need to inform Pro‐Pay or their payroll office of the remuneration paid by a foreign linked company to the Belgian employees in January and February 2019, in order to ensure correct reporting on the tax form 281.
Pro‐Pay is an independent payroll provider in Belgium offering services to Belgian companies and international companies with employees in Belgium. Find out more at: www.propay.be/en/
Public holidays in 2019
|New Year’s Day||Tuesday, January 1st 2019|
|Easter Monday||Monday, April 22nd 2019|
|Labour Day||Wednesday, May 1st 2019|
|Ascension Day||Thursday, May 30th 2019|
|Whit Monday||Monday, June 10th 2019|
|Belgian National Holiday||Sunday, July 21st 2019|
|Assumption Day||Thursday, August 15th 2019|
|All Saints’ Day||Friday, November 1st 2019|
|Armistice Day||Monday, November 11th 2019|
|Christmas||Wednesday, December 25th 2019|
When a public holiday falls on a Sunday or another day which is normally a non-working day (usually a Saturday), it must be replaced by a replacement day on a normal working day. In theory, in Belgium, employees cannot be required to work on public holidays. The employer however is obliged to pay the employee a normal salary for that holiday. In the list above, the public holidays that fall on a non-working day in the course of 2019 have been marked in bold. Employees are entitled to one replacement day in 2019, for the Belgian National Holiday (Sunday, July 21st).
The law of January 4, 1974 provides for the manner in which replacement days should be determined. In theory, the Joint industrial Committee competent for each sector may decide when replacement days shall fall, but in practice we don’t see this very often. If the Joint industrial Committee has not taken its decision before October 1, 2018, each company may decide for itself when the replacement days for its employees will fall. The company may take that decision in one of the following ways:
– By the Works Council.
– If the company has no Works Council, by agreement between the union representatives and the employer.
– If the company has a Works Council nor union representatives, by agreement between all the employees and the employer.
– If no agreement can be reached for the whole company, individual agreements may be drawn up between the employer and each employee.
If replacement days cannot be decided upon using one of the solutions above, they automatically fall on the next normal working day following the public holiday (usually a Monday).
Employers must inform their employees of the replacement days for 2019 by displaying a signed and dated document on the company premises before December 15, 2018.
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