Fortunately, there are good alternatives, each with their own pros and cons.
Classic bonus not fiscally interesting
Both you, as an employer, and your employee will have to pay social security contributions on a classic bonus. Moreover, this bonus is taxed with an exceptional payroll tax. On top of that, such a bonus is taken into account for the calculation of holiday pay, and has to be included in the calculation base for severance pay. There are alternatives, however.
Bonus collective agreement 90
From 2008, bonus plans have existed in implementation of the Collective Labour Agreement 90 (CLA 90). Based on this, you can grant a (para)fiscally favourable bonus to all your employees or to group(s) of employees if the set objectives are achieved.
For 2021, the maximum amount that can be granted per year is EUR 3,447.
- As an employer, you pay a solidarity contribution of 33% on top of the gross amount of this bonus.
- For you as an employer, the bonus is 100% deductible.
- A social security deduction of 13.07% applies for your employee.
- The bonus is fiscally beneficial for your employee, as he or she does not pay any tax on it.
- This bonus is not taken into account for the calculation of the holiday allowance.
- This type of bonus is collective.
- The introduction requires quite a lot of administration.
From 2017, there has been the possibility of allocating up to 30% of the wage bill at a favourable rate, in the form of profit sharing.
The maximum permitted amount of this collective (para)fiscal bonus is considerably higher (by about 5 times) than the bonus provided for in CLA 90. Contrary to the provisions of CLA 90, the only criterion for the profit bonus is the realisation of a profit.
- As an employer, you are exempt from social security contributions on this bonus, as it is not considered as salary.
- The introduction procedure for the profit premium is simple. In most cases, the mere provision of information is sufficient.
- The profit premium is exempt from personal income tax, as it is a profit-sharing system.
- The profit premium is subject to a liberating tax of 7%.
- The profit premium is not regarded as salary, which means that it should not be included in the calculation basis for holiday pay.
- The employee pays a solidarity contribution of 13.07%.
- The profit premium is not deductible from the corporation tax for you as an employer.
- The profit premium is a collective bonus and cannot be linked to individual performance. If the granting of the premium differs according to the category of the employee, social consultation is necessary.
Warrants can be granted on an individual basis. The amount of the warrants may not be disproportionate to the customary remuneration. This means that you can grant your employees an amount of warrants up to a maximum of 20% of their annual salary.
- For you as an employer, warrants are tax deductible costs.
- Warrants are exempt from social security contributions, provided they are accepted by your employee within 60 days after the offer.
- Warrants are not considered as wages, which means that they should not be included in the calculation basis for holiday pay.
- Warrants are a taxable income, subject to progressive personal income tax.
- As an employer, you pay bank charges of about 5% on the gross amount.
- Your employee pays various fees, estimated at around 1.27%, including stock exchange taxes.
Individual pension commitment
If you take out a group insurance policy for all your employees, you can motivate employees who have made an extra effort for the company and allocate them a part of their salary in the form of an individual pension commitment (IPC). Here, too, there is the possibility of individualisation.
- An NSSO/RSZ contribution of 8.86% and an insurance tax of 4.4% are due on the premium that you pay as an employer.
- Your employee pays a social security levy (RIZIV/INAMI) of 3.55% on the entire supplementary pension that is paid out upon retirement or death.
- The capital to be paid out is in principle subject to a one-off tax of 16.5%. If the amount is only collected at the age of 65, on the other hand, only 10% tax has to be paid, provided that your respective employee has been working continuously for the last three years before reaching his/her legal retirement age.
Comparing and choosing your bonus
There are many alternatives to the traditional bonuses for rewarding and motivating your employees. If you are interested in introducing one of the above bonus schemes in your company, please do not hesitate to contact us.