Personal income tax reform: the end of unlimited gross salary exchange?

More cash salary, fewer benefits in kind

The government has observed that an increasing number of remuneration packages consist of a combination of a limited gross salary and a substantial package of benefits in kind, often combined with a cafeteria plan. To shift the focus of remuneration back towards cash salary, the legislator intends to limit what is known as gross salary exchange. As a result, benefits in kind valued on a lump-sum basis may now represent a maximum of 20% of taxable remuneration in order to avoid certain sanctions.

How is the 20% threshold calculated?

The calculation is not made on an individual basis, but collectively, with separate calculations for employees and company directors. The benefits of one category are therefore not added to those of the other category.

Employees

The total benefits valued on a lump-sum basis for all employees are compared with the total taxable remuneration reported on forms 281.10.

Company directors

For company directors, a separate calculation is made based on forms 281.20.

Which benefits?

The measure specifically targets benefits that are valued on a lump-sum basis.

Exempt social benefits, such as hospitalisation insurance and gift vouchers, are not included in the calculation. Benefits taxed based on their actual value or actual expenses are not targeted either.

Specifically, this concerns the following benefits:

• company cars;
• stock options if taxed on a lump-sum basis in accordance with the Act of 26 March 1999;
• internet subscription;
• laptop;
• smartphone;
• free accommodation;
• heating and electricity when combined with free accommodation;
• subsidised meals;
• interest-free or low-interest loans.

Warrants are, in principle, taxed at their actual value and are therefore not targeted by this measure. Consequently, they are not included in the ‘numerator’ of lump-sum benefits, but they are included in the ‘denominator’ of taxable remuneration when determining whether or not the 20% threshold has been exceeded.

Notwithstanding the above, previous restrictions on warrants must still be taken into account. Based on the positions adopted by the NSSO and the Ruling Commission, the amount of warrants must be limited to 20% of total gross remuneration, including the warrants.

What happens if the threshold is exceeded?

Employees: separate 7.5% levy

If the lump-sum benefits exceed 20% of total employee remuneration, a separate levy of 7.5% is applied to the excess amount. This levy is payable by the employer company and is not tax-deductible. It therefore constitutes a disallowed expense.

Company directors: loss of the reduced tax rate

If the 20% threshold is exceeded, the company loses its entitlement to the reduced corporate income tax rate, even if all other conditions are met. As the reduced rate consists of applying a rate of 20% instead of 25% to the first €100,000 of taxable profit, the sanction for non-compliance with this new measure amounts to a maximum of €5,000.

For companies that do not benefit from the reduced corporate income tax rate and where the 20% threshold is exceeded only in the company directors category, no other sanction is provided for.

Minimum remuneration for company directors increases

The minimum remuneration for company directors required to retain access to the reduced corporate income tax rate increases from €45,000 to €50,000, provided that the company’s financial results allow for such remuneration. In addition, annual indexation is being introduced for the first time, meaning that the minimum remuneration will have to evolve in line with inflation.

This annual increase in remuneration, in turn, has a favourable effect on the lump-sum benefits in kind that can be granted.

What does this mean for your company?

Companies that offer benefits in kind with a high lump-sum value will need to analyse and potentially reassess their remuneration policy. The new measures apply to remuneration granted from 1 January 2026.

In this context, we recommend:

• mapping the ratio between cash salary and lump-sum benefits in kind and checking whether the 20% threshold is respected;
• if the threshold is exceeded, calculating the cost impact and determining whether an adjustment is advisable;
• reassessing existing salary optimisation measures annually;
• for smaller companies and management companies, also checking the remuneration of company directors against the new minimum remuneration of €50,000.

How can Moore help you?

Our Global Mobility specialists within Tax & Legal are closely monitoring the personal income tax reform. We are happy to help you analyse the impact on your current remuneration structure and develop tax alternatives that are aligned with this new legislation.

Do you have questions about the impact on your company or management company? Please feel free to contact your trusted Moore adviser.