The Act of 15 July 2026 reforming personal income tax (Belgian Official Gazette of 29 July 2026) introduces several tax measures. One of these measures is a new tax penalty for the excessive use of benefits in kind valued on a lump-sum basis.
As from assessment year 2027 (income year 2026), a tax penalty will apply where such benefits exceed 20% of the total taxable remuneration.
Below, we explain which benefits are covered, how the excessive portion is determined and which penalties apply.
Which benefits in kind are covered?
The new rules specifically target the excessive use of benefits in kind valued on a lump-sum basis, such as:
- company cars;
- the private use of IT equipment made available by the employer (mobile phone, mobile phone subscription, tablet, laptop and internet connection);
- the free provision of accommodation, whether or not combined with the payment of utilities;
- interest-free loans or loans granted at a reduced interest rate;
- stock options for which the taxable basis is determined on a lump-sum basis.
Benefits in kind that are taxed on the basis of their actual value, as well as exempt benefits such as meal vouchers, fall outside the scope of this new measure.
What is the excessive portion?
The excessive portion is the part of the benefits in kind valued on a lump-sum basis that exceeds 20% of the total taxable remuneration granted to the relevant category during the same taxable period. According to the explanatory memorandum, the calculation is based on taxable remuneration rather than gross remuneration.
The 20% threshold is not assessed at the level of each individual employee or company director, but at company level. Two categories are considered separately:
- employees: all employees of the company taken together, based on the information reported on tax forms 281.10;
- company directors: all company directors of the company taken together, based on tax forms 281.20.
For each category, it must be determined separately whether the 20% threshold has been exceeded. A lower ratio in one category therefore cannot offset an excess in the other category. For example, if benefits in kind represent 12% for your company’s employees but 30% for its company directors, there will only be an excessive portion for the company directors.
Penalty
Employees
The employer is liable for a separate 7.5% levy on the excessive portion. This levy is not deductible as a professional expense for personal income tax or corporate income tax purposes.
Example
Total taxable remuneration of the employees: 180,000 EUR, including the following benefits in kind valued on a lump-sum basis:
- company cars: 44,800 EUR;
- IT equipment (laptop, mobile phone, internet connection and subscription): 216 EUR.
The total amount of benefits in kind valued on a lump-sum basis is 45,016 EUR, corresponding to 25% of the total taxable remuneration. The 20% threshold amounts to 36,000 EUR. The excessive portion therefore amounts to 9,016 EUR. The 7.5% levy amounts to 676.20 EUR.
Company directors
An excessive portion of benefits in kind valued on a lump-sum basis for company directors results in the company losing its entitlement to the reduced corporate income tax rate of 20% on the first tranche of 100,000 EUR applicable to small companies.
If the company is already not entitled to the reduced rate, this penalty will in practice have no additional tax impact.
Practical points to consider
Although the Act clearly establishes the principle of the 20% threshold, several practical aspects currently remain unclear. For example, tax form 281.10 does not currently distinguish between benefits in kind valued on a lump-sum basis and benefits that are taxable based on their actual value. It is therefore not yet clear how the tax authorities will verify compliance with this measure in practice. An amendment to the tax forms therefore appears to be necessary.
We are closely monitoring further administrative guidance and any amendments to the tax forms and will keep you informed as soon as further clarification becomes available.
Do you have any questions about this new measure or would you like further information? Please feel free to contact us at tax@pro-pay.be.