Collective bonus plans: new threshold amount
Since 2008, employers in Belgium may grant their employees a non-recurring, result-related benefit, also referred to as a bonus plan, based on the act of 21 December 2007 and collective labour agreement n° 90 (CLA n° 90).
If the benefit does not exceed a certain threshold and fulfills a number of conditions, the bonus system enjoys favourable treatment with regard to tax and social security. Thus the allocated benefit is not subject to withholding tax up to the threshold, is tax deductible as a business expense and is not, for example, included in calculations of an indemnity in lieu of notice and holiday pay. It is, however, subject to a special employer’s social security contribution of 33% and a solidarity contribution of 13,07% for the employee.
The aforementioned main conditions are the following:
- It’s a collective benefit, subject to achieving certain collective results or goals that have been determined in advance;
- The results or objectives must apply to a company, a group of companies, or a well-defined group of employees;
- The results or objectives must be clearly outlined, transparent, determinable/measurable and verifiable. Examples of objectives are: achieving an actual turnover during the reference period, decreasing the error range, decreasing the number of complaints from customers, obtaining an ISO-norm or another license, … ;
- At the time of introducing the bonus plan, it should be uncertain whether the results or objectives will be achieved;
- The bonus plan should meet certain formalities, such as drafting an act of adhesion or concluding a collective labour agreement and the approval of the CLA or the act by the competent authorities. As from January 1, 2019, a new to be used mandatory model document has been published.
The yearly threshold is adapted to the health index every year on January 1st. Hence as from January 1, 2020, the new thresholds are the following:
The limit that is applied by The National Social Security Office amounts to 3.413 EUR gross in 2020 (= 2.968 EUR net + a solidarity contribution of 13,07%), per calendar year and per employee.
For the tax authorities, the amount is exempt of taxes for a maximum of 2.968 EUR net per calendar year and per employee in 2020.
Feel free to reach out to your Payroll Business Partner if you want to check whether your collective goals for 2020 are eligible for the advantageous system provided by CLA n° 90.