Expatica news

Increase in social security payments for Belgian NRRBs

Employees’ social security payments will be applied to the bonuses for the first time, representing an extra payment of 13.07 percent. The National Social Security Office also confirmed that the higher ceiling for qualifying NRRBs will increase from EUR 2,430 to EUR 3,100. The changes apply to all plans from 1 January 2013.

NRRBs are an employee benefit that was introduced by the Belgian government in 2007, allowing employers to grant a yearly net bonus to employees that is exempt from income tax in certain circumstances. Principally these criteria require bonuses to be based on the collective results of the company or a well-defined group of employees, rather than on individual performance. Typically this has been based on turnover, sales and production figures, acquiring an ISO standard, or improving health and safety. Additional restrictions mean that bonuses must be fixed in value and cannot be connected with a company’s share price.

Historically, employees also have not had to pay social security contributions, although the employers’ contribution of 33 percent has always applied. The changes mean that an employee receiving the maximum bonus for 2012 of EUR 2,430 will receive EUR 318 less. However, the fact that the upper ceiling has also increased means that employees may potentially receive a higher payout in the future. Employers will not notice any change to the existing system as the additional contribution will be paid by workers.

NRRBs will still be exempt from income tax in Belgium, unlike standard cash bonuses, which are taxed at the standard progressive income tax rates – up to 50 percent plus local tax.

The tax changes are the result of extensive budgetary negotiations that have produced the federal budget plan for 2013. Belgium needs to procure additional income or savings of EUR 3.8 billion in order to reduce the country’s deficit to 2.15 percent of GDP for 2013.

Expatica

Photo credit: StockMonkeys.com