What is a social benefit?
Social benefits are low-value benefits, which you, as an employer, can provide to your staff to foster a positive atmosphere in the workplace. Social benefits can be given to both employees and managers .
In addition to their social purpose, these ‘small gifts’ are mainly a form of alternative remuneration that allows you to reward your employees in a way that is both tax-efficient and socially beneficial. If certain conditions are met, they are indeed exempt from social contributions and taxes.
The gifts can take various forms: gifts in kind, in cash (bonus) or in the form of gift vouchers.
How are social benefits treated from a tax and social perspective?
The tax scheme includes a tax exemption and advance tax levy for the recipient (employee) and a deductibility for the employer.
From a social law perspective, gifts are not subject to social contributions, provided you stay within certain limits.
Sinterklaas, Christmas and New Year
As an employer, you can give gifts for Sinterklaas, Christmas, or New Year. We recommend keeping such gifts limited to 40 euros per year per employee, with an additional maximum of 40 euros per year for each child that the employee fully or partially supports.
This limit is explicitly accepted by both the tax authorities and the NSSO. Gifts that stay within this limit are not subject to social contributions, advance tax levy, or taxes. As an employer, you can also deduct these gifts for tax purposes.
If you exceed this amount, the entire benefit will be taxed as regular salary, and advance tax levy will also be withheld. The entire benefit will then be considered fiscally as a non-deductible expense. There will also be social contributions due on the entire amount of the gift.
Birthday, patron's day
For other annual celebrations that have the same social character as the year-end celebrations mentioned above, the tax authorities also apply the limit of 40 euros per employee per year, increased by 40 euros per year for each child dependent on the employee. If you exceed that limit, taxes and advance tax levy will be due on the entire amount, and the gift will be non-deductible for tax purposes.
The social security legislation does not provide any exemption for birthday and patron's day celebrations and considers gifts in that context as regular salary. Therefore, social contributions are due on the entire amount, regardless of how small the gift is.
Retirement
Upon retirement, it is best to give a gift worth at least 120 euros and a maximum of 40 euros per full year of service with you as the employer. You should also not exceed the limit of 1,000 euros.
If you deviate from these limits, you will pay social security contributions on the total value of the gift.
If your gift is less than 120 euros or more than 40 euros per year of service, taxes and advance tax levy will also be due on the entire amount. The entire gift will then be no longer tax-deductible for you as the employer. However, the limit of 1,000 euros does not affect the fiscal perspective.
Example
Hilde retires after working for 30 full years with the same employer. She receives a cash amount of 1,200 euros from her employer. This bonus meets the conditions to be tax-exempt and deductible. The ceiling of 30 times 40 euros, which is 1,200 euros, has not been exceeded. However, the NSSO will consider the entire amount as salary and subject it to social contributions, as the limit of 1,000 euros has been exceeded.
Presentation of an honorary distinction
If your employee receives an official or civil distinction awarded outside the company, such as a medal or order of knighthood, a decoration, or a labour laureate, you may give a gift on that occasion. We recommend keeping it limited to 120 euros per year to benefit from a favourable social and fiscal arrangement. If you give more, social contributions, taxes, and advance tax levy will be due on the entire amount. The entire benefit will then no longer be tax-deductible for you as the employer.
A special case: the wedding bonus
If you give a gift in kind, in cash, or in the form of a gift voucher for an employee's wedding or legal cohabitation, this gift should not exceed 245 euros.
If you exceed the allowed amount, only the portion that exceeds this amount will be subject to social security contributions and taxes. This is different from other gifts, where the entire amount is subject if the allowed amount is exceeded.
Be careful; if the other conditions are not met, the entire amount will be subject.
Other gifts
For other occasions, you can sometimes give a small token socially and fiscally advantageously. Consider events like a birth, adoption, seniority, or an anniversary in the company. Contact your Securex Legal Advisor to find out which fiscal and social limits you should consider in your situation.
Stricter conditions for gift vouchers
If you choose gift vouchers, you must also comply with these conditions:
- The vouchers may only be redeemed at companies that have previously entered into an agreement with the issuer.
- The vouchers must have a limited validity period (maximum one year).
- The vouchers may not be refunded in cash to the employee.
If not all these conditions are met, the entire benefit will be considered a non-deductible expense.
Our tip
Gift vouchers are very appealing because your employees can choose how they want to spend the amount. Through Securex, you can easily order gift vouchers from the companies Edenred, Monizze, and Sodexo. Contact your Client Advisor at myHR@securex.be for more information!
Mention on the tax form
Tax-exempt gifts do not need to be mentioned on the tax forms 281 of the recipients, as they are social benefits.
However, if they do not meet the exemption conditions, they must be mentioned on the tax form, either as salary or as benefits granted at the end of the contract.
Read more in our theme series ‘Gifts and gift vouchers’
Sources
- Article 19, § 2, 14° of the royal decree of November 28, 1969
- Administrative instructions NSSO – Gifts and gift vouchers
- Administrative instructions NSSO – Exclusions from the salary concept
- Circular 2018/C/125 of December 5, 2018 regarding gifts in kind, in cash or in the form of payment vouchers