Attracting talent? Choose the tax-efficient recruitment premium

Utilise your own workforce network to more effectively identify top candidates.

In the present context, identifying new collaborators can be a challenging endeavour. This is particularly true as the process of searching for applicants can incur substantial costs. Consider implementing a tax-advantaged recruitment premium; this is an effective strategy to encourage your staff to seek out the ideal candidate on your behalf.

This AI-generated translation may contain errors and should not be considerd legal advice. For accurate info, refer to the Dutch or French version or consult your Securex Legal Advisor.

Do you wish to confirm the tax benefits? Please contact our specialists for guidance on the procedure.

Why offer a recruitment bonus?

The recruitment bonus enables you to provide a specified amount to an employee who refers a new recruit to your organisation.

This system is not new; it has been employed by employers to identify the ideal candidate at a lower cost for positions that have often remained vacant for an extended period. In fact, tensions in the labour market have increased in recent years, making the search for new collaborators both challenging and expensive.

The provision of a recruitment bonus is not mandatory. However, it serves the purpose of financially motivating your employees to present suitable candidates, often at a significantly lower cost than that of a headhunter or recruitment agency.

Moreover, you have the flexibility to establish the conditions and terms of the recruitment bonus. It is typically accompanied by conditions, such as the candidate-employee's commitment for a minimum duration, for instance.

Additionally, this bonus cannot be offered to employees in the human resources department or to members of management, as they possess decision-making authority regarding the hiring of new employees.

What is the social and tax treatment of the recruitment bonus?

In principle: a professional income

Due to its clear connection with the employment relationship, the recruitment bonus is classified by the tax authorities and the NSSO as professional income. Consequently, it is subject to taxation, advance tax levy, and social contributions.

In principle, this bonus is taxed at the progressive rates of personal income tax applicable to the employees of the company.

Specifically, an employee with a high income may be taxed at the marginal rate of 50% on this bonus.

For the calculation of the advance tax levy, the recruitment bonus is regarded as an exceptional allowance. This means it is not taxed in the same manner as ordinary remuneration. The withholding percentage is determined based on the amount of the normal gross annual remuneration and may reach up to 53.50%.

The recruitment bonus is also subject to social security contributions of 13.07%.

Example

Pierre receives a recruitment bonus of 2,000 euros, which is a gross amount.

After deducting 13.07% in social contributions, a taxable amount of 1,738.60 euros is obtained.
From this amount, the advance tax levy must still be deducted. If Pierre has a high income, his employer will need to withhold 53.50% of the advance tax on this amount, which totals 930.15 euros.
From the initial 2,000 euros granted by his employer, Pierre will therefore receive a net bonus of 808.45 euros.

Important: The amounts mentioned above should be assessed and applied on a case-by-case basis.

A miscellaneous income as an exception

In the context of advance rulings submitted to it, the tax administration has classified a recruitment bonus as a windfall benefit. In the relevant companies, not only staff could claim it, but also third parties. Consequently, it determined that in these specific cases, the bonus should be taxed as miscellaneous income.

If it can be demonstrated that the recruitment bonus arises outside the employment relationship, for example, because it is also available to individuals outside the company, the tax authorities may consider it not taxable as professional income.

As a result, you should not withhold advance tax on this bonus. However, it must still be declared as miscellaneous income.

As an exception, the bonus may be classified as miscellaneous income, taxed at the advantageous rate of 33%, if it can be proven that it arises outside the employment relationship.

This does not imply that it is exempt from tax; rather, it will be classified as miscellaneous income and taxed at the more advantageous rate of 33%. In this case, consider requesting an advance ruling.

Under what conditions?

To be classified as miscellaneous income, the recruitment bonus must meet the following conditions:

It must be available to both the employees of the company and to third parties.
Individuals outside the company must be informed of the possibility of obtaining this bonus.
The procedures and conditions for granting must be identical for employees and third parties.
The same individual may not receive the bonus more than twice within a twelve-month period.

What does this mean for the NSSO?

Tax rulings have only a fiscal and individual scope. In other words, they are not enforceable against the NSSO. An advance ruling binds the tax authorities only to the employer who requested it. Therefore, if the recruitment bonus is classified by the tax administration as miscellaneous income, it will not be exempt from social contributions.

As a precaution, it is advisable to withhold social contributions on this bonus.

What does Securex do for you?

If you wish to ensure that your recruitment bonus will be taxed as miscellaneous income, consider requesting an advance ruling. Do not hesitate to contact our specialists at consultinglegal@securex.be; they can assist you with your procedures.

If you have any further questions regarding the recruitment bonus, please contact your Legal Advisor at myHR@securex.be.