Do your employees use a company smartphone, laptop or Internet connection? Do you reimburse your employees for the use of own devices for professional activities under a Bring Your Own Device (BYOD) plan? If so, this newsflash is relevant to you.
Agoria, the largest Belgian association representing businesses active in the technology sector, announced that it is negotiating new rules with both the social security and tax authorities to determine the benefit in kind associated with company smartphones, laptops and Internet use. (more information from Agoria is available in Dutch or French).
This newsflash is based on information provided by Agoria. Please note that the social security or tax authorities could issue a different opinion in the near future. The end objective is to enact the new rules into law.
In October 2013, NautaDutilh's Tax and Employment teams organised a client seminar on the tax and social security consequences of BYOD plans.
We will be sure to keep you informed of any new developments in this area.
Over the past few years, PC plans, whereby the employer contributes to the employee's purchase of a PC, have gained tremendously in popularity.
The employer's contribution (which can cover not only the price of the computer but also an Internet subscription) is not subject to tax, provided it does not exceed EUR 840 per year. However, this exemption only applies if the employee's gross annual salary does not exceed EUR 32,880 (amount valid for 2014).
From a social security standpoint, the rules on PC plans have recently been aligned with the tax rules. Therefore, the employer's contribution to the purchase of a computer or other hardware is not subject to social security contributions, provided it does not exceed EUR 840 per year. As indicated above, this exemption does not apply if the employee's gross annual salary exceeds EUR 32,880 (amount valid for 2014).
In the absence a PC plan, the employer can still offer to cover the cost of an Internet subscription for employees who use their own computers to work from home. In practice, many employers contribute EUR 20 to EUR 40 per month. Such a contribution is not generally considered a benefit in kind which is subject to tax and social security contributions, provided it does not cover personal Internet use. However, since precise amounts are not mentioned in the tax or social security legislation, employers tend in practice to request the Ruling Commission to approve a certain amount.
Alternatively, the employer can decide to provide the employee with a computer and/or full Internet subscription in its own name. In this case, the benefit in kind will be determined based on a standard rate, in accordance with harmonised tax and social security assessment rules. For a computer, the benefit in kind is generally valued at EUR 180 per year. For an Internet subscription, the benefit in kind is valued at EUR 60 per year.
The benefit in kind for a computer remains EUR 180 per year or EUR 15 per month. However, a laptop will no longer be considered a computer, merely an accessory device (valued at EUR 72 per year or EUR 6 per month).
The benefit in kind associated with an Internet subscription is still valued at EUR 60 per year (or EUR 5 per month), which is now the maximum amount: if the employee has Internet access through a second device (such as a laptop or tablet), no additional benefit in kind will be taken into account.
Mobile phones and smartphones
Even though there are no official valuation rules for tax and social security purposes, it is generally accepted that the provision by the employer of a mixed-use mobile phone or smartphone generates a benefit in kind of EUR 12.50 per month. This amount is not official, however. Under a BYOD plan, the employer often covers, in practice, the full cost of the employee's mobile phone or smartphone, including both the monthly subscription and calls. Even in this case, however, the benefit in kind is still only EUR 12.50 per month.
Both the social security and tax authorities will officially accept the abovementioned amount of EUR 12.50 per month for the private use of a mobile phone or smartphone. This amount covers the cost of the device, calls and mobile Internet access.
Finally, the use of tablets at work is becoming more frequent. In this respect, it appears that when the employer covers the professional use of a private tablet (3G card), the benefit in kind is usually set at EUR 5 per month.
The benefit in kind associated with a tablet has been set at EUR 3 per month. The benefit in kind for Internet use on a tablet is EUR 2 per month.
Based on the available information, the difference is that no additional benefit in kind for tablet Internet use will be taken into account if the employee also has access to the Internet through a PC.
Agoria provides the following example: if an employee receives both a laptop and a tablet with Internet access, the benefit in kind will decrease from EUR 40 (i.e. EUR 15 + EUR 5 per month, for both the laptop and the tablet with Internet connections) to EUR 14 per month (i.e., EUR 6 for the laptop, EUR 3 for the tablet, and EUR 5 for the Internet connection).