As of 1 January 2019 Belgian based employers whose employees receive bonuses or other benefits from (a) foreign-based group company(ies) must withhold payroll taxes and report these benefits on a tax form 281.10 or 281.20 “as if they granted these benefits”.
In the past, Belgian employers were only due to comply with these tax reporting obligations insofar they intervened (e.g. administratively and/or cost wise) in such grants and/or payments. Belgian employers now always have to comply with these tax-reporting obligations.
A transitional period applies for payments or grants between 1 January 2019 and 28 February 2019. For these benefits the Belgian employer must only file a specific tax form prior to 1 March 2020. If not, the employer risks a tax increase of 10% (on the non-reported benefit), unless it can be demonstrated that the employee reported the benefit in his income tax return.
Some practical issues
Please note that this new law also impacts the grant of stock options. As you know, according to the Belgian stock option law of 26 March 1999, a Belgian employer was already obliged to mention the benefit resulting from stock options granted by a foreign-based group company on a tax form 281.10 or 281.20. However, payroll taxes were only due if the employer also intervened in the grant. As of 1 March 2019, payroll taxes are due to withhold as well regardless an intervention from the Belgian employer.
It also implies that foreign-based group companies will have to inform the Belgian employer when they pay such benefits. Seems innocent but in practice this could be a delicate matter as local HR is not always informed about bonuses paid on group level to their management team members (in such case it used to be the employee’s sole responsibility to report the benefit in his/her income tax return because the Belgian employer did not intervene in the grant and/or payment).
Which taxpayers are involved?
Taxpayers involved are both resident and non-resident taxpayers insofar the latter are of course taxable in Belgium. It therefore also applies to Belgian non-residents whose Belgian based employer applied for the application of the special tax status for foreign executives.
Salary splits are excluded according to the explanatory memorandum of the law insofar an employee-employer relation exists between the employee and the foreign employer. Key is to be able to demonstrate such relationship. Hence, an employee having a Belgian and French employer but receiving a bonus from another group company still requires above said tax reporting obligations as of 1 January 2019.