Print this page

Monday, 20 April 2020

To compensate my employees for their loss of income due to temporary employment, I would like to pay them a supplement on top of their (legal) unemployment benefits. What is the tax and social security treatment of these payments?

Daan Buylaert

Daan Buylaert

Partner
Brussels

To soften the loss of income of the employees being confronted with temporary unemployment due to the COVID-19 pandemic, employers may want to pay a supplement on top of the statutory unemployment benefits.

In principle, such payments are tax deductible on behalf of the company and taxable on behalf of the employees at the normal rates.

Such supplements can, however, be exempt from (employer and employee) social security contributions, if

  • the employees do not receive a higher net than when they would have been working; and
  • all employees are treated equally (in terms of percentage or via a lump sum).

In view of the reference salary

  • only salary subject to social security contributions can be taken into account;
  • for employees receiving a variable salary, the average salary of the past months can be taken into account.

If during the months of March/ April, excessive supplements were paid, this can be compensated in the months to come.

Tiberghien can assist you with the calculation of the supplement which can be paid in order to benefit from the social security exemption.