Advocaten / Avocats / Lawyers

Monday, 20 April 2020

Are there any benefits I can grant in a tax-friendly way to my employees to keep them motivated?

There are several possibilities to support employees and keep them motivated : 

  • Babysit service

 To meet the practical difficulties that employees with children are currently facing, a babysit service could be introduced, to which employees could call upon if their child is ill or when they are prevented to work due to e.g. closed child care centers.

From a tax perspective, a babysit service could potentially qualify as a so-called ‘social benefit’, which is exempt from personal income tax. The other side of the coin is that the expense is not tax deductible on behalf of the employer.

As to social security, potentially no social security contributions are due if the amount of the monthly benefit does not exceed 50 EUR per child (i.e. 600 EUR per year per child, to be assessed together with supplementary child allowances potentially being paid).

  • Employee contest

 Organizing an employee (e.g. photo) contest, via which a gift certificate, a bottle of Champagne, … can be won, can be a cost-friendly way to motivate employees and to strengthen the social cohesion amid the current COVID-19 pandemic.

Under certain conditions, the value of the prize granted to the winning employee is not subject to social security contributions nor taxes on behalf of the employee. The cost, however, will in principle not be tax deductible for the employer.

  • Exceptional benefits

 Under certain conditions, benefits granted to employees in case of an event not directly related to the professional activity can be tax exempt in the hands of the employee. In the past, the (tax-free) grant of one-time benefits to employees such as a bike, a tablet, etc. on the occasion of e.g. the x-year anniversary of the company has already been accepted by the tax authorities.

Interesting question is whether the current COVID-19 pandemic could also qualify as such an event on the occasion of which a benefit could be granted to the employees free from tax.

  • Vaccination

 Albeit not a classic way to reward employees, once the pharmaceutical industry manages to create a COVID-19 vaccine, many employers may want to offer their employees free vaccines in order to safeguard the working environment. In principle, free influenza vaccines are not subject to tax nor social security contributions. Given the government’s wish to prevent further expansion of the COVID-19 pandemic, it is very likely that these exemptions will also apply to future COVID-19 vaccines.

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