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Seniority Bonus: The Tax Administration Follows the NSSO

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Learn more about Belgian rules on seniority bonuses

The tax administration has changed its position on the seniority bonus (Circular of 25 February 2010) having been “inspired” by the instructions of the NSSO (National Social Security Office). The changes concern the following elements.

The alternative calculation method to determine the maximum amount of the seniority bonus exempted from social security contributions, as provided by the NSSO, is now also accepted by the tax administration. This means that the seniority premiums awarded from 1 January 2009, are also considered as exempted social advantages, when they are calculated on the average gross amount of a monthly salary in the company.

Also for tax purposes, the “average gross amount of a monthly salary in the company” must be based on the proportion between the wages that have been paid out and the amount of full-time equivalents during the previous calendar year.

If the employer awards a seniority bonus the amount of which exceeds the maximum limit, then the employee will now only be taxed on the portion that exceeds the limit. The rest is exempted as a social advantage.

Finally the tax administration points out that the employer can’t apply during one calendar year both the classical calculation method (on the basis of the gross salary of the employee concerned) and the aforementioned alternative calculation method. Should the employer do so, all seniority premiums that have been awarded during that year will be considered as a taxable advantage for the employees.

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