The tax authorities on 14 July 2020 released a circular as guidance regarding the treatment of expenses claimed by employers and relating to working-from-home or teleworking arrangements of their employees. The circular, therefore, addresses the tax treatment of certain work arrangements that reflect the business implications of the coronavirus (COVID-19) pandemic.
In general, payments that concern the work product provided by employees in the service of their employer are considered to be taxable remuneration. However, an exception is available for certain costs or expenses that an employee incurs in the course of the work performed on behalf of the employer and that are reimbursed by the employer. Thus, these reimbursement payments generally fall outside the definition of remuneration and are not taxable to the employee, while remaining deductible to the employer. This rule applies particularly in the situation of working-from-home expenses for which the tax authorities recently issued the July 2020 circular.
The circular confirms that allowances for teleworking arrangements can be fixed on a lump-sum basis when the amount has been established according to verifiable standards. Since 1 April 2020, the tax authorities have accepted a maximum monthly amount of €129.48 as employer-specific expenses for working-from-home expenses. This allowance is intended to cover the costs of fitting out and using (including rental and any depreciation) an office, computer and printing equipment, small office equipment, basic utilities (such as water, electricity, and heating), maintenance costs, and insurance at the employee's private home.
The circular includes certain conditions for the monthly allowance of €129.48 to be a non-taxable reimbursement to the employee and fully deductible for the employer. For instance, the telework must be regular and structural, meaning at least five working days per month. The reimbursement amounts paid during the normal period of annual vacation leave also qualifies. The allowance cannot be combined with any other office expenses allowances that the employee already receives. For employees affected by a “salary split,” the circular specifies that the reimbursement paid must be reduced in proportion to the activity actually conducted in Belgium by the employees.
An employer desiring to make a higher monthly payment (or to reimburse other types of office expenses not covered by the circular) is not prevented from doing this, but needs to be able to justify these increased reimbursement payments, or the excess amounts may be reclassified as taxable compensation. To obtain legal certainty, employers may request a ruling that the amounts paid will not be treated as taxable remuneration.
Finally, the circular includes recordkeeping requirements for employers.
Read a July 2020 report (French) prepared by the KPMG member firm in Belgium
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