Company-provided family allowance – exempted from social security contributions

Nicolas de Limbourg 29 March 2016


Companies can, for example within a flexible reward plan, opt to grant their employees (with children) a so-called ‘family allowance’, which is an additional child benefit on top of the statutory child allowance.

Recently, the Belgian Supreme Court has decided that such allowances are not to be considered as “salary” for social security purposes. Consequently, these additional child allowances are exempted from employer and employee social security contributions. The fact that the allowance is only granted to a well-defined group of employees, notably with a certain position and level of seniority, has no (negative) impact from a social security perspective.

Based on an internal instruction of the Belgian social security authorities, the maximum family allowance that can be exempted from social security contributions amounts to EUR 50 per month and per child. However, neither in the above-mentioned decision of the Belgian Supreme Court nor in the Belgian (social security) legislation, a maximum amount or threshold can be found in this respect.

From a personal income tax point of view, the Belgian tax authorities explicitly state that such an allowance is not to be considered as an employee benefit (‘sociaal voordeel/avantage social’). Consequently, the family allowance is subject to the progressive personal income tax rates (including communal taxes). Moreover, wage withholding taxes are to be withheld by the employer via the payroll.