According to article 57 of the Belgian income tax code (hereafter ‘BITC’), certain costs will only be tax deductible to the extent that they are properly reported on individual fee forms (281.10 for employees and 281.20 for company directors). This includes commissions, brokerage fees, trade rebates or other discounts, remuneration, bonuses, fees, allowances (‘vergoedingen’ / ‘rétributions’) or fringe benefits, … that constitute – whether or not Belgian – taxable professional income in the hands of the recipients.
In the past, a strict reading of article 57 of the BITC would lead to the conclusion that there would be no obligation to report reimbursements of ‘cost proper to the employer’ on the basis of actual supporting documents (in other words based on the expense reports). It was therefore sufficient to state in the fee form that reimbursements were made on the basis of “documentary evidence” (free translation).
Law of 27 June 2021: a Game Changer
The Belgian tax authorities want to have a more holistic view of the reimbursement of various costs proper to the employer (for employees) or costs proper to the company (for company directors).
Based on the circular letter 2021/C/20, lump-sum home office work allowances (see our previous flash on this topic), paid as of 1 January 2022 will need to be mentioned on the tax forms.
Additionally, the Law of 27 June 2021 containing miscellaneous tax provisions and amending the Law of 18 September 2017 on the prevention of money laundering and terrorist financing (so-called “pot-pourri law”), published in the Official Gazette of 30 June 2021, inserted a new obligation for companies to report the amount of costs proper to the employer that are reimbursed on the basis of actual supporting documents.
The objective of the legislator is to enable tax inspectors to verify whether the costs reimbursed on the basis of the expense reports are not also reimbursed on a lump-sum basis.
The extended obligation is applicable to variable cost reimbursements made as from 1 January 2022 (and which need to be put on the relevant tax forms that will have to be drafted before March 2023). It is obviously also relevant for compensation paid by a company to its company directors as a reimbursement of “costs proper to the company”.
As a result, companies are thus encouraged to start thinking about how they can trace and link the expenses that are reimbursed via expense reports, in the light of this new reporting obligation.
In case of any further questions, please do not hesitate to contact Philip Maertens or Sandrine Schaumont.