A benefit in kind is a benefit granted by an employer to an employee free of charge or at a low price. Examples include a laptop, mobile phone or company car. The employer and the employee must pay tax on the amount corresponding to the value of the benefit in kind.
How are employers taxed when they provide a company car?
Employers are taxed when they provide a company car that can be used for private purposes. This is done in the form of an additional non-deductible expense and amounts to:
- 40% of the benefit in kind if the employer contributes (partly) to the fuel costs and the employees can use their leasing vehicle for private purposes.
- 17% of the benefit in kind if the employer doesn't contribute to fuel costs.
The total ‘theoretical’ benefit in kind serves as calculation base for the additional non-deductible expenses. An eventual own contribution of the driver cannot be deducted. The additional non-deductible expense is added to the non-deductible expense that arises from the deduction restriction on the vehicle costs (in terms of the CO2 emissions, a minimum of 60% and a maximum of 120% of the costs of a lease car can be deducted from the taxable amount).
The increase in non-deductible costs for the employer results in an increase in the taxable amount. The company therefore pays more corporation tax. The effective cost is calculated as follows:
17% or 40% x benefit in kind x 33.99% (corporation tax at the standard rate)
How are employees taxed when they drive a company car that they use for both work and private purposes?
If you have a company car that you use both for professional and private purposes (including commuting to and from work), you are enjoying a taxable benefit. Your employer declares this benefit on your payslip under 281.10 or 281.20.
The benefit can never be less than EUR 1.280,00 per year (2017 income – 2018 tax year). If you pay a monthly own contribution to your employer for the private use of your company car, this contribution will be deducted from the taxable benefit. You can deduct a one-off own contribution from your personal income tax. The taxable benefit is calculated annually using the following formula:
age-based percentage x list value of the vehicle x 6/7 x CO2 percentage
- Age of the vehicle
The age of the vehicle is taken into account when calculating the benefit in kind. The older the vehicle, the lower the benefit in kind. The list value is multiplied by a percentage that takes into account the time that has elapsed from the date of initial registration of the vehicle.
Time elapsed since the initial registration of the vehicle (a month that has already commenced counts as a full month)
Percentage by which the list value is multiplied
From 0 to 12 months
From 13 to 24 months
From 25 to 36 months
From 37 to 48 months
From 49 to 60 months
From 61 months
- List value of the vehicle
The list value is the actual list price of the new vehicle including all optional extras when sold to a private individual plus the VAT actually paid. Discounts and bonuses are not taken into account. A figure of 6/7 of the catalogue value is taken into account when making the calculation.
- CO2 emissions of the vehicle
The basic CO2 percentage is 5.5%.
If your company car's emissions exceed the reference emissions level*, the basic percentage is increased by 0.1% per gram of CO2 up to a maximum of 18%.
If your company car's emissions are lower than the reference emissions level*, the basic percentage is reduced by 0.1% per gram of CO2 down to a minimum of 4%.
* The reference CO2 emission level for vehicles with a petrol, LPG or CNG engine is 105 g/km (for the 2017 calendar year). The reference CO2 emission level for vehicles with a diesel engine is 87 g/km (for the 2017 calendar year).
Reforestation and biodiversity in practice
Some causes are more important than the pursuit of EBITDA. Without trees there can be no biodiversity, and flora, fauna, soil, water and air are all affected. That is why WeForest is mobilising companies to plant forests.
Reforestation is neither a luxury nor a question for hippies. It is indispensable for the climate and biodiversity, the quality of our soil and water, as well as for food; it is thus vital for the future of all species.
The solutions, which remain under-recognised, are simply waiting to emerge. They are not technical, do not adhere to the logic of extraction and do not call on limited natural resources. They are tremendously effective, draw their inspiration from natural ecosystems and entail integrating trees into fields. See also the article The full potential of reforestation.
We have pinpointed two relevant non-governmental initiatives: Ecosia, a search engine launched by a start-up in Berlin, has attracted 7 billion users and plants one tree for every 45 searches made – the equivalent of some 27 million trees planted to this day; secondly, the non-profit organisation WeForest is utilising its expertise in this area, its basis in science and its business network to engage in sustainable reforestation. We went to meet Marie-Noëlle Keijzer, the founder of WeForest, to hear her story.
From carbon offsetting to corporate 'water footprints'
In the early days, WeForest was not convinced by carbon offsetting, which it regarded as too reductive. Yet it was a means to connect with its target audience: companies anxious to measure, reduce and then offset the carbon emissions that they are not able to avoid. Today, the objective of 'net positive emissions' has been set, which also aims to offset past emissions.
It is obvious that environmental concerns now extend beyond carbon alone. Many are beginning to examine their water footprint. A new vision is taking hold, which entails development aid via the promotion of reforestation. "Moving countries out of poverty and doing more than simply planting trees and leaving: this is how companies now wish to act in a socially responsible way", explains Marie-Noëlle Keijzer, CEO of WeForest.
Intervening on vegetation, carbon, water, air and employment
With the 270 corporate clients that have joined it since 2011, WeForest planted almost 17 million new trees and restored 13,000 hectares of land by the end of 2017, and aims to double these figures by 2020. It offers high-impact marketing materials to customer companies with messages such as 'one sale = one tree planted'.
In 2014, Brabantia decided to 'do something different'. It wanted to sell products, of course, but also give thought to global issues. Working alongside WeForest, the company entered into a joint financing project supporting reforestation. "Since Brabantia began to state on its website, on YouTube and on its packaging that one tree would be planted for every rotary dryer sold, it has seen a 25% increase in sales every year", explains the head of WeForest, citing well-substantiated case studies with certified benchmarks: "We go beyond the theoretical", she continues. "There is total transparency, with every customer receiving a GPS map of the hectares they have funded. We then ensure the forest is protected, approve our customers' projects and help develop the socio-economic activity of the entire region by initiating alternative revenue sources which create employment."
A tree is more valuable in the ground than on it
WeForest is not engaged in helping Zambia in order to maintain its reliance on international aid, but to educate the hundreds of farmers who chopped down all of their trees in order to sell them for firewood. By bringing them together, the association demonstrates that they do not have to clear trees to sell forestry chips, and that by selectively collecting biomass, they can provide heat without cutting a tree down. WeForest trains women to work as nursery growers, giving them a job, an income and an identity. It also supplies beehives to farmers who have begun to produce honey as a new source of income. Bees have other positive effects too, since they pollinate flowers, plants and fruit crops, for example. "It's really simple", affirms Marie-Noëlle Keijzer. "If we kill bees and birds by using pesticides and insecticides, we are preventing nature from doing its work."
Trees provide a habitat for animals and natural fertiliser for plants
In regions of Brazil where tree coverage is 3%, leopards have completely died out. Agriculture has supplanted forests wherever the ground is level. WeForest cannot operate across the entirety of the country, which is much too large. But they have created green corridors, and life has begun again. Trees and plants have been restored, attracting birds and animals that use them to move around, eat and reproduce.
Trees are also a natural source of fertiliser: corn grows more quickly when it is close to trees. They provide shade and retain water in the soil.
There are trees and trees
Not all reforestation projects are equal. Some trees boost the food supply or increase soil nitrogen levels (such as the lucerne), whereas others are detrimental to diversity. For example, no animals will live in palm tree plantations where the soil is also full of chemicals. "We won't solve the problem if we do nothing to change the causes of deforestation: intensive agriculture for the purposes of producing meat, for example", says Marie-Noëlle Keijzer, firmly convinced. Solutions exist, but everyone needs to accept their share of responsibility.
Sources: BNP Paribas Fortis, WeForest
Simpler rules for VAT on e-commerce are one step closer
Europe is about to modernise the rules relating to VAT levied on goods and services sold online. The aim is to lighten the load on SMEs and turn the EU into a genuine "electronic single market". The first stage will begin on 1 January 2019.
Obligations associated with VAT applied inside the EU can sometimes be a real headache for companies trading within the Union's borders. While self-declaration payment rules for B2B trade are relatively simple to apply (providing the purchasing company has a valid VAT number), selling to individuals within the EU involves a more complex set of formalities. This is because companies that exceed the annual threshold of EUR 35,000 (in Belgium) must register for VAT in the country or countries of destination. According to European Commission estimates, this administrative obligation equates to an average annual cost of EUR 8,000 (per member state) for a company to ensure it complies with local VAT rules, making it costly for SMEs. This observation led the European Commission to put forward an action plan in April 2016, which was ratified by the European Council last December. What will the new rules change?
A new threshold for "digital services" from 1 January 2019
Brussels has a clear objective: it wants to simplify VAT collection from e-commerce companies in order to turn the European Economic Area into a genuine "digital single market". The primary beneficiaries will be companies that offer "digital services" to individual consumers anywhere in Europe (relating to video on demand, music or app downloading and the distribution of video games or e-books, etc.) Up to a new annual threshold of EUR 100,000, these companies can remain subject to VAT in Belgium, thereby avoiding all obligations in the other Member States.
The "one-stop shop" will gradually be extended
In addition, such digital services companies can already make use of the Mini One-Stop Shop (MOSS), a system which simplifies all cross-border VAT operations by allowing companies to make one single VAT declaration: this is submitted electronically in the company's country of origin, for all services in all other Member States. This portal therefore removes a large chunk of the administrative burden on firms. The good news is that this mini portal will be accessible to providers of all other types of services in Europe from 2019.
Distance selling of goods also to be covered from 2021
Companies whose business involves the distance selling of goods will need to wait until 1 January 2021 for the new EUR 100,000 threshold to come into force. But the other change is that the MOSS will also be opened up to these online retailers. There can be no doubt that access to this single portal is a real step forward that will, according to the European Commission, lead to savings of EUR 2.3 billion and increase Member States' VAT receipts by EUR 7 billion. It should also be emphasised that from 2019, micro-businesses with cross-border online sales of no more than EUR 10,000 can continue to apply the VAT rules of their home country.
The other priority: the fight against fraud
This package of new measures also aims to mount a more effective attack against a form of fraud that reportedly led to losses of more than EUR 152 billion across the EU in 2015. As a result, a new measure to take effect in 2021 will remove the VAT exemption on goods with a value of under EUR 22 imported from outside the European Union. This is because it was often abused by companies that exploited it to bring in goods of a higher value while evading payment of VAT in their country of arrival.
Thinking of buying a property with your company? Take care!
We explain how stricter rules now apply to the "split purchase" of a property obtained via a company. This is a favourable fiscal arrangement for a company director, but one that must be approached with more caution than ever.
The "usufruct/bare ownership" structure
For several years now, the so-called mixed purchase (private/professional) of a property has been common practice for some company directors. This fiscally beneficial solution is based on the principle of "breaking up" full ownership of the property. On one hand, the usufruct is assigned to the company for a certain amount (proportion of the purchase price). This means that the company is entitled to use the property with no rental liabilities during a given period (generally between 20 and 30 years). On the other, the company director acquires bare ownership of the property, which allows him/her to retake full possession of the building once the usufruct has expired without paying a euro more.
The crux of the issue: the valuation of the usufruct
Where is the interest in this arrangement? It lies in maximising the cost to the company of acquiring the usufruct. This is because the larger the sum paid by the company, the smaller the sum the director has to pay at the time of purchase (not forgetting taxes, registration levies, indemnities, etc.). In addition, the company can deduct building/service charges such as withholding tax, maintenance and financial costs, and amortise the value of the usufruct over the agreed term. This is the best possible fiscal scenario, but one that has resulted in a certain amount of abuse at the point of the oft-mentioned "usufruct valuation". It is not by chance then that the tax authorities have been studying the issue for a few years now with a view to tidying things up a little.
The taxman turns the screw even more
Up until now, the authorities used a formula known as the Ruysseveldt formula to calculate the usufruct value, based on the discounted proceeds of gross rental yield for the duration of the usufruct term. However, this approach led to over-valuations, and so did not prove effective enough in the eyes of the tax authorities. This is why they recently decided to apply a new financial appraisal formula which is much tougher. In reality, this is the method already in place since 2016 to assess cases filed with the Service des décisions anticipées (SDA) (advance ruling service) of Federal Public Service Finance. It should be recalled that this service has established a "pre-filing procedure" for usufruct arrangements (used in advance of the official application) to ensure the future operation benefits from a certain degree of legal security.
The "advance ruling" formula is much less favourable
By changing its stance on the issue, the tax authorities could cause problems for some directors who have been too greedy. This is because the two formulae produce rather different results. Take this basic example of a property with a purchase price of EUR 500,000, for which the company acquired the usufruct at a cost of EUR 425,000 under the Ruysseveldt formula (85% of the price). In this case, the director has only paid EUR 75,000 for the bare ownership. Based on the authorities' new approach, the financial valuation of the usufruct would actually sit at around 60%, with bare ownership at around 40%. This means the individual would have had to pay EUR 125,000 more – an altogether different situation.
Handle with care
So any head of a company who wishes to be involved in this kind of operation will need to be more prudent than ever before. One of the most important things is to demonstrate that the arrangement genuinely reflects a financial logic. With this in mind, well-informed entrepreneurs will ensure they prove the property deal will profit the company, and will adequately evaluate the usufruct's value and term. Finally, we should emphasise that approval can be sought from the tax authorities via the fiscal ruling website.
Company insolvency reconsidered and rectified
The new law on insolvency came into force on 1 May, introducing its share of changes on aspects including court-ordered reorganisation, bankruptcy and the responsibility of directors.
Published in the Belgian Official Gazette last September, the new law of 11 August 2017 applies to all insolvency proceedings begun on or after 1 May 2018. Are changes on the cards? Most certainly. The new insolvency law is more than a simple modification of the existing regulations arising from the law of 31 January 2009 on "company continuation" and that of 8 August 1997 on "bankruptcies": it introduces its own set of new rules. Its stated aim is to create a more consistent framework of laws on the subject and incorporate them into Book XX of the Code of Economic Law. A "big step towards the law of the future" is the description used by the Minister for Justice, and its impetus was derived, among other things, from EU regulations on insolvency and a certain number of Belgian Constitutional Court and Supreme Court rulings. This drive for consistency also aims to strengthen the distinction between "insolvency" and "bankruptcy" in a way that gives weight to the idea of a "second chance".
Insolvency for (almost) everyone
Beyond the desired harmonisation and greater computerisation of processes, the objective was also to considerably enlarge the scope of application of insolvency proceedings. Whereas until now only "traders" could be declared bankrupt, from this point onwards practically all "companies", including liberal professions, will be able to follow procedures to reorganise their business or file for bankruptcy. And they are not the only ones, because agricultural entities (which could already have recourse to the Belgian business act), non-profit organisations, landlords' associations and any individual who is self-employed in their line of work (even company managers or managing directors) are also affected by a broader concept that establishes the idea of the "company" as the basic model.
Priority to the "second chance"
This is one of the most prominent aspects of this law: encouraging businesspeople to start again, either by restructuring their business or by being able to recover more quickly following bankruptcy. This intention can be seen in several new measures:
- The modernisation of the amicable agreement excluding court-ordered reorganisation to make this more attractive and "secure" for the lender. We should also note the appearance of the "company mediator", whose role will be to support businesses in difficulty to prepare this agreement.
- In relation to court-ordered reorganisation there is no real revolution: the three existing forms are retained, but certain rules have been clarified to bring them closer into line with practice.
- Finally, the provisions covering bankruptcy share the same aim: to allow a bona fide victim of bankruptcy to make a fresh start, quickly.
Responsibility of directors
The consistency of rules governing the responsibility of directors of companies in difficulty (except private individuals) has also been reviewed, and the rules have been extended to all "companies" (with a small number of exceptions that include private individuals, SMEs and non-profit organisations). There are three specific cases: the accumulation of liabilities where there is clear and serious misconduct, non-payment of social security contributions, and the unreasonable pursuit of a loss-making business.