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UPDATE - Did you properly report all your “variable” costs proper to the employer on the Fiche 281?
As mentioned in our previous alert regarding this topic (Costs proper to the employer: don't forget the new reporting obligation (ey.com)), the reporting obligation for costs proper to the employer has changed as of tax year 2023 - income year 2022.
As confirmed by the law of 27 June 2021, and clarified in the circular letter 2022/C/62, also the variable cost allowances such as the reimbursement of actual expenses should be reported on the tax forms 281.10/20.
Former regulation
Under the previous regulation, there was only a reporting obligation for fixed cost reimbursements (article 57, °3 BITC). Failure to comply with these obligations could be heavily sanctioned with the non-deductibility of the professional expense and/or the application of the secret commission tax at corporate tax level of 100%.
For the variable cost reimbursements, where the employer reimburses the actual costs on the basis of supporting documents (e.g. an invoice), there was no such obligation.
New regulation as of income year 2022
As of income year 2022, the methodology of reporting reimbursements of costs proper to the employer has changed and also the variable cost allowances such as the reimbursement of actual expenses should be reported on the tax form 281.10 for employees and on the tax form 281.20 for company directors, regardless whether the reimbursements are being processed through the payroll or not. Additionally, it is now mandatory to indicate the actual amount of the allowances for each category.
With these new obligations, the tax authorities aim to get a better understanding of the amounts that are granted as a reimbursement of costs proper to the employer and, in practice, to ensure the same costs are not being covered by different reimbursements (double dipping).
Summarizing overview of the new regulation:
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Lump sum allowance based on reasonable criteria |
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Lump sum allowance not based on reasonable criteria |
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Reimbursement based on supporting documents |
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Furthermore, the circular letter 2022/C/62 has provided additional guidelines by describing different examples to clarifiy which variable costs are to be reported on the Fiche 281.10/20.
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Reporting on Fiche 281.10? |
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A personal assistant is asked to send a registered letter for his employer. He pays at the post office using his own bank account and gets a cash receipt for 8,45 EUR. The employer reimburses the amount based on the receipt. |
Reimbursement based on supporting documents: 8,45 EUR. |
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An employee, who is working from home on a regular and structural basis, purchases a standard office chair for her home office for 350 EUR. The invoice is on the name of the employee and is paid from her own bank account. The employer decides to make a partial reimbursement of the purchase of the office chair of 150 EUR. The employee also received a fixed home working cost allowance of 100 EUR per month. |
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An employee is requested by the employer to buy some paper for the office printer. The invoice from the store is drawn up in the employer’s name. Since the employee paid the invoice from her own bank account, the employer reimburses the expenses. |
The reimbursement should NOT be reported on a fiche 281.10, since invoice was on name of the employer. |
Sanctions
Failure to comply with the additional new obligations for variable expenses will not have an impact on the deductibility of said costs on behalf of the employer, and will not result in the automatic application of the secret commission tax. Nevertheless, the Administration can still impose administrative fines.
Conclusion
As mentioned in our previous alert, it is important as an employer to properly keep track of all reimbursements of costs proper to the employer.
Therefore, in the event expenses are being reimbursed based on supporting documents and payments are processed outside the payroll, make sure to efficiently detect and trace the actual amounts as they will have to be included in the tax forms. In this respect, an adjustment of the accounting system resulting in the proper reporting on the tax form will be required.
Finally, with these new obligations, the Belgian tax authorities will be even more focused on the cost reimbursements made by companies to their employees / directors with a focus on double use of lump sum allowances and reimbursement of actual expenses and an increase in tax inquiries on this topic can be expected. Therefore, it is highly recommended to ensure the expense policies and working methods within your company are in place and up to date.
If requested, we are available to provide more detailed information or how to set up a fully compliant ‘expense working method’ in place, and work together towards a better working world.