An energy budget for your staff
October 2021 – A major energy supplier offers employers the opportunity to provide free heating or electricity to their employees. The employee is taxed on this benefit, but the taxable amount is independent of the actual value of the benefit, which is usually higher.
Lump sum value of benefits
According to the tax legislation, every employee or company director is taxed on the real value of the benefits offered by the employer. This does not take into account the cost of the benefit to the employer, but the value of the benefit to the employee.
In order to avoid lengthy discussions, some benefits are assessed on a flat-rate basis. A soft loan or free accommodation, for example. There is also a flat-rate calculation for heating and electricity, from which there can be no deviation. Neither by the employer or employee, nor by the tax authorities.
The free provision of electricity has long been estimated at 470 euros per year (1 030 euros for managers and company directors). The estimated amount for heating is 930 euros (2 080 euros for managers and executives).
Product
A major energy supplier recently obtained a ruling to apply this flat-rate assessment also to a new product it is launching. In concrete terms, the employer will conclude a contract with the energy supplier for the supply of energy and heating to staff members. The employer offers his staff an energy budget, but the product can also fit perfectly into a cafeteria plan, where the employee is offered several alternative forms of remuneration - such as a company car, a company bicycle, meal vouchers or warrants.
The employee who joins this system is logically taxed on a benefit of any kind that is assessed on a flat rate basis (as described above).
The bill that the employer pays (which is probably much higher than the flat rate value of the benefit) is fully deductible.
Details
The employer must grant a predefined budget to the workers, possibly depending on the category of function to which the worker belongs. In other words, the budget may vary according to the function performed.
If the employee decides to join the energy budget system, the employer concludes a contract with the energy supplier to supply energy to this particular employee.
Of course, the employer also concludes a contract with the employee that defines the principles of the heating or electricity budget. This contract must also include a prudent and reasonable person clause (the old "good father" clause). The purpose of this clause is to prevent the employee from starting to heat unnecessarily, leaving doors and windows open, etc. The clause allows the employer to act to avoid excessive energy consumption (e.g. to deny the employee the benefit of the heating or electricity budget in the future).
The employee himself decides whether to accept the budget or not.
If he accepts, it is in his interest to limit his consumption as much as possible, knowing that the part of the budget he does not use can be paid to him as taxable remuneration according to the usual rules.
The employee can also switch to another energy supplier at any time, in which case he or she will forgo the heating or electricity budget.
If the worker exceeds his budget, he must pay the difference out of his own pocket.
Note that the difference he pays is not a personal contribution, as with the company car. If a company director or a member of staff has to pay part of the car costs personally, this personal contribution can be deducted from the amount of the benefit. The amount the employee pays because he has exceeded his energy budget is not a personal contribution and cannot be deducted from the taxable benefit.
Expense deduction vs. taxable benefit
The sums that the employer pays to the energy supplier are considered as part of the employee's remuneration. This means that they are deductible as personnel costs, provided that they are included in the taxable pay slip.
The employer will be able to deduct the amounts actually paid, while the employee will only be taxed on the (usually lower) lump-sum benefit.
Will the energy budget become the new company car?
