In the spotlight: tax-friendly benefits of all kinds
October 2023 - From passenger cars to laptops: for many entrepreneurs, tax-friendly benefits in kind (VAA) are a popular way to supplement their monthly remuneration. Central to this is the favourable flat-rate basis for its taxation.
These benefits include a wide range of perks, ranging from a private car, smartphone (with or without a subscription) and laptop to the provision of a private residence, including electricity and heating. Borrowing from the company for private purposes, with or without interest, can also lead to taxation of a benefit in kind.
As these benefits are considered remuneration from a tax point of view, you have to pay personal income tax and (usually) social security contributions on them. Here, the actual value of these benefits should apply, but for the most common benefits, the tax authorities have set a flat rate, which is often lower than the actual value.
We highlight some popular benefits of all kinds:
Smartphone: if you purchase a device worth 1,000 euros and an accompanying subscription of 600 euros through your company, you will be taxed on a VAA of 144 euros on an annual basis. Specifically, this results in an amount of 80 euros as an annual tax. You will therefore keep more net.
VAPZ: if you do not have your VAPZ premiums and social contributions paid privately, but by your company, these are benefits of all kinds for you as a company director that are added to your taxable income. For your company, these are deductible professional expenses.
Company bicycle/speed pedelec: have your mobility financed by your company! If, as a company manager, you can prove that you regularly use this bicycle for (part of) your commuting trips, that benefit in kind is exempt from taxes and social security contributions. Incidentally, this also applies to maintenance and storage costs. Did you know that you can accumulate this VAA with a tax-free bicycle allowance of 0.27 euros per km (income year 2023)?
Private residence costs: you can have the costs of your private residence - including electricity and heating - borne by your company, even if, as a company manager, you use the home (partly) for family accommodation. This benefit is budgeted at a flat rate. But beware! The tax authorities and courts are very strict in assessing the deductibility of these costs on behalf of your company. You must be able to demonstrate in detail why you choose such benefits.
Using tax-friendly benefits of all kinds can be a valuable strategy for you as a business owner to both reduce your tax burden and attract and retain talent in your company. However, it is crucial to always respect the legal rules so that you do not risk incurring costly penalties.
