Social liabilities: clarification from the tax authorities
December 2021 – A single status for blue-collar and white-collar workers was introduced in 2013. This measure aimed to harmonise the status of these two categories of workers with regard to notice periods and the waiting day. The introduction of this status has led to an increase in costs for employers wishing to dismiss a worker. The social liability exemption helps to offset this additional cost.
In broad terms
The social liability exemption allows employers to exempt a part of their profits in case they wish to dismiss an employee. The amount to be exempted is equal to a certain amount of remuneration allocated to workers who have reached five years of service under the single status.
This exemption is temporary. The amount exempted for each worker is included in the profits and benefits when the worker leaves the company.
Finally, the employer spreads the cost of a dismissal over the employee's career, as well as the tax deduction.
Social security liability
This exemption is granted to all employees, regardless of their working regime (full-time, part-time, etc.), the date of their employment, the level of their remuneration and the reason for leaving the company.
However, the employee must have acquired at least five years of service with the employer as of 1 January 2014 and be subject to Belgian social security law.
However, the law does not include the condition of being subject to Belgian social security law.
In practice, it is not common for a worker employed by a Belgian employer not to be subject to the NSSO. However, this is the case, for example, when the Belgian employer seconds a member of his staff abroad.
How should these five years of service be calculated?
The tax authorities have recently clarified that in this case the period of employment abroad must be taken into account for the calculation of the five years of service. Neither the place of work nor the liability to Belgian social security is relevant.
Average gross monthly earnings
The calculation of the social liability is done in three steps.
The first step is to determine the number of weeks of earnings that are relevant for the exemption. The exemption is equal to three weeks' pay for each year of service commencing after the sixth year of service after 1 January 2014. From the twenty-first year of service after 1 January 2014 onwards, the amount of the exemption is only one week's pay per year of service.
The second step is the amount of the remuneration. If the remuneration is less than or equal to 1 500 euros/month, it is taken into account for the exemption up to its total amount. If the remuneration is more than 1 500 euros per month, only 30% of the part exceeding this amount is taken into account. The part of the remuneration exceeding 2 600 euros per month is not exempt. By remuneration, the tax authorities mean the average gross monthly remuneration, before deduction of personal social security contributions, calculated over the total number of months of the taxable period for which the exemption is claimed.
The third and final step is to spread the amount of the exemption over five years.
The tax authorities also clarify that the (single and double) holiday pay for blue-collar workers and the double holiday pay for white-collar workers do not form part of their regular monthly remuneration and therefore cannot be taken into account.
However, the single holiday pay for employees can be included in the reference pay.
Obligation to make a record
In order to benefit from the tax exemption for social liabilities, you must send the tax authorities a list of the names of the employees employed each year and provide a number of details for each employee. This must be done electronically.
Moreover, the exemption for social liabilities is a right, not an obligation. It is perfectly conceivable that you do not wish to create social liabilities.
As explained above, the exemption must be spread over five years. Therefore, if in 2021 you make use of an exemption corresponding to one fifth of the total exemption, you must draw up a form. And, if the following year you do not claim an exemption, for example because your profits are insufficient, you still have to make the form!
