And employees are now worried.
Deloitte | tax@hand
If employees failed to declare the RSUs, they are at risk of facing a tax re-adjustment imposed by the tax authorities. Ideally, the tax authorities should be lenient, as it would be unfair to sacrifice these employees on the altar of excessive tax penalties. They should be excused to a large extent by the complexity of the regulations and the absence of legal framework.
The employees themselves should also be given the advice to report to the Central Point of Contact CPC foreign securities accounts on which the shares are paid out. This is a legal obligation for every account held abroad. These employees should take into consideration that, when the assets of these foreign securities accounts are transferred to Belgium, Belgian banks may question the origin of the funds. The banks have this obligation under the money laundering laws. The latter has decided to introduce an obligation of declaration for domestic companies.
From now on they will have to create and fill in a form for shares, stock options and RSUs granted to their employees from 1 January by a foreign parent company.
Tax regime for stock options in Belgium
The government would even like to go one step further by requiring domestic companies to withhold payroll tax on this award or payouts from 1 January And, eventually, this will create a clearer framework, which will benefit the tax authorities as well as employees. There you have it: a short and practical update on RSUs. Unfortunately, columns have to be written a week in advance, which means that this column will not be published in time for the party of this coming weekend.
I will, however, for all the subsequent parties.
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A win for me on two levels: a positive impact on both Trends and my party mood…. Back to insights overview. Stock options and RSUs. The trees, the forest, the forester and the regulator Doctors have an unenviable position at parties. The forester In practice, these RSUs are declaration sensitive, however.
Published under Private Tax. Andere relevante insights. Jan Tuerlinckx. Taxation on a human scale. Tax law is a matter of public policy. This is a legal doctrine which means, among other things, that tax law must be applied at all times, that it cannot be deviated from, not even by the court.
The beneficiary must, therefore, declare payments obtained in their personal income tax return or, if applicable, non-resident tax return.
This applies to the remuneration of both employees and company managers. In the past, taxpayers often tried to escape taxation when they were granted RSUs from a foreign company, whether or not they know that collecting the tax correctly is often not a simple matter for the tax authorities. The absence of any fiche-reporting or withholding obligation, combined with the fact that any RSU income is often deposited in a foreign securities account, may lead taxpayers to believe that this income is not subject to taxation in Belgium. The Belgian tax administration, and in particular the Special Tax Inspectorate, focuses its attention on employees who are granted payments by foreign multinationals as an organised control activity.
If the payment obtained is not subject to withholding tax on income from professional activities, the Administration checks whether the benefit has been included in the personal income tax return and, in the absence of this, it will, if necessary, proceed to levying taxes, including increases.
The draft bill aims to introduce a rule whereby from now on, a Belgian company subject to Belgian tax whose employees receive payments from foreign companies affiliated to these taxpayers because of, or in connection with, the exercise of their professional activity, will be deemed to have granted those payments itself. Affiliated companies are those that meet the criteria of Article 11 of the Companies Code.
The draft creates a tax fiction that requires the employer of the payment beneficiary to declare the payment on a fiche and summary statement, on the one hand, and to withhold withholding tax on earned income and pay it to the Treasury, on the other. Even if the Belgian employer does not intervene in the transaction as debtor, depositary, agent or intermediary , it is bound to fulfil these obligations on the basis of the fiction.
Share option plans
The fiche obligation is set to apply to the qualifying remunerations and payments of all kinds granted or made payable during the calendar year The fiction relating to withholding tax on wages will, in turn, have to be applied to remunerations granted or made payable as from 1 January If a taxpayer employed by a Belgian employer receives a payment from his employer's foreign affiliated group company from 1 January onwards, this Belgian company-employer must withhold and pay the withholding tax.
As the Belgian company does not, in principle, intervene, it will be important to align the internal business policies with the new regulation, so that the employer is always informed of payments granted from abroad so that it can fulfil its notification and withholding obligations. Although as the law currently stands, there is no obligation to withhold withholding tax on wages and to declare in advance payments obtained from a foreign group company, such payment must always be declared in the personal income tax return. Since the withholding tax is merely an advance on the final income tax, employers can, of course, also withhold the withholding tax voluntarily.
The draft can, therefore, be welcomed by taxpayers who benefit from the advantages that in the past remained unclear whether or not they would be subject to taxation. All benefits will, in future, have to be reported and subject to withholding tax. Those who tried to take advantage of the vagueness of the system of taxability on benefits obtained from abroad will, in turn, no longer be able to rely on their good faith when they receive additional tax on a 'forgotten' undeclared payment.
In addition, the draft regulation will remedy the difficulties faced by the tax authorities in correctly collecting the tax on payments made from abroad. Finally, the extension of the fiche obligation means that many more payments obtained must be reported, giving the tax authorities a better overview of the payments on which they must receive withholding taxes on companies. The Covid pandemic has generated quite a few additional challenges. How, for example, do you organise a general meeting with Do you employ a wage bonus scheme each year?
Many companies do.
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It is an attractive type of incentive. From now on, you will retain more net from your French dividends than from your Belgian dividends.