Belgium: New reporting requirements for “costs proper to the employer” beginning 1 January 2022

Beginning for income year 2022, all amounts of “costs proper to the employer” will need to be reported on the annual individual salary forms 281.10 and 281.20.

The reimbursement of expenses incurred by the employee for the account of the employer (costs proper to the employer) is non-taxable for the individual and tax deductible as business expenses for the employer, provided that the employer can demonstrate that the expenses are proper to their business activities and the payment is made to reimburse the employee that pre-financed these expenses.

• According to article 57, 3° of the Belgium income tax code (BITC), fixed allowances attributed to personnel members as reimbursement of costs proper to the employer must be reported on the annual individual salary forms.
• In Circular 2021/C/20 on the homework allowances, the tax authorities announced that for all reimbursements of costs proper to the employer the total amount of the allowances must be reported on the annual individual salary forms.
• The law (27 June 2021) on various tax provisions, published in the Belgian Official Gazette of 30 June 2021, added art. 57, section 2 BITC according to which variable allowances attributed to personnel members as reimbursement of costs proper to the employer must be reported on the annual individual salary forms. According to the explanatory notes to the law, company directors are also covered.

Based on this circular and the new legislation, all amounts of costs proper to the employer now must be reported on the annual individual tax forms 281.10 or 281.20 beginning for income year 2022. This means that all the amounts of the expenses reimbursed based on supporting documents (e.g., reimbursement for parking based on a receipt) and the amounts of the lump-sum expenses reimbursed based on “reasonable criteria” (e.g., daily allowances for foreign or Belgian business trips) are now to also be reported on the annual salary forms.

It is expected that more practical details will be announced in the “Notice to employers and other debtors” (Bericht aan de werkgevers / Avis aux employeurs) that will be published in the beginning of 2023.

Employers may need to review their current processes as a lot of costs in scope are currently not reported through payroll but generally reported via expense reports submitted to the accounting department.  

Failing to properly report these costs could result in the application of the secret commissions tax for corporate tax purposes (only in the case of fixed allowances) and in administrative penalties (in all cases).

Read a January 2022 report prepared by the KPMG member firm in Belgium