Belgium | Reimbursement of employer's own expenses: extended reporting obligation
Published on 26th Sep 2022
In Belgium, from the tax year 2023 (applicable to revenues earned in 2022), employers will be required to report the total amount of employer's own expenses they reimbursed to each of their employees. The relevant amount has to be reported to the tax authorities on a yearly basis (through the employees' individual tax forms 281.10)
This new obligation is likely to increase the number of tax audits regarding the reimbursement of employer's own expenses. Obtaining a tax ruling covering such reimbursements will become more important than ever.
Under the current regime, employers had to report the amounts reimbursed for certain expenses only (such as reimbursement of employers' own expenses through lump sum allowances not based on relevant and congruent criteria). The existence of other employer's own expenses reimbursements (based on relevant and congruent criteria or based on supporting documents) had to be mentioned but employers were not required to indicate the amount of these reimbursements.
However, employers will, as of tax year 2023, have to report the amount of all expenses reimbursed to the employees (subject to certain exceptions, for example when an employee prepays a bill addressed to the employer and is then reimbursed). This new obligation applies to reimbursements made to employees as well as to company directors (via tax forms 281.20 for company directors).
The new obligation will enable the Belgian tax administration to review and challenge any reimbursement of employer's own expenses that it considers to be exaggerated or that simply exceeds a certain threshold.
Failure to comply with the new obligation or challenges from the tax administration could lead to financial consequences both for employers and employees. For employers, the deductibility of these expenses may be rejected and they may be subject to a "secret commission" contribution (taxation of the amounts concerned up to 100%). A fine can also be imposed by the tax authorities. As far as employees are concerned, exaggerated reimbursements of employer's own expenses may be requalified as disguised remuneration and therefore subjected to personal income tax.
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