Global Tax and Regulatory Update: February 2019


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This month’s update covers important information from Belgium to Canada!

  Belgium: 2019 tax reform not approved

Last December in our newsletter we informed you that significant changes were expected to happen in Belgian tax law effective January 1, 2019. The Belgian parliament was expected to approve new requirements for tax reporting and withholding, however, the Belgian federal government fell at the end of last year. A ‘minority’ government is currently in place, and due to this governmental crisis, there is now great uncertainty about the application of a whole series of fiscal measures that had already been announced, including the draft bill of December 18, 2018.

For the new tax requirements to enter into force there was a requirement for the law to be published in the Belgian Official Gazette at the latest by December 31, 2018. This did not happen and consequently the draft law remains in legislative limbo and therefore the new rules do not apply yet. It cannot be ruled out that an alternative parliamentary majority may still approve the bill.  It is also possible that the same (or a modified) content may reappear in the form of a future bill originating from the Belgian Federal Parliament. We will of course keep you updated in case the draft bill is revisited.

As a result of this unexpected change in events, share plan benefits granted by foreign parent companies to employees of affiliated Belgian subsidiaries are to be reported by employees and pay taxable income as part of the annual tax return process, provided the employer is not directly involved in the payment or the grant of the benefit and no recharge agreement is in place with the local subsidiary. In such case, the Belgian employer is not responsible (at this moment) for reporting share plan income or withholding tax on such income

Please be aware that such draft legislation would only impact those companies who were not recharging the costs. If you are recharging the costs in Belgium you should already be reporting and withholding taxes from the awards on behalf of your employees.

Finally, with regard to the application of social security contributions, due to the administrative instructions that were published by the Belgian National Social Security Office in the third quarter of 2018, social security tax is due on any benefit that is granted by a foreign entity to a Belgian employee in either of the following scenarios: (i) the cost of the benefit is charged back to the Belgian employer, or (ii) the benefit can be linked to the Belgian employee’s function (without even the slightest intervention by the Belgian employer), which is always the case.

Our Global Compliance Network Law Firm, Argo Law, in Belgium would be happy to provide you with more information. For any further information feel free to reach out to Philippe Rens at philippe.rens@argo-law.be and Leander Buyle at leander.buyle@argo-law.be.

We recommend companies review these change and amend their practices accordingly. Please contact us if you have any questions.

UPCOMING FILING AND REPORTING DEADLINES

 

 

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