The awaited law implementing a general income tax withholding and reporting obligation for (amongst others) equity awards granted by a foreign parent company to employees of a subsidiary in Belgium was approved by the Belgian Parliament on January 31, 2019.
Key points include:
Income resulting from equity awards during 2018 (e.g., RSU vests in 2018):
- This income is outside the scope of the final version of the new law. Therefore, no reporting or withholding on 2018 equity award income is required if a company was not previously obligated to report the income or withhold income tax (which typically would have been the case if it did not charge the local entity for the cost of the awards).
Income resulting from equity awards during the period January 1, 2019 to February 28, 2019:
- This income must be reported by the Belgian employer on a special fiscal voucher (not fiscal voucher 281.10 for employees), which must be filed electronically with the tax administration before March 1, 2020. The special form is not yet available.
Income resulting from equity awards on or after March 1, 2019:
- Income tax must be withheld by the Belgian employer. Generally, income tax must be remitted to the tax administration by the 15th day of the month following the month in which the taxable event occurs.
- This income will also need to be reported on an ordinary fiscal voucher (281.10 for employees), which must be filed electronically with the tax administration (generally) before March 1, 2020.
The new law does not deal with social security matters. It should thus not impact the new position of the social security administration regarding whether social security contributions apply to income from equity awards granted by a foreign parent company to employees of a subsidiary in Belgium, as reported in our October 2018 newsletter. We understand the Belgian Social Security Administration intends to await the outcome of the decision of the Belgian Supreme Court in a case that was lodged before the Supreme Court against a decision of the Brussels Court of Appeal of March 2018 before reviewing its position. Therefore, companies should continue to evaluate their position and watch for further developments in this regard.