Costs proper to the employer, meaning expenses which are incurred by employees in the context of their employment agreement and then reimbursed by the employer, has become a “hot topic” recently due to a legislative change.
In practice, the reimbursement of such costs can be made on the basis of actual expenses or on basis of monthly lump sum allowances that cover these expenses. If settled correctly, this kind of reimbursement is advantageous for both the employee and the employer. For the employee the reimbursment is in principle free of tax and social security contributions. For the employer, as the reimbursement does not qualify as “salary”, no employer social security contributions are due.
Due to the recent legislative change, we can expect more audits (from the tax and the social authorities) of these reimbursement of costs “proper to the employer”. Therefore, it is essential to be prepared in case of an audit and to assess, as an employer, the quality of the internal cost policy.
During this podcast our experts Olivier Chapelle, Ingrid Kinet and Gauthier Vael will tackle the different aspects to be taken into consideration when implementing such a costs reimbursement policy. Indeed, as the social security authorities and the tax authorities sometimes have different positions on the same question, it is essential to adopt a pluridisciplinary approach.
A well-implemented costs reimbursement policy reduces the risk of rejection of reimbursement as “costs proper to the employer”. In case of rejection, the rejected costs have to be considered as salary, with consequences for social security and tax.
Therefore, to prevent this risk, our experts share with you their analysis and recommendations to safeguard your remuneration policy and practice.
More information on this podcast, and others, can be found on our website