Whenever an employer provides an employee with a free tablet, mobile telephone, telephone or data subscription that may be used for private purposes, this is considered a taxable benefit in kind. Since the beginning of this year there are fixed charges for such benefits, but in some cases it is possible for a benefit to be avoided.
Fixed benefits in kind as from 2018
A fixed amount has been established for most such benefits in kind. However, until recently, there was no fixed fee for the free provision of a tablet, mobile telephone, or telephone or data subscription. Such benefits therefore needed to be evaluated on the basis of their ‘true value’ to the recipient. This changed, thanks to the Royal Decree dated 2 November 2017, establishing the following fixed annual costs, applicable as from 1 January 2018:
- Free provision of a tablet or mobile telephone: 36 euros
- Free telephone subscription (land line or mobile): 48 euros
- Free internet connection (fixed or mobile): 60 euros
The latter amount of 60 euros per year shall apply, regardless of how many devices are able to utilise the internet connection.
Changes were necessary as the existing fixed fees (particularly with regard to social security) could not always be considered to be aligned with the market, were no longer realistic and harmonisation was lacking between the various authorities (e.g. between the tax and social security authorities. The above amendment, together with a number of new (lower) fixed fees applicable as from 1 January 2018, now harmonise and clarify the existing rules.
An important remark is that, in some cases, the amounts must be combined. Therefore, the free provision of a smartphone with a data and telephone subscription will incur a total benefit in kind of 144 euros.
Sometimes no benefit in kind at all
Naturally, if the permitted use of the tools provided by the employer is strictly professional, no benefit in kind should be incurred. Where a system exists whereby the employee pays all private use (registered in a realistic system), then it is not necessary to declare benefit in kind. In the event of such split billing, the employer will only fund the costs as long as these do not exceed a clear limit. Any amount above the limit is then charged directly to the person receiving the benefit.
The latter point has recently been confirmed in a response from the Minister of Finance to a question raised in parliament. Furthermore, the minister not only confirmed that, in such cases, there is no taxable benefit in kind on the subscription and internet connection, but also that no benefit should be charged for the device supplied. This has also been confirmed in the past by the ruling committee – before the creation of fixed fees. It is argued that, in the aforementioned case, as the employer is no longer funding any private use of the smartphone, there should also be no taxable benefit on the device itself.
This is a somewhat surprising, but clear confirmation, which is certainly to the advantage of the tax payer and therefore can only be celebrated.
The amount beyond which any use is considered to be private (6.5 euros call costs and 1.5 gigabytes per month in the case that was submitted to the minister) does still need to be established in accordance with serious standards and criteria and, as such, must be confirmed as realistic. Indeed, in the past, the ruling committee have already determined the contrary, that a particular law could not be considered as ‘realistic’, when the facts demonstrated that in the past year the set amounts were not exceeded by the employees and therefore no charge was made for private use.