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Summer Agreement 2017: Profit Premium

As foreseen in the Summer Agreement of 2017, the government has decided to simplify the profit premium regime as of January 1, 2018. Below, we provide you with an overview of the key elements of the adapted profit premium regime.
Scope of the profit premium
A profit premium can be issued by any company, association or institution subject to Belgian corporate tax. It should apply to all employees of the company (it is nevertheless possible to exclude employees who have not (yet) acquired a seniority of one year). Furthermore, there is no obligation to grant the premium every year.
With respect to implementation, a different procedure applies based on whether or not the company decides to differentiate the premium amount.
Identical profit premium
When the granted amount is identical for all employees or if the premium is an identical percentage of the salary, no formalities apply. The meeting minutes of the general assembly must simply contain the following information:
  • The amount that will be evenly distributed or the identical percentage of the salary that will be taken into account;
  • The calculation method used if the general assembly choses to issue a percentage of the salary as profit premium;
  • Rules applicable to the granting of the profit premium; 
  • The calculation method used in the event that the profit premium is pro-rated.
Differentiated profit premium
A differentiated profit premium is a premium that differs depending on the category of the employees of the company concerned (e.g. blue-collar employees or white-collar employees). In such an event, the premium must be implemented by a collective labour agreement (to be signed by at least one trade union).
If a union delegation is not present within the company, the profit premium must be implemented by an act of accession.
The collective labour agreement or the act of accession should contain all conditions and modalities regarding the granting of the profit premium.
Amount of the premium
The total amount of the premiums paid to the employees cannot exceed 30% of the total gross salary of all employees.
Tax and social security treatment
The profit premium is exempt from employer’s social security premiums. Only a solidarity contribution of 13.07% will be withheld from the gross amount.
Furthermore, the premium is taxed at a separate rate of 7%.
Currently a draft of the Programme Act is still pending in parliament.
K law would be happy to provide you with further information on this topic including assisting you in the implementation of a profit premium.

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