Staff
Bonus plans
Do certain staff members receive variable pay in addition to their fixed monthly salary? Then that is rarely the most tax-advantageous way to reward them. With a bonus plan, you transform that variable pay into tax-attractive, deferred pay.
- Who we help
- Employers who grant variable pay or bonuses to (a category of) their staff.
- The tax benefit
- Tax-wise, considerably more advantageous than a cash bonus, both for employer and employee.
What is a bonus plan?
Do certain employees receive variable pay in addition to a fixed monthly salary? And do you, as an employer, also realise that this is not tax-efficient? A bonus plan in the form of group insurance is probably the solution for you and your staff. Thanks to this insurance, your company makes the difference in the constant search for new talent. You offer your employees one of the most valued fringe benefits on the market, and an attractive salary alternative. Such a bonus plan initially follows the rules of group insurance. A category of members is designated, for example. But...
- A bonus plan provides solely for pension building, without additional guarantees
- And instead of a fixed premium, the annual premium a member receives is variable
Who is it for?
Innovative employers looking for a tax-advantageous remuneration technique, for the benefit of a group of employees who receive a variable pay component.
Already heard of IPT for employees, or IPTL?
Under certain circumstances, which our experts are happy to explain, you can occasionally and not systematically, and for a limited premium, introduce an additional pension plan for a single employee, an IPT (an individual pension commitment funded by your company). In certain strict circumstances, this can be an alternative to a bonus plan.
Our tip: start well in advance
Start preparing to set up a bonus plan in good time. To avoid tax disputes, it is best to start a bonus plan before the evaluation year to which the bonus relates. In some cases, that means 2 years before the first premium payment.
Our tip: let our experts take care of the communication
Younger employees in particular can show a healthy suspicion when part of their variable pay is suddenly transformed into deferred pay. So it comes down to putting the benefits across clearly.
Taxation
The premium for a bonus plan is paid by the employer, and is 100% deductible for corporation tax, provided the 80% rule is not violated.
On payment
A premium tax of 4.4% and an employer RSZ (national social security) of 8.86%, so 13.26% total charges, is owed on every premium payment. This is significantly less than the 34% employer RSZ paid on salary.
On payout
On payout, a 3.55% RIZIV (the national health and disability insurance institute) contribution and a 0 to 2% solidarity contribution are withheld from the capital. After that, the guaranteed capital (the capital paid in plus the guaranteed return) is taxed between 10% and 20%, depending on the age at which one stops working, plus municipal tax. This too is significantly less than the sum of employee RSZ (13.07%) and personal income tax (usually 50%, because variable pay is taxed at the marginal rate). Both employer and employee are therefore better off with a bonus plan than with variable pay.
Does this fit your situation?
You will get an honest answer, even if that answer is "no".
Disclaimer: Life Experts provides insurance solutions for self-employed directors, liberal professions, SMEs and large companies. You will find the basic information for each type of solution on this website. With the product descriptions and the product overview on this website, we do not aim to follow a tax or legal classification, but a pragmatic and practical one. A turnover insurance, for instance, is fiscally a company-director insurance. And a death cover or a disability insurance can be taken out within the tax regimes of IPT, VAPZ, POZ, long-term saving, pension saving, and so on.