In view of the high (para) tax burden on cash incentives in Belgium, both for employees and employers, often less expensive alternatives are sought. One of these concerns the granting of stock options on Bevek/sicav or listed warrants.
The technique is simple: an employer buys listed warrants or issues options on bevek/sicav. These are then offered free of charge and on a discretionary basis to the employees, who must accept within a certain period. The employee can then proceed to sell the warrants or exercise the option.
Neither the sale of the warrants by the employee nor the exercise of the options is subject to tax.
The taxable moment is however situated the sixtieth day after the offer. At that moment the employee is taxed on a benefit in kind. This benefit is then equal to the closing price of the day prior to the offer for listed warrants/options or, in case of non-listed stock options and if certain conditions are met, a percentage of the value of the underlying shares. This percentage is 18% + 1% per year above the fifth year when the options have a longer term than 5 years. The tax burden for the employee is 50%.
The taxable benefit is not subject to social security contributors (employers or employees). Possibly, social contributions as independent are due.
Decisions ruling commission
In the past, the ruling commission issued positive rulings when there was no disproportion between the amount of the cash remuneration and the amount of the warrants and stock options granted.
In two recent rulings, the ruling commission has now defined the disproportionate character. In particular, the part of the remuneration and the amount of the warrants and stock options on sicav/bevek may not exceed 20% of the total cash remuneration. This is the gross salary including holiday allowance and thirteenth month as well as the variable salary. This limitation applies to awards for services as from 1 January 2018. For warrants and stock options relating to services performed before 1 January 2018, the old proportionality condition remains valid without being quantified.
It is therefore recommended to review your existing remuneration technique and make adjustments, if necessary.