New optional VAT regime

No more lump sum benefit in kind ?

Bart Apers
New optional VAT regime

In the past, the application of the lump sum valuation rules for certain benefits in kind has often been criticized when the recipient pays a market based compensation that is lower than the lump sum benefit.


After all, when determining lump sum benefits, the "actual value" of the benefit for the recipient must be taken into account. More specifically, there must be an increase in wealth on his behalf, which usually consists of savings on private expenditure. So if an employee or director pays a compensation that is in line with the market, there is in principle no savings and therefore no more benefit.


However, the Minister of Finance and the tax administration have for years maintained their position that the lump sum valuations need to be applied anyway, even if the lump sum amounts are higher than the market value.  


However, in a recent judgment, the Antwerp Court of Appeal ruled otherwise. The Court clearly states that the lump sum amounts count as a presumption, but that the taxpayer can always prove the contrary.   Lump sum valuation rules for benefits in kind can only be applied if there is actually an advantage left for the employee or manager. If he proves that he has paid an equivalent, market-based compensation, there is no longer any taxable benefit in kind, even if the compensation is lower than the lump sum amount.

Furthermore it can be argued that the lump sum benefits do not apply if one can prove a lower market-based value.


Does this mean that one can simply abandon the lump sum valuation of benefits in kind? Of course not! A well-documented file will be needed!