Home work allowance - social security and tax authorities agree again

Home work allowance - social security and tax authorities agree again

With a circular letter of 14 July 2020 the tax authorities now also accept a lump sum home work allowance of 129,48. As a result, the social security and tax authorities apply the same amount. A ruling is no longer necessary.

Social security

Each quarter the social security authorities publish an updated version of its instructions for employers. A part thereof are the lump sum allowances which employers can pay to their employees without these allowances are being considered as salary.

In the version 2020/02 which entered into force on 1 April we read that an employer can pay an 'office allowance' of 129,48 per month. An increase of approx. 2,50 compared to the 126,94 of previous year. This office allowance is not salary, but a repayment of the expenses the employee makes on behalf of his employer. Consequently, this allowance is exempt of social security contributions.
This allowance covers the expenses for heating, electricity, stationary, ... which an employee has when working from home.

The use of an own PC and internet do not fall within the scope of the office allowance: the employer can for each of these expenses pay additionally 20 per month to its employee.
For other expenses (own telephone, purchase of a monitor or scanner) the employer cannot apply a lump sum: this repayment should be based on the actual expenses.

Social security and COVID-19

After all, the social security authorities did not take any specific measures - because of the pandemic and the lockdown - after the government decided to oblige home work where possible. The only additional comment which was given, was that the usual directives could be applied for employees normally working at the office, but which exceptionally started working from following the corona crisis.

Tax authorities and COVID-19

In a first (fast) reaction on the obligatory home work, the Ruling Commission published a standard application form. Using this, employers could apply for a ruling so they could offer their employees a home work allowance. The standard allowance (mid-March) was 126,94 per month.

Mid July the tax authorities published an administrative circular which makes the further application of a ruling useless: in accordance with the social security authorities the tax authorities also foresee that an employer can pay a tax-exempt allowance to employees which regularly and structural work from home.

There is 'regular and structural home work' when the employee works from home at least 5 working days per month.

In rulings it was customary that the amount of the allowance was linked to the function of the employee. This is not the case here: only one amount applies. Other allowances or a functional differentiation per employee are still possible, but in such case you have to pass via the ruling commission.

Do not forget that as employer you have to report such expense allowance on the tax slip of the employee. Not the amount should be reported, but only the fact that such allowances are paid.

And then there is the amount: also for tax purposes a maximum amount of 129,48 per month applies. This amount should not be reduced in case of part time work. However a limited particularity applies: for tax purposes the maximum amount of 129,48 per month applies as from 1 March 2020. For social security purposes this is only since 1 April 2020.
Do you want to increase the home office allowance up to the new maximum, this is done best as from 1 April and not as from 1 March. Otherwise, the 2,5 can cost you a lot of administration.