24 October 2018

Repair legislation clarifies minimum remuneration requirement for managers

Reparatiewetgeving verduidelijkt minimumbezoldigingsvereiste bedrijfsleiders

The corporate income tax reform law of 25 December 2017 brought about many tax adjustments. One of the measures, the introduction/adjustment of the minimum remuneration requirement of EUR 45 000, created a number of uncertainties. With the Act of 30 July 2018, the legislator is now creating more clarity.


The minimum remuneration requirement is important for so-called SMEs (within the meaning of the Companies Code) that wish to apply the reduced rate of corporation tax.

The reduced ascending rate for SMEs (profit < EUR 25 000: 24,25%; profit 25 000 to EUR 90 000: 31,00%; profit 90 000 – EUR 322 500: 34,50%) has been replaced since 1 January 2018 by a linear rate of 20% on the first bracket of EUR 100 000 taxable income and 29% above. In order for an SME to be able to apply the 20% rate, it is required, among other things, that the company grants remuneration to a manager of at least EUR 45 000 (previously EUR 36 000).

In addition, the law of 25 December 2017 stipulates that as from fiscal year 2019, each company (large or small) must grant at least one of its managers a remuneration of at least EUR 45,000. If this is not the case, the company will be subject to a separate assessment of 5% (see below for the basis of calculation).

For both the manager/natural person and the manager/legal person

The law of 25 December 2017 was open to a double interpretation: is the minimum remuneration requirement only applicable if the company has at least one natural person as manager of the company or is it always applicable, i.e. also if the company only has legal entities as manager.

The law of 30 July 2018 closes this discussion and stipulates that the remuneration obligation also applies to companies with only legal entities as managers. Fortunately, this separate tax assessment of 5% is a tax-deductible professional expense for all companies.

The basis of calculation of this assessment is not changed. The 5% rate is applied to the positive difference between (a) the minimum remuneration required, being 
EUR 45 000 or (if lower) the taxable profit, and (b) the highest remuneration granted to one of his managers/natural persons.

Note that the Minister of Finance has confirmed the application of the attraction principle in the case of a free mandate. If a company manager/individual exercises his mandate free of charge and is also employed as an employee in the company, his remuneration as an employee will be taken into account for determining whether the EUR 45 000 limit is reached.

Retention of the tariff

The initial plan was to increase the rate of the individual assessment from 5% to 10% with effect from fiscal year 2021. The repair legislation is now reversing this increase. The rate will remain at 5% until further notice.

Debtor in a group context

For affiliated companies of which at least half of the managers/natural persons are the same persons, it is sufficient that the total remuneration (by the different companies) of one of these managers amounts to EUR 75 000 (and therefore not EUR 45 000). The recent amendment of the law now clarifies that in the absence thereof, the separate assessment is due in respect of the company with the highest taxable profit.


With the introduction of the law of 30 July 2018, a number of ambiguities were removed. All companies (both large and small; both those with managers/natural persons and those without) are subject to an additional tax of 5% as from fiscal year 2019 unless they meet the minimum remuneration requirement of EUR 45 000. Companies with only mandataries/legal persons should therefore check whether the appointment of a manager/natural person (with the associated social obligations) outweighs the separate assessment of 5%. An alternative is to give a person employed as an employee within the company a (unpaid) mandate as manager of the company. In accordance with the principle of attraction, his remuneration as an employee will be taken into account, even in the case of a free mandate.

Justine Bouckaert, De Langhe Attorneys.

Published in VOKA – Ondernemers West-Vlaanderen, edition 14, september 2018

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