Mazars Info September 2023

EMPLOYMENT LAW SERVICES

New social elections May 2024 deadlines coming very soon

Every 4 years, companies in the private sector that employ 50 or more full-time equivalents are legally obliged to organize social elections.

The aim of these elections is to give the company’s staff members the chance to choose from a list of candidates who will represent them in the company’s consultative bodies. These consultative bodies are the Committee for Prevention and Protection at Work (CPPW) and, in some cases, the Works Council (WC).

The next social elections will take place, in principle, between 13 May 2024 and 26 May 2024.
A procedure must be followed, according to a very strict calendar. The first important date of this procedure is 150 days before the election date, namely X-60 which is expected to be in December 2023. To ensure that this timing is achieved, now is the time to prepare the first deadlines so that the procedure can run smoothly.

The Employment law team has put together two packages to guide our clients through this strict and complex procedure, in order to respect the calendar and the steps to be taken, to avoid potential errors and/or potential sanctions.

Our clients can count on our specialist guidance as different ways of assistance: either
(1) By choosing the Assistance pack where we assist the client while they execute the procedure internally or,
(2) by outsourcing the procedure where we take care of all obligations that the company must fulfil throughout the entire social election procedure.

For more information around our assistance, feel free to contact kim.matthys@mazars.be or stefanie.devestel@mazars.be.

Notice period limited to 13 weeks in case of dismissal by employee as of 28 October 2023

The act of March 30, 2023 stipulates that as of October 28, 2023, the notice period for a dismissal of which the notification is done by any employee from that day onwards will be a maximum of 13 weeks.

This means that for an employee who ends the employment agreement and who has been employed before 2014, it is no longer necessary to prepare a different calculation for the period worked before 2014 and the period after 2014. This also means that there is no longer a possibility for high white-collar workers to exceed a notice period of 13 weeks.

For every notification of the dismissal given by the employee after October 28, 2023, the notice periods of the Act of January 1, 2014 on the unitary statute are applicable.

All notifications of dismissals that take place before October 28, 2023 must however still be done by the current rules, which means that for these employees it is still possible that they have to serve a higher notice period than 13 weeks. However, the Act of March 20, 2023 abolishes the deviating notice period for higher and highest white-collar workers due to
discriminatory reasons.

For more information about this topic, please contact our Legal Labour law team.

Federal learning account as of January 1, 2024

Based on the Act of October 3, 2022 concerning the labour deal, employees have a right to an individual learning account.

Employees of companies with more than 20 employees have a right to at least 4 learning days in 2023, whereas employees of companies with less than 20 employees, have a right to at least 1 learning day in 2023. For 2024, these are respectively at least 5 days and at least 1 day.

The act determines that companies with more than 20 employees must specify this in either a sectoral collective labour agreement or by granting the learning days through an individual learning account. The companies with less than 20 employees do not have these obligations, but can do this on a voluntary base.

To create more unity, transparency and simplicity, the government has proposed to introduce a digital database where employers will have the obligation to put in the balance of the individual learning account of each employee.

Employers who do not fulfil this obligation will be put on a list, which will be made public on the site of the Federal Public Service Employment Labour and Social Dialogue.

Currently, the act is not in force yet, but is foreseen to be in force as of January 1, 2024.

For more information about this topic, please contact our Legal Labour law team.

VAT

ECJ 29 June 2023, C-232/22 – Request for a preliminary ruling on the existence of a fixed establishment

The Belgian tax authorities often scrutinize the existence of a fixed establishment for foreign companies having economic activities in Belgium.

As per the general rule stated by article 44 of the EC Directive 2006/112, the place of taxation for a supply of service to a foreign taxpayer is deemed to be localized in the country where the customer is established.

However, the article lays down a special rule if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business. In such case, the place of supply of those services is the place where that fixed establishment is located.

By virtue of Article 11 of Implementing Regulation No 282/2011, the existence of a fixed establishment of the taxpayer in a place other than the place where he has established his business is characterized by a sufficient degree of permanence and (1) a suitable structure in terms of human and technical resources to (2) enable it to receive and use the services
provided to it for its own needs.

In the present case, the Court has judged that a taxable person established outside the European Union and receiving services does not have a fixed establishment in the Member State in which the supplier of such services is established, where the supplier provides services pursuant to an exclusive contractual arrangement together with a series of ancillary services, contributing to the business of that taxable person receiving services in that Member State.

According to the Court, the supplier remains responsible for its own resources and provides the services at its own risk. The fact that the contract for the provision of services is exclusive does not in itself mean that the provider’s resources become those of its customer.

The Court also ruled that is not possible to distinguish the resources used by the supplier for its own services from the resources that are used by the recipient to receive those services in Belgium, within its alleged fixed establishment.

The existence of a fixed establishment in Belgium is a question of fact that must be assessed on a case-by-case basis. Our VAT specialists can conduct an assessment to analyse whether your economic activity in Belgium could characterized the existence of a fixed establishment and trigger VAT registration and VAT compliance obligations in Belgium.

LEGAL

Reform of insolvency law

Introduction

On 7 June 2023, the Act transposing Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring schemes, on waiver of debt and prohibitions on appeals, and on measures to increase the efficiency of restructuring, insolvency and debt waiver procedures, and amending Directive (EU) 2017/1132 and laying down various provisions on solvency (“the Transposition Act”), was passed.

The law thoroughly reforms the insolvency law contained in Book XX of the Code of Economic Law and introduces a number of other changes in addition to the transposition of the Directive. The judicial reorganisation procedure is adapted to the case-law of the Court of Justice of the European Union, which imposed certain changes to reorganisation by transfer of undertaking. Furthermore, it will become easier to liquidate undertakings instead of declaring bankruptcy in certain circumstances. The law also relaxes post-bankruptcy debt discharge and brings it in line with the jurisprudence of the Constitutional Court. The second chance policy, which encourages entrepreneurship and enables a fresh start, is central to this.

The main objectives of the reform are to ensure that:

• an undertaking in financial difficulties has access to an effective preventive restructuring system that allows it to avoid insolvency;
• an undertaking natural person can be given a second chance in the form of a discharge of its debt and the lifting of any professional ban imposed at the time of the declaration of insolvency;
• restructuring, insolvency and debt forgiveness procedures become more efficient and shorter;
• further harmonisation of insolvency proceedings in the European Union is achieved, especially with regard to preventive proceedings.

Below, we list some of the most important novelties introduced by the Transposition Act:

(1) The preventive regime
The early warning of debtors with financial difficulties is guaranteed, refined and extended by the Transposition Act, as the debtor is granted access to the data concerning him held by the enterprise court where the undertaking has its registered office. The early warning is guaranteed by the system of “flashing lights” and by the obligation imposed on the numerical
professions to warn their clientele. The “flashing lights” system means that debtors can receive an early warning, including from the government, and can start a dialogue with the courts without any procedural threshold.

(2) Closed judicial reorganisation procedure
The Transposition Act also introduces a closed judicial reorganisation procedure. This procedure is confidential and allows agreements to be reached with a limited number of creditors without affecting the undertaking’s credit. Unaffected creditors thus remain outside the plan and are entitled to the full payment of their claim.

The proceedings can also be initiated at the initiative of certain creditors and not only at the request of the debtor.

(3) Public judicial reorganisation by collective agreement
As regards public judicial reorganisation, a distinction is now made between large undertakings and small and medium-sized undertakings. A large undertaking is defined as a company, association or foundation that exceeds one or more of the  following criteria for two consecutive financial years:

• annual average number of employees: 250;
• annual turnover excluding VAT: 40.000.000 euro;
• balance sheet total: 20.000.000 euro.

The Transposition Act introduces a complex procedure for the homologation of the reorganisation plan in large undertakings. If the undertaking has "capital holders" (this mainly refers to shareholders), they must be compulsorily included in the reorganisation plan. Furthermore, the reorganisation plan must provide for a categorisation, with creditors and capital holders to be divided into different categories. Extraordinary creditors in the moratorium and ordinary creditors in the moratorium must also be divided into different categories. Whereas when voting on the reorganisation plan of a small- and medium-sized undertaking, there will generally be a vote in one group, when voting on the reorganisation plan of a large undertaking, a majority must be obtained in each category of creditors in the moratorium for the reorganisation plan to be approved.

(4) Transfer of undertaking under judicial supervision
The regime of transfer of undertaking under judicial supervision has been thoroughly reworked and is no longer part of the judicial reorganisation procedure. Briefly, the new regime means that the transfer of undertaking results in bankruptcy or liquidation of the undertaking, in circumstances that are in the interests of capital holders as well as employees and creditors. The regime no longer aims to preserve the continuity of the undertaking itself.

Entry into force

The Transposition Act entered into force on 1 September 2023, and its provisions apply to insolvency proceedings opened from that date.

Sustainability Reporting: first set of European Sustainability Reporting Standards adopted

In a previous newsletter, we already reported on the Directive of 28 November 2022 of the European Parliament and of the Council amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (hereinafter the “CSRD”).

This Directive, which is part of the European Green Deal and the agenda for sustainable financing, strengthens the existing rules on non-financial reporting by expanding the scope of non-financial reporting to all large entities and all companies listed on regulated markets, except listed micro entities. In addition, the CSRD prescribes what such non-financial reporting should include, for example the CO² emissions, social capital, the impact on biodiversity and (violations of) human rights in the value chain.

On 31 July 2023, the European Commission has adopted the first set of European Sustainability Reporting Standards, or “ESRS”, according to which all entities concerned should draw up their non-financial reporting under the CSRD.

The first set of ESRS is considered sector agnostic, and therefore applies to each large entity subject to sustainability reporting obligations, regardless of the sector they operate in. These general sector agnostic standards will be completed with 40 sector specific standards, which will only apply to companies that are active within one of these 40 sectors. The sector specific standards should be available by June 2024.

The sector agnostic standards consist of two cross cutting or general standards (ESRS 1 and ESRS 2) and ten topical standards covering the full ESG spectrum (five environmental, four social and one governance standard).

The first reporting year is approaching, as companies that are currently already subject to sustainability reporting obligations (i.e. listed companies with more than 500 employees) will have to publish their first report in 2024 on financial year 2023, using the first set of ESRS.

UBO register: the ultimate beneficial owners have to be informed

Based on the Act of 18 September 2017 on the prevention of money laundering and the financing of terrorism and on limiting the use of cash, companies, (international) non-profit associations and foundations, as well as some other legal entities, are required to register their beneficial owners in the so-called UBO register. The purpose of the UBO register is to identify the individuals who exercise authority or control over the reporting entity or who ultimately own them.

Although it is not a new rule, it is often forgotten that the reporting entity has an obligation to communicate any registration in the UBO register to the ultimate beneficial owners concerned.

In addition, the ultimate beneficial owners are also informed by the Treasury via the Myminfin portal and on eBox. Moreover, the ultimate beneficiary can also directly consult the information in his/her name in the UBO register by logging in via the application.

Our legal team can assist you with this information obligation.

GLOBAL MOBILITY

Tax-Advantages for Overtime : Extension : Good news for Employers and Employees

We’re pleased to share some great news that will impact both employers and employees alike. The temporary increase in tax beneficial overtime hours, initially set to expire on June 30, 2023, has been extended across all sectors until June 30, 2025.

This extension brings significant financial benefits to businesses and their workforce, making it a win-win situation for everyone involved.

Background

Since 2019, businesses and workers have enjoyed the benefit of increased tax beneficial overtime hours, with the threshold raised from 130 to 180 hours. This temporary measure was designed to provide relief to both employers and employees,
and it has proven to be beneficial over the years.

Extended benefits

1. Savings for employers: One of the primary advantages of this extension is the potential savings for employers, subject to certain conditions. Under this scheme, businesses can reduce their withholding tax burdens, allowing them to allocate these resources to other essential areas of their operations. The degree of savings depends on the overtime surcharge percentage applied.

2. Reduced income tax for employees: On the other hand, employees will continue to benefit from reduced income tax on the income received for overtime hours. This is particularly significant for individuals who regularly work overtime hours, as the extended tax beneficial cap of 180 hours ensures a lower tax burden on their income.

Understanding the Tax Breakdown

The tax advantages for employers and employees varies based on the overtime surcharge percentage. Here's a breakdown of how it works:

These percentages are crucial for businesses and individuals to understand, as these determine the potential financial benefits of this extended tax beneficial overtime program.

Tax-Advantages for Overtime : Extension : Goof news for Employers and Employees

Sector-Specific Caps: While the extension applies across all sectors, it is essential to note that sector-specific caps remain in place. The specific details of these caps may vary, so businesses and employees are encouraged to consult with relevant
authorities or experts to ensure they remain compliant with sector-specific regulations.

Conclusion

The extension of tax beneficial overtime hours from 130 hours to 180 hours until June30, 2025, is indeed a positive development for businesses and their workforce. It provides a unique opportunity for employers to reduce their staff related tax costs and to employees being able to enjoy reduced income taxes, both of which contribute to improved financial well-being.

Staying compliant with the regulations outlined in this extension is crucial to secure the full benefits. We encourage you to reach out to us for more specific information for your case or to ensure you make the most of this tax beneficial overtime opportunity.

CORPORATE INCOME TAX

The Council of Ministers has approved Belgium's adoption of the Public Country-by-Country Reporting (CbCR) Directive (EU Directive 2021/2101)

The EU Directive on Public Country-by-Country Reporting, which was adopted on November 11, 2021, mandates qualifying multinational groups to publicly disclose specific financial data.

On July 20, 2023, the Council of Ministers approved the proposed legislation designed to enforce the public disclosure requirements outlined in the EU Directive. In essence, companies with a turnover exceeding € 750M, along with non-European ultimate parent companies engaged in economic activities in Belgium through one or more substantial
subsidiaries or branches, are obligated to publish information on their website. Belgian companies solely subject to the Belgian tax regime are exempt from this obligation.

This report requires to disclose information of all members (not limited to EU) within the MNE-group:

• Net turnover (both related and unrelated parties)
• Profit or loss before tax brief description of activities
• Tax accrued
• Tax paid
• Accumulated earnings
• Employee number
• Summary of activities

The Directive applies for financial years beginning on or after 22 June 2024.

The Belgian Parliament Contemplates Legislation for the Modification of CFC Rules (EU Directive 2016/1164 (ATAD))

The Belgian Parliament is reviewing a bill designed to modify Controlled Foreign Corporation (CFC) regulations in response to Belgium's referral to the Court of Justice of the European Union (CJEU) by the European Commission. The referral was initiated because Belgium did not correctly implement the CFC rules as outlined in the EU Anti-Tax Avoidance Directive
2016/1164 (ATAD).

The draft legislation, accepted for consideration by the Belgian Chamber of Representatives on June 26, aims not only to rectify Belgium's potential violation of ATAD concerning the non deductibility of taxes paid within Belgium but also seeks to enhance the effectiveness of the CFC rules.

In essence, the proposed bill introduces the following changes:

• Specific categories of passive income (such as interest, royalties, dividends, etc.) earned by CFCs associated with Belgian taxpayers would be required to be included in the taxpayer's taxable income, unless the CFC is tax-resident within the European Economic Area (EEA) and carries out legitimate economic activities at its place of operation.
• The inclusion of CFC income in the taxable income of Belgian taxpayers would account for any expenses incurred by the CFC related to that income. Belgian taxpayers would be permitted to offset foreign taxes paid on CFC income against Belgian corporate taxes within defined limits.

KEEP IN MIND THE DEADLINE!

VAT

• VAT-return September 2023 : 20 October 2023

CORPORATE INCOME TAX

• Corporate income tax return AY 2023 – Belgian resident companies and foreign entities:

         o Via Biztax e-filing platform : 9 October 2023

• Transfer pricing Local form 275 LF (via the MyMinfin platform) : 9 October 2023
• 3thrd advance CIT payment : 10 October 2023