Flemish Region: Flemish job bonus from 2022

SD Worx Knowledge Centre

Source

Draft decree regulating the granting of a job bonus, approved by the Flemish Government on 23 December 2021.

The Flemish Government provides for the allocation of a Flemish job bonus from the end of 2022.

It is a bonus for persons:

• with a low professional income; • with their principal residence in the Flemish Region; and • younger than the retirement age.

In the meantime, the definitive calculation rules have been determined, as well as the way in which the discount will be allocated.

Legislation is still under preparation. At the end of December 2021, the Flemish Government issued a second approval in principle for the draft decree. We expect another implementing decree that lays down further terms and conditions.

Situation

The idea of a job bonus is included in the Flemish governmental agreement of 2019.

The Flemish Government wants to give people with a low professional income an additional financial incentive to work or to continue working.

The job bonus must increase the difference between work and non-work and therefore make work more rewarding.

The original plan was to grant the job bonus as early as 2021. However, this development is taking a long time.

After exploring the various possibilities, a job bonus in the form of a bonus awarded based on the annual salary was chosen.

Moreover, the aim is to grant the bonus automatically as far as possible based on information from authentic sources. The development of such a system is very difficult.

For whom?

The decree specifies the target group of the job bonus in detail.

This will include:

• employees subject to social security (at least the sickness and disability benefits and medical care, unemployment and pension);

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• statutory officials (permanent staff of regional, federal, local and provincial authorities, including staff of Community education and all other public educational institutions); • beneficiaries of a PhD grant at private educational or research institutions; • permanent staff of subsidised educational institutions; • cross-border workers.

Working students (with a solidarity rate) are not eligible.

Persons who only receive an allowance or replacement income are not eligible for the job bonus for that period.

Conditions

In order to effectively receive a job bonus, the beneficiaries must meet a number of conditions:

• their official residence must be in the Flemish Region on 1 January of the year following the reference year (i.e. on 1 January 2022 for the job bonus in 2022); • they may not have reached retirement age on the first day of the quarter of service in the reference year (1 January 2021 for the 2022 job bonus); • the average monthly gross salary or average monthly income in the reference year must be limited to certain salary limits.

The reference year is the calendar year on which the job bonus is calculated. 2021 is the reference year for the first Flemish job bonus in 2022.

Note:

The person's place of employment is not relevant. The measure is linked to the place of residence. Those who work in another region or abroad can also benefit from a job bonus.

The explanatory memorandum to the decree states that the residence criterion may apply (in accordance with Union law) as this is not about social security, but about a fiscal measure in favour of active staff. In addition, there is also a supplementary measure for the selfemployed. The job bonus is intended for those subject to personal income tax in the Flemish Region.

Bonus amount and salary limits

The annual bonus for full-time employment for the full reference year amounts to:

• a maximum of €600 with an average monthly gross salary of a maximum of €1,800;

• a degressive amount from €600 to a minimum of €20 (based on a calculation formula) for an average monthly gross salary between €1,800 and €2,500;

• €0 or no entitlement to a job bonus for an average monthly gross salary of €2,500 or more.

If the bonus amount is too small, it will not be paid out.

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This occurs for a bonus lower than:

• €20 per year for full-time work; • €10 per year for part-time work.

The Flemish Government may adjust the bonus amounts and wage and income limits in line with changes in wages and purchasing power.

Calculation formula

The amount takes into account the actual number of hours worked in the reference year. The amount of the job bonus in 2022 is based on the work carried out in 2021.

Bonuses are calculated on a quarterly basis. The bonus is in proportion to the period worked and the work schedule.

An implementing decree shall lay down the precise method of calculation.

The calculation method will be established for beneficiaries who:

• have not worked the full reference year or full-time; • reach retirement age in a quarter on which the bonus calculation is made.

The decree will also determine what is understood by 'average monthly gross salary'.

Some income or parts of the salary may not, or may only be partially eligible under certain conditions. In addition, the aim is to make a distinction based on the source of income.

The calculation method for the job bonus will be partly modelled on the federal work bonus.

We want to use existing data files (NSSO source file for calculated federal work bonuses) and add our own information.

In divergence from the work bonus, DMFA pay code 2 (including the year-end bonus) will be completely disregarded for the calculation of the average gross salary.

This benefits citizens.

Additional income (excluding supplements) is not taken into account, such as income from the sharing economy and untaxed additional income in associations, income from political mandates, joint municipal corporation or boards of directors, income from a secondary occupation as a self-employed person and so on.

Non-occupational periods, such as temporary unemployment, long-term illness or time credit, or substitute income or allowances are not taken into account. The income is compiled for the periods in which the beneficiary receives a salary for work performance.

Automatic allocation

The Flemish Government is committed to the automatic allocation of the bonus based on the wage and working hours data as specified in the quarterly declarations to the NSSO. This is intended to reach as much of the target group as possible.

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The Flemish Department of Work and Social Economy (DWSE) and the Flemish Tax Administration (VLABEL) will work together as follows for the allocation, calculation and payment of the bonus:

• VLABEL ensures the retrieval and linking of the beneficiaries' account numbers. The account numbers are registered via the Agentschap Digitale Vlaanderen (My Citizen

Profile). VLABEL will set up a (one-off) registration procedure, which is part of a wideranging information campaign on the job bonus.

• DWSE calculates and checks the allocation conditions.

• VLABEL is responsible for communication with the beneficiaries and payment of the bonus to the Belgian account numbers that are available.

• VLABEL also ensures follow-up of responses, the handling of objections and the possible recovery of wrongly paid bonuses.

Beneficiaries for whom automatic allocation is not possible can apply for the bonus via an application form or online application module (within three years of the reference year).

The application includes:

• identity and address details; • national registration number or BIS number; • Belgian account number; • salary and employment details.

An implementing decree defines the procedure further.

Time of payment

The Flemish Government determines the time and frequency of payment of the bonus by means of an implementing decree.

In the first instance, an annual payment of a (larger) bonus amount is chosen. In principle, the first job bonus will be paid in November 2022.

The time of payment in November follows from the availability of 'stable' DMFA data after 10 months. Stable data will not be available for the 2021 revenue until October 2022.

Payment can therefore be made in November 2022 at the earliest, provided that the beneficiary's account number is known.

After all, the intention is to avoid recoveries as much as possible.

In the long term, it can be examined whether a payment within a shorter period is possible (e.g. on a quarterly basis).

Neutralisation of job bonus as income

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The job bonus is not charged for income-related measures in the Flemish Region, such as the growth package, childcare, social housing, study grants and prices at De Lijn, water and energy, among others.

The Flemish Government also requests explicit federal exemptions for the Flemish job bonus with regard to:

• income tax (necessary in order to avoid part of the bonus being tax-deductible); • subsidies to persons with a disability; • allocation of living wages and social benefits to people entitled to living wages; • means of subsistence for the application of tax legislation.

Next step

• The draft decree is to be sent to the Council of State for an opinion. • The federal government has been asked to exempt the bonus from tax. • Preparations have begun for the data exchange with the managers of the authentic sources. Data flows must be organised, including the NSSO, CBE registers, FPS

Finance, VLABEL and other data managers.

Entry into force

The Flemish Government determines the date of entry into force.

The option to determine separate effective dates for the various parts of the decree is also available in view of the desired adjustments in the federal legislation (exemptions that are necessary).

Payment of the bonus will only take place once the exemptions have been completed.

Note:

This discussion is based on draft bills. Amendments may therefore still be made. This discussion is also subject to publication in the Belgian Official Journal.

Consequences for the employer

The Flemish Government does not request any additional efforts from employers for the job bonus. The job bonus will be awarded directly to the beneficiaries in the Flemish Region in the form of a bonus.

However, the calculation will be based on the wage and working time data indicated in the mandatory quarterly declarations to the NSSO.

How will this affect the public sector?

Contractual and statutory officials are also eligible for the job bonus if they meet the conditions.

Context

The job bonus is aimed at all salaried residents of the Flemish Region of working age.

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We can assume that young people are more strongly represented in the target group of lowincome people due to their higher proportion of temporary employment and the strong link between age and seniority.

11.2% of the FTEs in work among young people (<25 years old) are remunerated with a reference salary of ≤€1,800 and would receive a full job bonus.

For persons aged 25 or older in the Flemish Region, this share is estimated at 2.6% in 2021.

An additional 53.9% of the FTEs in work among young people are remunerated with a reference salary of more than €1,800, but less than or equal to €2,500. For example, 65.1% of young people would be eligible for a job bonus.

Of the 25+ employees, 23.5% of the salaried employees (in FTEs) work for a reference salary between €1,800 and €2,500.

In the general wage-earning population in Flanders, 30.1% would be eligible. Young people are therefore more strongly represented in the target group of people with a low income.

(Source: NSSO simulation files for Q1 2021 – Q4 2021 for Flanders)

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