Hiring people and working with contractors
How can I maximise the involvement of executives and employees and reward them in a tax-friendly manner (bonus, hospitalisation insurance, pension plan)?
An ideal way of maximising the involvement of executives and employees is the use of stock options, which are taxable upon grant (rather than exercise) on a lump-sum basis.
Apart from stock options, there are a number of other employee-related R&D tax incentives (see question "Are there any tax incentives available to R&D companies and, if so, how can I benefit from them?").
Another way of remunerating or rewarding employees is the use of fringe benefits (company car, mobile phone, tablet computer, luncheon vouchers, etc), which are often taxed on a lump-sum basis and subject to reduced employer's social security
contributions. Please note that a tax ruling is frequently sought in these cases.
Finally, (pension and hospitalisation) insurance plans are also frequently used, as they allow substantial savings on employer's social security contributions whilst offering short- and long-term benefits to employees.Written by Kurt Demeyere
Are any contracts at risk of recharacterisation?
Caution should always be exercised when working with self-employed contractors. An agreement with a self-employed contractor can indeed be re-characterised as an employment contract if the contractor is subject to the company's instructions
and does not enjoy a certain degree of freedom to organise his or her work and working time.
The impact of recharacterisation (regularisation of social security contributions and taxes, interest and penalties, arrears of various benefits and severance pay) is indeed significant in terms of costs.
The risk of recharacterisation can be mitigated through the use of properly drafted agreements, emphasising the parties' intention to opt for a self-employed relationship, excluding the possibility of instructions by the company, and giving the contractor freedom to organise his or her work and working time.
A well-drafted agreement is not sufficient, however. Consistent performance of the agreement is also key to limiting the risk of recharacterisation. Companies that opt to work with self-employed contractors should act in accordance with that choice in order to mitigate the risk.Written by Tamar Van Colenberghe