A company car, free housing, heating, an interest-free loan — for decades, Belgian remuneration packages have been built on benefits in kind valued at flat rates far below their real cost. The personal income tax reform passed by the Chamber of Representatives in early July 2026 caps them, collectively, at 20% of remuneration. The compensation playbook just changed.
From income year 2026, flat-rate valued benefits in kind may not exceed 20% of the remuneration awarded — assessed globally, per category (employees on one side, company directors on the other). The excess is subject to a separate 7.5% levy, and for directors a breach can also jeopardise the reduced 20% corporate income tax rate (bill reforming personal income tax, DOC 56/1243).
The measure implements the Arizona government's summer agreement. Its intent is explicit: steer companies towards cash remuneration and away from packages whose fiscal valuation bears little relation to their economic value. For an international reader, the mechanics are unusual enough to deserve a closer look — and for anyone running a Belgian company, the arithmetic is worth doing before year-end.
What the cap covers
The cap targets benefits in kind valued on a flat-rate basis under the Belgian Income Tax Code: company cars, free provision of housing, heating and electricity paid by the company, interest-free or low-interest loans, and stock options. These are precisely the benefits whose taxable value is set by formula rather than by market price — which is what made them the standard building blocks of Belgian salary optimisation.
Two carve-outs matter. Employer-paid social security contributions and contributions to the supplementary pension for the self-employed (PLCI/VAPZ), where treated as remuneration, do not count towards the capped total. Benefits taxed at their actual value are also outside the scope.
One technical point deserves emphasis: the 20% threshold is not tested benefit by benefit, nor person by person, but globally per category of beneficiary — all employees on one side, all company directors on the other. A company can breach the cap through the accumulation of several packages that each look reasonable in isolation.
The penalty: 7.5% on the excess — and often more
Where the total of flat-rate benefits exceeds 20% of the remuneration awarded, the excess portion attracts a separate levy of 7.5%. Taken alone, that sounds manageable. It rarely is.
For companies whose directors exceed the cap, the exposure goes beyond 7.5%. The minimum director remuneration of €50,000 required for the reduced corporate rate (Article 215 of the Belgian Income Tax Code) can no longer be composed of flat-rate benefits beyond 20%: an overloaded package can cost the company the 20% rate on its first €100,000 of profit — up to €5,000 of additional corporate tax per financial year, before the separate levy is even counted.
A director who used to reach the remuneration threshold with a car, company-provided housing and a few flat-rate household benefits now has to redo the equation. On €50,000 of remuneration, flat-rate benefits may represent no more than €10,000; the balance has to take another form.
Why the legislator struck here
The logic is consistent with everything Belgium has done since 2025: broaden the taxable base by closing the channels that converted professional income into lightly taxed flows. The new capital gains tax on financial assets, the tightening of the liquidation reserve and the increase in minimum director remuneration all follow the same design. Flat-rate benefits were the remaining blind spot: a company car valued at a few thousand euros a year for tax purposes can cost the company two or three times that amount — fully deductible.
By capping the flat-rate component at 20%, the legislator is not abolishing these benefits; it is limiting their relative weight. What is now audited is the composition of the package, more than its size.
What stays outside the cap
The mechanism targets one specific category: flat-rate valued benefits in kind. Anything that is not a benefit in kind escapes by construction.
Cash remuneration, first — that is the intended effect. Dividends, next, under their own regimes (VVPRbis, liquidation reserve), with their own conditions and rates. And movable income: the rent a company pays its director for leasing movable assets — office furnishings, a collection, artworks under a movable lease — is movable income under Article 17 of the Belgian Income Tax Code, not a benefit in kind. It counts neither towards the 20% cap nor towards the base for social security contributions.
The reform does not condemn remuneration planning; it condemns lazy planning. A package built on three or four flows of distinct legal natures — cash, dividend, movable income, supplementary pension — remains entirely workable. What becomes expensive is stacking flat-rate benefits on top of each other.
What to check before closing 2026
The measure applies from income year 2026, so benefits granted since January already count. Three checks are worth running before the financial year closes.
Measure. Add up the flat-rate benefits actually granted — form 281.20 for directors — and compare them with the total taxable remuneration of the category. Many owners of small Belgian companies will discover they are above 20% without ever having run the number.
Recompose. If the cap is breached, arbitrate: increase cash pay, shift certain benefits to actual-value taxation, or move part of the flow towards legal forms the cap does not reach — dividends, movable income, supplementary pension vehicles.
Document. As always in Belgian tax matters, a qualification only holds if the legal and economic reality supports it: a movable lease requires a contract, a defensible valuation and market-consistent rent. December improvisation is the leading cause of requalification.
Every situation deserves its own calculation — ours does not replace your accountant's or tax adviser's; it prepares it.