In some sectors (such as PC124 and PC200), some employers are required to allocate a purchasing power premium depending on earnings in 2022. Employers who are not required to grant a sectoral purchasing power premium or employers who wish to grant a higher purchasing power premium may also, under certain conditions, grant a purchasing power premium or higher purchasing power premium at the company level.

To benefit from the (para)tax-friendly favor system, you must (1) have achieved "good results" in 2022 as an employer; (2) a collective bargaining agreement or individual agreement must be concluded; (3) the purchasing power premium may not exceed 750 euros; and (4) it must be granted before December 31, 2023.

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Within PC200, a sectoral collective bargaining agreement stipulates that as an employer, depending on how much profit is made in 2022, you must grant a purchasing power premium of between €125 and €375 to your employees. A similar rule applies in the construction sector (PC124). There, the amount varies between 250 euros and 750 euros.

Suppose you belong to a sector in which there is nothing stipulated about the granting of a purchasing power premium, but you still want to grant a purchasing power premium. Or, you want to grant a higher purchasing power premium than you are obliged to under the sectoral collective bargaining agreement. Is that possible?

The answer depends on two conditions:

• If an industry collective bargaining agreement is in place, doesn't that collective bargaining agreement prohibit you from granting a (higher) purchasing power premium?
• Do you meet all the conditions to enjoy the (para)tax exemption of the purchasing power premium?

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First, some background.

In Belgium, there is such a thing as the "wage norm." In short, this is a macroeconomic instrument aimed at limiting the increase in labor costs. This allows Belgium to remain competitive as an economy and as a labor market compared to its neighbors the Netherlands, France and Germany.

When the wage standard is set every two years, the first step is taken by the social partners. If they do not reach an agreement - as was again the case for the 2023-2024 wage standard - the federal government intervenes. The federal government set a wage standard for 2023-2024 of 0% by royal decree of May 13, 2023. This means that the wage cost in 2023-2024, although on top of the index and baremic increases, may not increase compared to the 2021-2022 period.

The wage norm, as it exists in Belgium, is strongly criticized. Trade unions, in particular, are strongly opposed to it, as the wage standard violates the social partners' margin for negotiation. The International Labor Organization (ILO) is also not in favor of the Belgian wage standard, as it believes it violates international rules regarding the freedom of collective bargaining.

When the wage standard is (very) limited or even 0%, it has been established in recent decades that the legislature compensates for it. In the context of the 2023-2024 wage standard, this compensation was provided through the introduction of the (para)tax-favored purchasing power premium. To this end, of course, a new exception had to be made in Article 10 of the July 26, 1996 wage standard law, excluding the purchasing power premium from the calculation of the wage cost increase.

The law of May 24, 2023, and the royal decree of April 23, 2023, then again exempted the purchasing power premium from, respectively, taxes and social contributions.

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Should you grant a purchasing power premium?

The fact that the government offered the possibility of negotiating a purchasing power premium and its (para)tax exemption does not in itself mean that every employer is effectively obliged to grant a purchasing power premium.

Now, with the introduction of the purchasing power premium, the legislature has only created the framework conditions (including the maximum amount of the purchasing power premium) within which the social partners can negotiate.

In other words, if the social partners within your joint committee do not reach an agreement on granting a purchasing power premium, you as an employer are not obliged to grant a purchasing power premium. And even if an agreement is reached, not every employer will be obliged to grant a purchasing power premium. This is the case, for example, for employers who did not make a profit in 2022.

Within a number of joint committees, however, the social partners have already reached an agreement in the meantime. For example, within PC200, depending on how much profit was made in 2022, an employer must grant between EUR 125 and EUR 375 to its employees. In the construction sector (PC124), the amount varies between EUR 250 and EUR 750, also depending on the amount of profit.

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Can you grant more?

n now, the key question: can you grant a (larger) purchasing power premium than what your joint committee imposes? There are two things to consider.

First, a sectoral collective bargaining agreement may not prohibit you from granting one or a larger purchasing power premium. After all, as an employer, you are bound by what is agreed at the sectoral level. Within PC200, there is no such prohibition in the collective bargaining agreement.

Second, when the purchasing power premium is granted, you must meet all the legal conditions to enjoy the (para)tax exemption of the purchasing power premium.

Below we briefly list the terms and conditions.

• You must have achieved "good results" by 2022. What constitutes good results is not defined. This means that as an employer you have to define and be able to argue for yourself what good results are. In our opinion, it is entirely justifiable that companies that have achieved profits - however limited - by 2022 can be considered a "good result."
• If you do not have a union delegation within your company, you must enter into an individual agreement with your employee. If there is union representation, then a collective bargaining agreement must be concluded at the company level.
• The total purchasing power premium granted cannot exceed 750 euros. Note that both the purchasing power premium determined at sector level and the purchasing power premium you grant at company level are added together to reach the limit of 750 euros. You would therefore do well to stipulate explicitly that any purchasing power premium granted at company level must be counted against the purchasing power premium that is (possibly) the subject of a sectoral collective bargaining agreement.
• The award of the purchasing power premium must be made between June 1, 2023 and December 31, 2023.

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Advantageous, for both employer and employee

The purchasing power premium is granted in the form of consumption vouchers and is completely exempt from taxes and social security contributions for the employee. Gross equals net. The employer pays only a special contribution of 16.50%.

In other words, if you allocate a purchasing power premium of 750 euros, your employee will have 750 euros to spend. As an employer, you pay 873.75 euros. In terms of cost/net ratio, that can add up.

By comparison, if you were to grant your employee a bonus in ordinary money with a wage cost of EUR 873.75 in salary, they would keep about EUR 400 net. That is 350 EUR less than the purchasing power premium.