"Forfaitary" valuation of mobile phone benefits foreseen

The Council of Ministers recently approved a draft Royal Decree which defines the way in which the benefits of private mobile phone use (cell phone, Blackberry etc.) must be estimated when calculating social security contributions.

Current regulation

In the current situation, legal uncertainty remains regarding benefits resulting from private mobile phone use since neither a valuation roster nor any accurate guidelines from the NOSS are in place. In practice different ways of handling such benefits co-exist. In fact, in most cases, no benefits in kind are reported on the pay slips.

Proposed new scheme

The draft Royal Decree describes the benefit as resulting from “the use for personal purposes of a mobile phone device put at the disposal of the worker by the employer or of which the employer (partly) bared the purchase cost.” This benefit is – for the calculation of social security contributions – evaluated at a lump sum of 12.50 EUR per month.

The adopted wording seems to cover several situations. The lump sum amount of 12.50 EUR per month could apply to a situation where an employer provides the employee with a mobile phone and – without any limitation – bears all call and subscription costs but could also apply to a situation where the employer limits himself to only contribute in the purchase of the device.

According to the draft Royal Decree, the lump sum of 12.50 EUR per month would not apply (and thus require no social security contributions) if the employer “uses a system which allows for a clear distinction between the personal and professional use of the device” (cfr. the “split billing” system currently proposed by several network operators).

In this case, the employer must be able to prove that such system is applied in practice. Further checks would also need to be performed to evaluate whether such personal use is realistic and whether the costs related to this use are actually borne by the employee.

The draft Royal Decree does not provide for any presumptions regarding private use. Consequently, if a dispute arises, the NOSS – as is the case today – must prove (i) that a mobile phone, (partly) paid for by the employer, is at the disposal of the employee, and (ii) that it is used for private purposes.

Finally, these possible changes would only apply to the valuation of the benefits related to personal mobile phone use when calculating social security contributions and not to the fiscal valuation of the same benefits or to the determination of a notice period or indemnity.

The Royal Decree will be applicable on the first day of the quarter following its official publication. Given the fact that the draft Decree must be sent first to the State Council for its opinion, it is likely that the Royal Decree will not enter into force before April 2010.