Changes to home office cost allowances
07 Jun 2022
Over the last couple of years, the benefits of working from home have become apparent to all but its staunchest opponents. At the same time, working from home does come with a specific set of home office related costs for the employee, such as heating and electricity costs and the cost of small office supplies.
However, an employer can opt to reimburse (part of) these expenses and for employees structurally working from home, two different types of lump sum cost allowances existed in this respect; the National Social Security Office’s (‘NSSO’) 10% cost allowance for teleworkers and the home working cost allowance adopted in Circular letter no. 2021/C/20, accepted by both the tax and social security authorities. The beginning of June saw changes to both systems: the phasing out of the first one and the indexation of the maximum amount of the second one.
Note that these two specific cost allowances only concern so-called ‘home office costs’. Different lump sum cost allowances, free from income taxes and social security contributions, are in place for i.a. the professional use of the private internet connection (EUR 20,00 per month) and the professional use of the private PC (also EUR 20,00 per month).
Phasing out 10% teleworking cost allowance
For employees working from home in execution of a teleworking agreement – concluded in the framework of Collective Bargaining Agreement no. 85 – the NSSO accepted a cost allowance amounting to a maximum of 10% of the part of the employee’s gross salary that related to telework. No social security contributions were due on this amount. That being said, it’s important to point out that the tax authorities didn’t accept this 10% rule.
In their Administrative Instructions for the second quarter of 2022, the NSSO announced the phasing out of this type of cost allowance. As of 1 June 2022, employers can no longer introduce new applications of this 10% cost allowance. Only such cost allowances that were already being paid to employees before this date can continue to be awarded afterwards and only if there are no changes to the teleworking agreement.
Indexation of lump sum home working cost allowance
In case an employee structurally works from home – i.e. minimally the equivalent of one normal working day per week – a lump sum cost allowance can be attributed, free from social security contributions and income taxes, to cover the related home office expenses.
In this respect, the NSSO fully follows the principles adopted in the Circular letter no. 2021/C/20. To account for inflation, the maximum amount of this cost allowance increased to EUR 140.15 per month as of 1 June 2022 (up from EUR 137.40 per month for the period from 1 April 2022 up until and including 31 May 2022).
Key takeaway
If your company has been using the above-mentioned system of a teleworking cost allowance amounting to maximum 10% of the telework-related gross salary, you must take care to no longer introduce new iterations of this method of cost reimbursement. Teleworkers who already received this form of cost allowance before 1 June 2022 can continue to do so afterwards, however, some active monitoring of these employees’ teleworking modalities is preferable, as changes in this respect could render this type of cost reimbursement invalid.
To the extent that these employees structurally work from home in the meaning of the lump sum home working allowance (see above), their home office expenses can still be reimbursed free from social security contributions and income taxes, currently up to a maximum amount of EUR 140.15 per month.
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