• Service: Tax & Legal
  • Type: Business and industry issue
  • Date: 02/10/2013

Social security contributions due on specific out-of-service compensation 

e-Tax Flash
A recently published royal decree alters the social security regime for certain out-of-service compensation as from October 1, 2013. The range of compensation which is subject to social security contributions is rather broadly extended.

As from October 1, 2013 the compensation following the exercise of a non-compete clause (and/or non-solicitation clause), in execution of a non-compete/non-solicitation agreement concluded within 12 months after the termination of the employment contract, will be subject to social security contributions. In other words, the mere payment of such compensation after this period of 12 months is in itself not sufficient in order for the compensation to be exempt from social security.

Furthermore, the compensation related to the dismissal of protected employees (e.g. maternity leave, time-credit, etc.) and the client indemnity for sales representatives will be subject to social security contributions as from October 1, 2013.

This means that on the abovementioned compensation both employer’s social security contributions and employee’s social security contributions are due.

These measures will have a financial impact for employers as the costs related to the termination of an employment contract will generally increase.


Furthermore, if the employer does not withhold the employee’s social security contributions within due time, the employer cannot reclaim these contributions from the employee and the cost in this respect would therefore remain at charge of the employer – which would entail an even greater financial impact for the employer.

KPMG advises its clients on a daily basis in this matter and can assist you with every query you might have in this respect.


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