Employment Incentives Comparative Guide

1. Legal and enforcement framework

1.1 Which legislative and regulatory provisions govern employee share plans in your jurisdiction?

In Belgium, employee share plans are governed by various legal provisions, depending on the type of plan. Share options and warrants are based on Articles 41–47 of the Act of 26 March 1999 concerning the Belgian employment action plan. This law provides a tax framework for granting options to employees. For social security treatment, the Royal Decree of 5 October 1999 applies.

In the case of warrants, Tax Ruling 2017.166 of 26 April 2017 offers additional clarification.

For direct transfers of shares – such as discounted sales or subscriptions in the context of a capital increase – Section 7:204 of the Companies and Associations Code applies. These plans are also subject to the tax rules under the Income Tax Code (WIB92) and the social security regulations enforced by the National Social Security Office (NSSO).

1.2 Do any special regimes apply in specific sectors?

Startups and scale-ups: To support entrepreneurship and talent retention in early-stage companies, Belgium offers certain fiscal incentives. For example, the Tax Shelter for Startups and Scale-ups, introduced by the Programme Law of 10 August 2015, provides personal income tax reductions for individuals (including employees) who invest in qualifying companies.

Financial sector: In the Belgian financial sector, the Law of 2 August 2002 on the supervision of the financial sector and financial services is the primary legal basis for the oversight of institutions such as banks, listed companies and insurance firms. Together with European regulations (eg, the Capital Requirements Directive IV (CRD IV) and the Market Abuse Regulation (MAR)), this law forms the framework within which employee compensation – including stock options and other forms of variable remuneration – is assessed.

Over-the counter (OTC) options: These are options issued by a financial institution on an equity fund established by the financial institution, which the employer purchases from the financial institution and immediately offers to its employees. Such OTC options are finished products from the financial institution that are purchased over the counter.

According to a broader interpretation, OTC options also include options issued by the employer (ie, non-listed options) on an equity fund established by a financial institution. The financial institution may consult with the employer which will offer the options to the employees on the shares to be included in the fund.

The financial institution provides assistance to the employer in issuing the options on the equity fund established by the financial institution.

1.3 Which bodies are responsible for enforcing the legislation? What is their general approach in doing so?

In Belgium, several authorities are responsible for enforcing legislation related to employee share plans, as follows:

• Federal Public Service Finance: Enforces the tax rules applicable to share-based compensation, including the taxation of stock options and warrants under the Law of 26 March 1999. Its approach is focused on:
• • compliance with declarative obligations; and
  • timely taxation at grant under specific conditions.
• NSSO: Supervises the social security treatment of share-based remuneration. This includes applying the Royal Decree of 5 October 1999, which defines the conditions under which stock options are exempt from social security contributions. The approach is mainly administrative, with audits conducted when discrepancies arise.
• Financial Services and Markets Authority: Oversees transparency, market conduct and the proper functioning of financial markets, especially for listed companies. This includes enforcing rules under the MAR related to insider trading and disclosure of share transactions by executives.
• National Bank of Belgium: Monitors the remuneration policies of financial institutions as part of prudential supervision under the CRD IV. Its approach is risk based and focuses on alignment between variable remuneration and long-term financial stability.

2. Providers

2.1 What types of companies typically provide employee share plans in your jurisdiction?

The law does not specify who may grant stock options. This may be:

• a company for which the activity is performed;
• an affiliated company;
• a multinational;
• a third-party company;
• a natural person; or
• any other legal entity.

The scope of the regime in this respect is very broad.

2.2 Can overseas employers provide employee share plans in your jurisdiction?

Yes.

Previously, a Belgian company or legal entity was only required to withhold wage withholding tax on foreign remuneration – such as stock options or other benefits – if it was directly involved in the grant. In such cases, the amounts had to be reported on Annual Tax Form 281. However, if there was no involvement from the Belgian entity, no withholding obligation existed and no reporting was required.

This has changed following a legislative amendment introducing a legal fiction: where a Belgian employer or entity receives professional services from an individual, it is now deemed to have granted the remuneration or benefits awarded by a related foreign company.

As a result, the Belgian entity is now responsible for:

• calculating and remitting the wage withholding tax; and
• reporting the benefit on Form 281.

This applies regardless of whether the Belgian entity had any actual role in granting the foreign remuneration.

These new obligations apply only where the benefit is granted by a foreign company related to the Belgian employer. Whether two companies are considered related is assessed based on Article 1:20 of the new Companies and Associations Code.

Determining whether companies are related can be complex. It involves more than just shareholding links – control can also arise from factors such as:

• the ability to appoint or dismiss directors;
• provisions in contracts conferring control rights;
• voting power at shareholders' meetings; or
• de facto control over a company's strategic decisions.

Additionally, rules concerning consortia may be relevant in assessing such control relationships.

3. Participants

3.1 What kinds of employees are typically invited to participate in employee share plans in your jurisdiction?

All natural persons who maintain a business relationship with the company granting the benefit may receive options. These include:

• employees and company directors of the entity granting the options; and
• subcontractors and suppliers.

The individuals must be natural persons who are subject to personal income tax or non-resident income tax. The legislature has therefore excluded legal entities from the scheme.

3.2 Can overseas employees participate in employee share plans in your jurisdiction?

Yes.

3.3 Can contractors participate in employee share plans in your jurisdiction?

No, contractors cannot normally participate in employee share plans in Belgium. These plans are typically reserved for individuals who qualify as employees under Belgian labour law.

4. Types of plans

4.1 What types of employee share plans are typically offered in your jurisdiction? What factors influence the decision on which plans to offer?

In Belgium, the most common employee share plans are as follows:

• Stock option plans: Governed by the Law of 26 March 1999, these are by far the most frequently used. They allow employees to acquire company shares at a fixed price after a certain vesting period. The tax is due at the time of offer (if accepted within 60 days), based on a lump-sum valuation, offering predictability.
• Warrant plans: Similar to stock options but structured through a third party (typically a financial institution). They are often used for tax or administrative reasons and are also covered under the 1999 law if certain conditions are met

4.2 Share option plans:

(a) What option plan structures are available in your jurisdiction?

A 'stock option' in Belgium is an agreement under which the recipient of the option is granted the right by the grantor to subscribe to a certain number of shares at a predetermined or to-be-determined price within a specific period (the so-called 'exercise period').

The financial benefit for the employee lies in the capital gain that they receive when exercising the option, as the purchase price is typically lower than the market value of the share.

In essence, the beneficiary can acquire shares at a discount, resulting in a potential profit upon resale.

It is not necessary for the options to relate to the shares of the company itself. Options can also be granted to employees on:

• shares of third-party companies, particularly publicly traded firms; or
• a basket of listed securities.

As an alternative to a bonus paid in the form of salary, an employer – including, for example, non-profits and small businesses – can grant employees options on an investment fund that invests in a basket of, for instance, large European stocks.

This system is possible only on a voluntary basis.

Warrants are financial instruments that give you the right to purchase shares at a predetermined price within a specific period. In practice, however, employees usually choose to sell the warrants in order to receive cash instead.

(b) What are the advantages and disadvantages of each?

• Advantages:
• • The capital gain from the sale of the shares is not taxable.
  • With warrants, employees receive a salary benefit that, under certain conditions, is exempt from social security contributions without necessarily taking on significant risks.
• Disadvantages:
• • The beneficiary is taxed before it is certain whether the underlying shares will generate a profit.
  • This type of benefit is not suitable for small and medium-sized enterprises (SMEs) (non-listed companies with a closed shareholder structure).
  • The plan system is not tailored to the non-profit sector.

(c) What rules and requirements apply to these structures?

Tax treatment: If the stock option – whether granted free of charge or not – is awarded to an employee or company director by virtue of or in connection with their professional activities, the stock option constitutes a taxable benefit in kind for them.

A fundamental requirement for the option to be valid is that the offer must be dated and formally communicated in writing to the beneficiary.

The taxable benefit is equal to the value of the option.

Social security aspects: The benefit from stock options is excluded from the definition of 'salary' for social security purposes. As a result, no social security contributions are due.

However, there are two exceptions to this general rule:

• If the exercise price of the option is lower than the value of the underlying shares at the time the option is offered, the difference is considered salary and is subject to social security contributions.
• Where the option, at the time of the offer or up until the expiry of the exercise period, contains provisions intended to guarantee a certain advantage to the beneficiary, the benefit may also be considered salary and thus subject to social security contributions.

4.3 Share award plans:

(a) What award plan structures are available in your jurisdiction?

The restricted stock unit (RSU) is a benefit granted by the employer to the employee. Specifically, it gives the employee the right to receive a share for free at the end of a specified period, provided that they are still employed at that time. In other words, it is a promise by the employer to award a certain number of shares to the employee within a defined period.

RSUs are formally granted to the employee on the grant date, but they only become effectively available to them on the vesting date, after the vesting period – the period during which the rights are being earned – has ended.

Only on the vesting date will the employee gain access to the share-related rights, such as voting rights and entitlement to dividends.

(b) What are the advantages and disadvantages of each?

• Advantages:
• • Clear and guaranteed benefit if conditions are met.
  • Aligns employees with shareholder value.
  • No upfront cost to employees.
• Disadvantages:
• • Taxable at vesting based on full market value.
  • Employees get value only if they stay until the vesting date.
  • Less common in Belgian SMEs due to complexity.

(c) What rules and requirements apply to these structures?

There are no specific provisions in the Social Security Act or its implementing decree that expand or restrict the definition of 'salary' for social security purposes in the case of free shares. As a result, only the general rule applies.

4.4 Share purchase plans:

(a) What share purchase plan structures are available in your jurisdiction?

Free shares or shares offered at a discount can be transferred by the company to its employees under an employee share purchase plan. Unlike RSUs and performance share units, the employee acquires the shares immediately – either:

• free of charge; or
• by paying a certain price in the case of discounted shares.

This results in the immediate transfer of ownership rights, such as voting rights and dividend entitlements.

In some cases, however, these shares may be temporarily locked, meaning that they cannot be sold immediately.

In Belgium, a specific system was introduced through Article 609 of the Companies Code, now incorporated into Article 7:204 of the Companies and Associations Code. If certain conditions are met, the subscription by employees to newly issued voting shares:

• will not be considered a taxable benefit; and
• will not be subject to social security contributions.

A company in Belgium can transfer a number of its shares to its employees, either free of charge or in exchange for payment. This can involve:

• the sale of existing shares at a discount; or
• a subscription to newly issued shares as part of a capital increase (in accordance with Article 7:204 of the Companies and Associations Code).

The price for acquiring the shares can range from zero to a discounted price up to the full market value. This system is often accompanied by a lock-up period during which the employee-shareholder is not allowed to sell or transfer the shares.

(b) What are the advantages and disadvantages of each?

• Advantages: It builds long-term loyalty and shareholder culture.
• Disadvantages:
• • With the reform of company law, this scheme was incorporated into the new Article 7:204 of the Companies and Associations Code. Under this revised framework, not only employees with an employment contract but also directors with self-employed status are now considered part of the 'staff' for the purposes of acquiring shares and/or profit certificates.
  • Regarding the prior consultation of the works council, the explanatory memorandum clarifies that a company with multiple technical business units and several works councils may choose either to:
  • • consult through an inter-council meeting; or
    • consult each works council individually.
  • However, the legislation remains silent on how this should be handled in companies without a works council.

(c) What rules and requirements apply to these structures?

A company that has distributed dividends in at least two of the last three financial years may carry out a capital increase by issuing voting shares reserved in whole or in part for its employees. This operation must first be discussed with the central works council, which must also provide an opinion on how it will be implemented. The total capital increase under this scheme, including the proposed transaction, may not exceed 20% of the company's capital over the current and previous four financial years.

The shares must be registered in the names of the subscribing employees and cannot be transferred for five years from the date of subscription. The general meeting or board of directors sets the detailed conditions, including:

• a required seniority of at least six months and no more than three years;
• a subscription period of between 30 days and three months; and
• a maximum of three years to fully pay for the shares.

The issue price must be no less than 80% of the value justified in the reports of the board and statutory auditor.

At least 10 days before the subscription opens, all eligible employees must be:

• informed of the terms; and
• granted access to relevant company documents.

4.5 Phantom share plans:

(a) What phantom share plan structures are available in your jurisdiction?

Not all companies are able or willing to offer their employees the traditional short or long-term equity plans. This may be:

• due to a reluctance to issue shares to external parties; or
• because employees are legally restricted from holding shares – such as where a regulatory authority imposes limitations.

As an alternative, companies can implement phantom shares or stock appreciation rights (SARs):

• Phantom shares are essentially virtual shares granted to employees, often at no cost. Although no actual shares are transferred, the employee receives a cash payout at a later date that mirrors the market value of the shares at that time. In effect, this functions as a bonus linked to share price performance, without involving any real equity transfer.
• SARs give employees the conditional right to receive a reward equal to the increase in share value between the grant date and the exercise date. This gain can be settled in cash or, in some cases, actual shares. SARs are particularly useful in jurisdictions where employees are not allowed to hold equity in foreign companies. In such cases, the appreciation is most commonly paid in cash.

(b) What are the advantages and disadvantages of each?

• Advantages:
• • From a (para)fiscal perspective, such a bonus is considered an ordinary bonus, but employees – depending on their role – can influence the amount of their bonus: the better the company performs, the higher the bonus. These bonus systems are therefore typically used as long-term incentive plans for senior management.
  • Since this is a cash benefit, there is no issue regarding the valuation of this benefit for the calculation of social security contributions. The cash amount paid is the amount subject to social security contributions.
• Disadvantages: Does not grant employees voting rights.

(c) What rules and requirements apply to these structures?

SARs are not covered by the Law of 26 March 1999; therefore, general law applies. In several rulings, the ruling commission has confirmed that the payout of a SAR is classified as income (Article 31, second paragraph, 2° of the Income Tax Code 1992). Consequently, the taxpayer will be taxed on the actual benefit received, which in most cases is a cash payment.

4.6 What other types of long-term incentives are available in your jurisdiction? What are the advantages and disadvantages of each?

• Restricted stock units;
• Performance stock units; and
• Phantom shares/SARs.

4.7 What rules and requirements apply to discretionary plans? In the case of recurring discretionary plans, is it possible to argue under any circumstances that these have become mandatory contractual entitlements?

Based on a 2017 ruling of the Brussels Labour Court (13 October 2017, AR 2016/AB/667), the key consideration for discretionary plans is the employer's good faith when exercising the bonus scheme. In that case, the court did not invalidate a clause that made the final bonus amount dependent on the employer's assessment of the employee's active contribution to a project. Instead, it focused on how the employer applied that clause.

This ruling suggests that while discretionary plans remain at the employer's discretion, the recurring application of such plans requires careful and fair implementation. If employees are denied any opportunity to provide input or contest the assessment, this could:

• undermine the discretionary nature of the plan; and
• potentially give rise to claims that the bonus has become a mandatory contractual entitlement.

Therefore, employers should act transparently and fairly to avoid such risks.

4.8 Are any types of plans prohibited in your jurisdiction?

In Belgium, it is prohibited to include a clause in a stock option plan that removes the possibility for an employee to exercise their options in case of dismissal for serious misconduct. Such a sanction is considered unlawful and must not be included in a stock option plan.

5. Awards

5.1 Can awards involve the following features in your jurisdiction? What key concerns and considerations should be borne in mind in relation to each?

(a) Deferral

Yes, deferral is often used as a retention tool, incentivising employees to stay until the award vests.

(b) Performance or time-based vesting conditions

The restricted stock unit (RSU) is a benefit granted by the employer to the employee. Specifically, it is the employee's right to receive a share for free at the end of a specified period, provided that the employee is still employed at that time.

This means that RSUs are time-based awards.

(c) Leaver provisions

Yes, leaver provisions – clauses that determine what happens to granted stock options or other awards when an employee leaves the company – are allowed under Belgian law, but there are important considerations.

According to Belgian case law, the grant of stock options is in principle considered a benefit acquired under the employment contract, provided that it is not a one-off ('one-shot') grant. If the option was granted in the 12 months prior to termination, this must generally be taken into account in the calculation of the severance payment.

Particular attention must be paid to clauses that remove the right to exercise the option upon termination. If an employee loses their right to exercise an option solely because they are no longer employed at the time of termination, this may be considered unreasonable or even prohibited, especially if the loss of the option effectively acts as a hidden sanction without prior agreement.

Even if stock options are granted by a third party (eg, a parent company), they may still be regarded as remuneration if granted as consideration for work performed. The Supreme Court confirmed in 2022 that benefits granted by third parties can be included in the severance calculation, depending on the specific circumstances.

Leaver provisions are possible in Belgium, but they must be drafted carefully. The loss of options upon termination must be legally justified. Employers are advised to include such provisions clearly in the plan and apply them fairly in order to avoid future disputes.

(d) Forfeiture

Long-term warrants are tradable warrants with a long duration (between 10 and 100 years) that can only be exercised during the exercise period of approximately one month prior to the warrant's expiration date. The underlying asset of the warrant is a capitalisation share of a listed (foreign) equity fund.

The financial institutions that issue these long-term warrants arrange for a separate listing of the warrants and therefore consider them as listed warrants.

The employer may purchase these long-term warrants from the issuing financial institution and then grant them (free of charge) to their employees. The beneficiary employee has the option either to:

• exercise the warrants received (ie, purchase the underlying share at a predetermined price (exercise price) and during a specific period (exercise period)); or
• sell or transfer the warrants (sometimes even) within 24 hours after the grant of the warrant up to the warrant's expiration date.

(e) Post-vesting/post-employment holding periods

The inclusion of employee participation in salary has long been the subject of legal debate. However, recent court rulings have clarified the issue. It is now established that the granting of stock options by the employer is, in principle, a benefit acquired under the employment contract. This benefit must therefore be taken into account when calculating the severance payment, particularly if the option was granted during the 12 months preceding termination of the employment contract.

6. Formal and regulatory requirements

6.1 What reporting, filing or other administrative requirements apply to (a) the rollout of and (b) participation in an employee share plan?

(a) Rollout of the employee share plan

Where a Belgian company rolls out an employee share plan, it must ensure clear documentation of the plan's terms and conditions, including:

• eligibility;
• vesting schedules; and
• the types of instruments offered (eg, shares, options, warrants).

The plan may require approval or notification to regulatory authorities, especially if the company is publicly listed. From a tax and social security perspective, the employer should anticipate administrative obligations related to the granting of benefits, including determining:

• the taxable base; and
• the timing of tax events (eg, at grant, vesting or exercise).

(b) Participation in the employee share plan

Employees' participation typically triggers tax and social security reporting and withholding obligations for the employer. Belgian law generally treats the benefits arising from employee share plans (eg, the granting of options or shares) as taxable income or benefits in kind. The employer:

• must report these benefits on specific tax forms (notably Form 281.10 for employees and Form 281.20 for company directors); and
• is responsible for withholding payroll taxes on the taxable amount.

If the benefits are granted by a foreign affiliated company but relate to work performed for the Belgian employer, Belgian tax law contains a fiction that treats the Belgian company as if it granted these benefits. This means the Belgian company must still withhold and report the taxes due, even if it did not directly administer the plan.

Moreover, administrative requirements include:

• maintaining accurate records of grants, exercises, transfers and terminations; and
• providing employees with appropriate documentation for their own tax filings.

Failure to comply may lead to penalties or disputes with tax authorities

6.2 What formal and substantive requirements apply to (a) the rollout of and (b) participation in an employee share plan?

(a) Rollout of the plan

The implementation of an employee share plan in Belgium requires compliance with both labour and company law provisions. For example, a capital increase for employee shares must comply with conditions under Article 7:204 of the Companies and Associations Code. Formally, the following must be ensured:

• proper and timely communication to eligible employees;
• a written and dated offer of participation;
• approval or consultation with internal employee bodies (eg, works council), where applicable; and
• clarification of which legal entity is granting the benefit (especially for international or group-wide plans).

(b) Participation in the plan

Employees must:

• sign an acceptance form or individual grant letter;
• meet possible minimum seniority requirements;
• accept the offer in writing and within the stated deadline (typically 60 days for stock options under the 1999 law); and
• fulfil any vesting or contribution conditions if required.

7. Tax and social security issues

7.1 What are the tax and social security implications for the company:

(a) On grant?

For qualifying stock options under the Law of 26 March 1999, a taxable benefit arises at grant if the offer is accepted in writing within 60 days. The employer must withhold wage withholding tax. These options are excluded from social security contributions if all legal conditions are met. However, if the option is 'in the money' or lacks formal compliance, social contributions may apply

(b) On vesting (which, for an option, means the option becoming exercisable)?

For instruments such as restricted stock units (RSUs), the taxable event (for both tax and social security) typically occurs at vesting, when the employee becomes entitled to the shares

(c) On exercise?

If the option is not covered by the 1999 law, the benefit realised on exercise (the difference between market value and exercise price) may be subject to both income tax and social security contributions.

(d) On the acquisition, holding or disposal of underlying shares or securities?

Once shares are acquired, the employer is no longer involved from a tax or social security perspective. Capital gains on disposal are private and not subject to payroll taxes

(e) In relation to any loans provided to participants within the framework of the employee share plan?

While not specifically regulated, loans granted under favourable terms may result in a taxable benefit in kind and be subject to social security if granted below market interest rates.

7.2 What are the tax and social security implications for participants:

(a) On grant?

For stock options under the 1999 law, the taxable benefit is assessed at grant based on a lump-sum valuation (typically 18%–23% of the underlying share value) if the option is accepted in writing within 60 days.

(b) On vesting (which, for an option, means the option becoming exercisable)?

For RSUs and performance shares, the benefit is taxed at vesting, based on the fair market value of the shares at that time.

(c) On exercise?

For non-qualifying options (eg, those not accepted on time or not under the 1999 law), taxation and social security apply at exercise, based on the gain. Phantom shares are also fully taxed upon payout.

(d) On the acquisition, holding or disposal of underlying shares or securities?

There is no further tax or social security impact from holding or selling the shares, unless the transaction is considered speculative. Capital gains are normally tax free for individuals.

(e) In relation to any loans provided to them within the framework of the employee incentive scheme?

Loans granted below market rates may result in a taxable benefit in kind, subject to both personal income tax and social security, depending on the nature of the advantage.

7.3 What other key concerns and considerations in relation to employee share plans should be borne in mind from a tax perspective (eg, corporation tax deductions)?

• No automatic corporate tax deduction: Generally, benefits granted under employee share plans (eg, share options) are not deductible as business expenses for corporate income tax purposes, unless they result in a taxable benefit for the employee. For instance, if a cash benefit or a 'certain advantage' is paid, it can qualify as a deductible professional expense under Article 49 of the Income Tax Code 1992.
• Tax timing: The timing of taxation is crucial. For share options falling under the 1999 law, taxation generally occurs on the 60th day following the offer date, provided that the offer is accepted in writing within that period. If this is not the case, the taxation may shift to the moment of exercise, potentially increasing the tax burden and affecting cost planning.
• Withholding obligations: If benefits are granted by a foreign group company but relate to work performed for a Belgian employer, the latter may be deemed responsible for withholding Belgian wage tax under a legal fiction introduced in Article 270 of the Income Tax Code. This includes administrative obligations such as reporting on Form 281.10 or Form 281.2

8. Corporate governance issues

8.1 What corporate governance rules and requirements apply to employee share plans in your jurisdiction?

In Belgium, employee share plans must comply with the rules laid out in the Companies and Associations Code – particularly Article 7:204, which allows for capital increases reserved for employees under specific conditions. These include:

• prior distribution of at least two dividends in the last three years;
• issuance of voting shares only;
• a five-year lock-up period; and
• a cap of 20% of the share capital across five years.

The employee shares must be registered and non-transferable during the lock-up period. Moreover, employee share plans:

• should be approved at the level of the general shareholders' meeting or board of directors, depending on the context; and
• require consultation with the works council if applicable.

8.2 What other key concerns and considerations in relation to employee share plans should be borne in mind from a corporate governance perspective?

From a governance perspective, transparency, fairness and alignment with long-term company strategy are critical. Share plans should:

• avoid over-dilution; and
• ensure equitable access among employees.

Governance policies, such as clawback and malus provisions, may be recommended to ensure accountability. In regulated sectors (eg, financial institutions), additional requirements under the Capital Requirements Directives IV and V apply, including deferral and performance linkage to avoid excessive risk-taking.

9. Employment law issues

9.1 Do any employee consultation or notification requirements apply before an employee share plan can be rolled out in your jurisdiction?

There is no specific legal requirement for prior consultation, but clear and timely communication with employees is recommended for transparency and legal certainty.

If a share plan involves a capital increase under Article 7:204 of the Companies and Associations Code, the company must consult the central works council. The council:

• must be informed of the intention to grant shares to employees; and
• may give non-binding advice on how the plan is implemented.

9.2 Are participants in employee share plans entitled to compensation for loss of associated benefits on termination of employment? Does this vary depending on the grounds for termination?

Based on the Belgian legal framework and the information in the provided document, the following rules apply:

• If the benefit (eg, stock options or restricted stock units) was granted as part of the remuneration package under the employment contract, and was granted in the 12 months preceding termination, it may be considered a 'benefit acquired under the employment agreement'. In that case, it must be included in the calculation of the termination (severance) compensation, provided that the employee had a vested right to the award at the time of dismissal.
• However, unvested or discretionary future benefits (eg, one-time grants, performance-dependent grants not yet awarded) typically do not qualify as compensation rights upon termination, especially in the case of dismissal for cause or early termination by the employee.

In short, the inclusion depends on whether the award:

• was earned and vested; and
• forms part of the regular compensation structure.

The reason for termination can also influence this, particularly in cases of dismissal for serious cause.

9.3 Can the type or amount of a share award granted to one participant potentially affect awards granted to other participants?

Yes, in Belgium, the type or amount of a share award granted to one participant can potentially affect others – particularly in plans with a fixed or limited pool of available shares or options.

If the plan has an overall cap (eg, under Article 7:204 of the Companies and Associations Code, a 20% cap over five years), granting a larger portion to one participant may reduce the availability for others.

9.4 What other key concerns and considerations in relation to employee share plans should be borne in mind from an employment law perspective?

From a Belgian employment law perspective, there are several key considerations for employee share plans:

• Share options may be regarded as remuneration when granted in return for work, meaning that they:
• • must be included in severance pay calculations;
  • are subject to wage protection rules; and
  • cannot be unilaterally altered by the employer once contractually vested.
• Clauses about losing unvested rights upon termination must be carefully drafted; automatic forfeiture in cases of dismissal for serious cause:
• • may be considered a double penalty; and
  • is often unlawful.
• To avoid disputes, it is also essential that the plan clearly defines:
• • vesting conditions;
  • consequences of dismissal, resignation or death; and
  • whether the plan is discretionary or contractual.
• Moreover, principles of non-discrimination and equal treatment must be respected, with any differences objectively justified – for example, by role or seniority.
• Consultation with the works council may be required, especially if the plan affects remuneration policies.

In short, employee share plans must be legally sound, transparent and fair to ensure legal certainty.

10. Securities law issues

10.1 What securities law rules and requirements apply to employee share plans in your jurisdiction? Do any exemptions apply?

There are no exceptions for employees.

10.2 What other key concerns and considerations in relation to employee share plans should be borne in mind from a securities law perspective?

Changes are forthcoming regarding capital gains tax and income exceeding a certain amount, which may also have an impact on employees.

11. Data protection issues

11.1 What data protection rules and requirements apply to employee share plans in your jurisdiction?

Employee share plans involve the processing of employees' personal data and must comply with:

• the EU General Data Protection Regulation; and
• Belgian privacy laws.

This means data must be collected and processed:

• lawfully;
• transparently; and
• only for the purpose of managing the share plan.

Employers must:

• minimise data collection; and
• ensure appropriate security measures to protect the data.

Employees have rights to access, correct and control their personal information. If data is transferred outside the European Union, adequate safeguards must be in place.

11.2 What other key concerns and considerations in relation to employee share plans should be borne in mind from a data protection perspective?

Key considerations include:

• ensuring clear communication to employees about how their data will be used and processed;
• managing third-party data processors through proper agreements;
• limiting data retention to what is strictly necessary; and
• preparing procedures to detect and report data breaches quickly.

Employers should also consider the legal basis for processing data carefully, often relying on legitimate interest rather than consent due to the employment context.

12. Internationally mobile employees

12.1 What are the tax and social security implications if a participant in an employee share plan becomes tax resident in another jurisdiction?

Tax: Belgium generally follows the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention, which stipulates that share-related benefits (eg, options, restricted stock units (RSUs)) are taxable in the country in which the underlying employment activities were performed. If the benefit vests over time, taxing rights are typically allocated proportionally between countries based on the working periods. If an employee relocates during the vesting period, the benefit must be apportioned accordingly.

Social security: As a rule, an employee is subject to the social security regime of only one country at a time. Where an employee works in multiple countries or is seconded, EU regulations (eg, Regulation 883/2004) or bilateral agreements determine the applicable legislation. A key question is whether the benefit constitutes 'remuneration borne by the employer' – as clarified by the Supreme Court (Cassation) on 5 September 2022, social security contributions are due only if the benefit is granted by or at the expense of the employer.

12.2 What are the tax and social security implications where a participant in an overseas employee share plan becomes tax resident in your jurisdiction?

Tax: Belgium generally follows the OECD Model Tax Convention, which stipulates that share-related benefits (eg, options, RSUs) are taxable in the country in which the underlying employment activities were performed. If the benefit vests over time, taxing rights are typically allocated proportionally between countries based on the working periods. If an employee relocates during the vesting period, the benefit must be apportioned accordingly.

Social security: As a rule, an employee is subject to the social security regime of only one country at a time. Where an employee works in multiple countries or is seconded, EU regulations (eg, Regulation 883/2004) or bilateral agreements determine the applicable legislation. A key question is whether the benefit constitutes 'remuneration borne by the employer' – as clarified by the Supreme Court (Cassation) on 5 September 2022, social security contributions are due only if the benefit is granted by or at the expense of the employer.

12.3 What other key concerns and considerations in relation to internationally mobile employees should be borne in mind, from a tax perspective or otherwise, in relation to employee share plans?

Timing and source allocation: It is crucial to determine and allocate the timing of grant, vesting and exercise across jurisdictions based on the employee's work locations. This determines which country has taxing rights.

Filing and withholding obligations: Belgian companies in international groups may be required to withhold Belgian wage tax on benefits granted by foreign group companies if the employee works in Belgium.

13. Disputes

13.1 In which forums are disputes over employee share plans typically heard?

If the dispute concerns the employment relationship – for example, the grant of shares as part of the employment contract or a dispute over its execution – the labour court has jurisdiction. This is often the case for conflicts regarding the employee's rights within the share plan.

13.2 What issues do such disputes typically involve?

• Eligibility and participation: Whether the employee qualifies to participate in the share plan (eg, based on seniority, position or contract terms).
• Grant and vesting of shares: Disagreements about:
• • the number of shares granted;
  • the vesting schedule; or
  • whether shares have properly vested.
• Terms and conditions of the plan: Interpretation of:
• • plan rules;
  • rights attached to shares (voting, dividends); or
  • conditions for exercising options.

14. Trends and predictions

14.1 How would you describe the current employee share plan landscape and prevailing trends in your jurisdiction?

Employee share plans are increasingly used by Belgian companies – both startups and established firms – as a tool to attract, motivate and retain talent.

14.2 Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Yes, new legislative developments are expected within the next 12 months that could indirectly impact the broader compensation framework within which employee share plans are often embedded. Starting in 2026, new legislation on pay transparency will come into effect, based on a European directive aimed at:

• promoting equal pay for equal work; and
• reducing the gender pay gap.

This law will require employers to be more transparent about their overall compensation policies, including fixed and variable pay components. Although the exact Belgian implementation is still in development, it is anticipated that reporting obligations and employees' right to access information about pay structures will apply. Fringe benefits such as stock options may also be subject to these requirements.

While the legislation does not specifically target share plans, it could influence how these plans are designed, justified and communicated within an organisation's compensation policy. Transparency around grant criteria, the objectivity of benefits and equal access for employees may become increasingly important in ensuring compliance.

15. Tips and traps

15.1 What would be your recommendations for the smooth rollout of an employee share plan and what potential pitfalls would you highlight?

For a successful rollout of an employee share plan, it is essential to:

• set clear objectives; and
• align the plan well with the company culture.

Ensure full compliance with applicable laws and regulations and involve legal and tax specialists early in the process. Communicate openly and clearly with employees about how the plan works, its benefits, and potential risks, providing adequate guidance and support. Accurate and reliable administration is crucial to prevent errors and misunderstandings. It is also important that eligibility criteria are fair and transparent to avoid unnecessary conflicts.

Common pitfalls include:

• overly complex plans that cause confusion;
• unexpected tax consequences;
• poor communication;
• administrative mistakes;
• unequal access; and
• the risk of non-compliance with regulations.

Additionally, market volatility can cause fluctuations in the value of shares, which may lead to employee disappointment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.