Benefit in kind for free housing violates equality and non-discrimination principle

In implementation of Article 36, §1 CIT92, Article 18, §3, 2 RD/CITC92 provides a lump sum basis for the benefit in kind when an employee or director, apart from his normal salary, receives free housing. The formula of this lump sum basis depends on whether the housing is given by an employer-individual or by an employer-legal person. The amount of the benefit in kind is higher when the house is granted by an employer-legal person.

In two recent decisions, the Antwerp1 and Ghent2 Court of Appeal considered that the difference in calculation of the benefit in kind for free housing granted by an employer-legal person compared to an employer-natural person violates the principle of equality and non-discrimination. Indeed, if the employer-legal person grants housing to an individual, the taxpayer must declare a substantially higher benefit in kind and will be taxed accordingly. According to both Courts of Appeal, the difference in treatment violates the principle of equality and nondiscrimination since there is no objective and reasonable justification for this differentiation.

Possibilities for recovering the higher benefit in kind

The decisions of both Courts of Appeal do not have general binding force, and hence do not entail any rights for other taxpayers than the ones involved in the cases themselves. Therefore every taxpayer that wants to recover the surplus, should file an administrative appeal against his own tax return upon receipt of the tax assessment calculated on the higher benefit in kind. This appeal has to be filed within 6 months after the third working day following the day on which the tax assessment was sent (Article 371 CIT92).

Since the tax administration has to apply the law as it still exists, they could still apply Article 18, §3 RD/CIT92 and declare the appeal unfounded. In such case, a petition can be filed before the Tribunal of First Instance. Obviously, there is a high success rate for these cases with regard to the discriminatory nature of the benefit in kind for free housing.

With regard to the filing of the tax return, please note that the RD/CIT92 itself was not annulled or modified. This implies that the benefit in kind should be declared in the tax return in accordance with the law as applicable at the time of the filing of the tax return. Therefore, in the case of housing granted by a legal person, the higher lump sum basis should continue to be declared in the tax return. A correction will be possible by filing an administrative appeal.

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