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What is a Wage

Wage is everything that an employee receives on the basis of his employment. it's not important whether the employee is entitled to wages. it's also irrelevant whether the employee receives the wage in cash or in another form, rewards in kind and claims can also be wages.

The salary that an employee receives is part of the concept of wage as defined in the Income Tax Act 2001 (Law IB ): "wage is all that is received from an employment or a previous employment." An employment relationship is an obligation based on an employment contract. Wage in the employment contract is the compensation that the employer owes the employee for the stipulated work. The IB Actdefines what is meant by wages and therefore must be taxed. Not only the salary, but also some allowances provided to the employee as well as income in kind, various claims, social benefits and pensions are counted as the (taxable) wage.

The name 'wage' is not important. Also the rewards from employment as wages (military personnel), remuneration (civil servants) holiday allowance, bonus, profit sharing, covenant allowance, overtime, bonus, consignment allowance, etc. count the tax authorities as (taxable) wages.

Forms of wage

The followings are forms of wage:

  • pay in cash;
  • wages in kind;
  • reimbursements and benefits;
  • benefits and benefits in the event of special events;
  • claims and benefits based on claims;
  • benefits other than on the basis of claims;
  • cede wage;
  • negative wage (see paragraph below);
  • insurance payments taxed for payroll taxes.

* An employee may also be employed by another employer for his employment with an employer (hereinafter: the main employer). The employee is then usually obliged to hand over the wages to his main employer. Under certain conditions, that other employer (hereinafter: the payer) doesn't have to withhold wage tax and national insurance contributions. This regulation is important for certain supervisory directors, for example. Other employees and directors major shareholders can also use it.

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