Executive remuneration: weighing pay, dividends and benefits in kind
Publication · December 11, 2025
Determining a company director's remuneration is an exercise in balancing several income sources subject to distinct tax and social security regimes: the director's remuneration itself, dividends distributed by the company, and benefits in kind granted in addition to, or in place of, part of the monetary remuneration. Each of these components follows its own rules regarding personal income tax, social contributions and, where relevant, corporate income tax in the hands of the distributing company.
Remuneration paid to the director is, in principle, deductible for the company as a business expense, subject to compliance with the general deductibility conditions set out in the 1992 Income Tax Code, while it is taxable in the director's hands as professional income, subject to the progressive tax scale and self-employed social contributions. This route remains structurally important, as it also conditions access to certain social benefits and the accrual of pension rights.
Dividends, for their part, are not deductible for the distributing company, which must first pay corporate income tax on the profit realised before distributing a dividend that is, in principle, subject to withholding tax. The regime applicable to small companies has undergone several successive changes, notably through the so-called liquidation reserve and VVPRbis mechanisms, intended to encourage, under certain conditions, reduced taxation of dividends distributed from profits allocated to specific reserves. These regimes nonetheless remain subject to precise application conditions and recurring legislative changes, such that any reference to a specific rate or threshold must be verified case by case before any decision is taken.
The tax status of small and medium-sized enterprises also conditions access to a reduced corporate income tax rate, subject to conditions relating in particular to a minimum remuneration granted to at least one individual director. This minimum remuneration requirement creates a direct link between the director's remuneration policy and the company's eligibility for this regime, which calls for an annual review of the situation against the applicable criteria — criteria that have undergone successive reforms whose scope must be verified at the time of the decision.
Benefits in kind, such as the provision of a vehicle, housing or group insurance, constitute a third form of remuneration, valued on a flat-rate or actual basis depending on the rules specific to each benefit. Their appeal lies in a sometimes more favourable tax and social treatment than equivalent monetary remuneration, but their implementation requires a precise analysis of the applicable valuation rules, which are regularly adjusted by the tax administration.
The trade-off between these different components cannot be made in isolation: it must take into account the director's overall situation, immediate liquidity needs, the accrual of social rights, and prospects for the transfer or sale of the business. Remuneration that is too low may, for example, jeopardise eligibility for the reduced corporate income tax rate or limit the accrual of pension rights, while excessive dividend distributions may weaken the company's cash position or generate a heavier immediate tax burden than anticipated.
Planning a director's remuneration must also take account of ongoing legislative developments, as the Belgian tax regime for small companies and investment income has undergone repeated reform in recent years. It is therefore essential not to rely on fixed parameters, but to verify, for each financial year, the legal conditions applicable at the date of the intended decision.
Ultimately, the trade-off between remuneration, dividends and benefits in kind is a recurring exercise that must be reassessed each year in light of the director's and the company's specific situation, as well as the state of applicable tax and social law, with no single combination capable of being regarded as universally optimal.