As part of the ongoing tax reform, the government is paying increasing attention to executive compensation and corporate tax optimisation. While taxation remains a tool for attracting investment, lawmakers want to further regulate the trade-offs between professional compensation, benefits in kind and dividends.
The first change concerns the minimum remuneration required for executives to benefit from the reduced corporate tax rate. To maintain the 20% rate, companies will have to pay executives a minimum of €50,000 per year. Below this threshold, profits will be taxed at the standard rate. The measure aims to limit situations where executives opt for low remuneration combined with a distribution of lower-taxed dividends.
The second structural measure concerns benefits in kind (BIK). From 2027 onwards, the value of BIKs may not exceed 20% of the executive’s total remuneration. Only lump-sum ATNs are affected, which include vehicles, computer equipment, accommodation provided or certain heating and electricity expenses. The aim is to prevent remuneration from being artificially made up of ATNs in order to reduce the tax base or optimise social security contributions.
For companies, these rules imply a recalibration of remuneration schemes. Trade-offs between salary, non-cash benefits and dividends will need to be reviewed based on the capital structure, the role of the executive and the maturity cycle of the company. For executives, optimisation does not disappear, but it becomes more regulated: forecasts will need to be carried out over several financial years to avoid losing the reduced rate or exceeding the non-cash benefit ceiling.
From a practical standpoint, these measures require compliance with payroll systems, anticipation of distributable cash flows and clarification of contracts between companies and executives. They also reinforce the importance of internal governance: compensation decisions will need to be better documented, justified and aligned with comparable standards.
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