Check whether your remuneration package relies too heavily on lump-sum benefits
February 2026 - Since January 2026, stricter rules have applied to the composition of remuneration packages for company directors. A new tax rule limits the share of lump-sum benefits of any kind in the total remuneration package to a maximum of 20 per cent.
Are you an SME manager? Then now is the time to take a critical look at your remuneration package and avoid unpleasant tax surprises.
What exactly is changing?
The federal government has approved a draft law stipulating that a manager's remuneration package may only consist of a maximum of 20 per cent of fixed benefits of any kind. Final approval by parliament is expected in early 2026, but the outlines have been established. The measure is intended to prevent remuneration packages from being overly composed of tax-advantaged benefits.
What benefits of any kind are taken into account?
Flat-rate benefits of any kind are benefits that are taxed according to a fixed rate rather than their actual value. Classic examples are a company car, smartphone or laptop. The provision of a private home through the company or the granting of share options also fall under this category. Because the flat-rate valuation is often lower than the actual cost, these benefits are fiscally attractive, but this is precisely what the legislator now wants to put a stop to.
The tax risk of exceeding the threshold
Anyone who exceeds the 20 per cent threshold risks losing the reduced corporation tax rate. Small companies currently enjoy a rate of 20 per cent on the first tranche of 100,000 euros of profit, provided that the manager receives a minimum gross annual salary. This minimum salary is currently 45,000 euros and will be increased to 50,000 euros from 2026. If the VAA threshold is exceeded, the reduced rate no longer applies and the standard rate of 25 per cent applies again.
When does it become problematic?
For many SME managers who supplement their salary with common benefits such as a car and a mobile phone, the 20 per cent limit will not be a problem. The situation changes when more substantial benefits are granted, such as the use of a private home through the company. Certainly in the case of high-value real estate, the flat-rate benefit can quickly add up and take up a large part of the salary package.
Possible solutions and considerations
Those who exceed the limit can choose to increase their fixed salary so that the share of benefits decreases. However, this option requires caution. A higher salary also means higher social security contributions and a faster progression to higher income tax brackets. In some cases, it may be more financially advantageous to abandon the reduced corporate tax rate and accept the standard rate, which amounts to a limited additional tax on the first profit bracket.
Consequences for employees too
The measure is not limited to company directors. Companies are also being encouraged to limit the use of fixed benefits for employees. If more than 20 per cent of the total wages of all employees combined consist of such benefits, the excess portion will be subject to a special levy of 7.5 per cent. Moreover, this levy is not tax deductible.
Critical review of remuneration packages
The new rules make it clear that a balanced remuneration structure is more important than ever. It is worthwhile for SME managers to review their remuneration packages in good time and, together with their advisor, consider whether adjustments are necessary. This will ensure that remuneration remains tax-efficient, without unexpected costs for the company.
