Important changes to the wage withholding tax reductions as of 1 April 2022 (no, this is not a joke)
There are still certainties in life; one of them is that the Belgian tax system is constantly changing . Also in the context of the so-called ‘wage withholding tax discounts’, changes are imminent as of 1 April 2022.
Wage withholding tax discounts’
In order to stimulate or provide additional financial support to certain sectors, the law provides for “wage withholding tax discounts”. Examples are the discount for scientific research, the discount for start-up companies, the discount for night work or shift work.
This means that the employer does not have to pay (part of) the wage withholding tax to the Treasury, but may keep it within the company, thus providing more liquid resources.
Overview of the changes
The draft law “on reducing labour costs” submitted by the government clarifies, relaxes or tightens some aspects of the existing legislation.
We explain the main changes.
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WWT discount for night work and shift work
Firstly, the regulation of night work and shift work will no longer be viewed and evaluated as one regime, but rather as two separate regimes.
The size of the compulsory night premium or shift premium will also be regulated, so that employers are no longer able to grant – in practice, sometimes occurring – insignificant ‘pro forma’ premiums.
For example, the law states that the premium for ‘shift work’ must increase the hourly wage by at least 2%. The premium for ‘night work’ must increase the hourly wage by at least 12%.
In addition, the premium must be laid down in a collective agreement, in labour regulations or in an employment agreement. However, this formal obligation only has to be complied with by employers as from 1 April 2024.
The fact that the so-called 1/3rd standard (1/3rd of working time must be performed in shift work or night work) is no longer judged by reference to working days but by reference to working hours, will be anchored in law by means of the draft law.
With regard to the uninterrupted nature of consecutive shifts, the law now provides that an interruption of 15 minutes or less does not compromise the exemption regime.
If temporary employment agencies wish to apply an exemption as from 1 October 2022, they will only be able to do so if they have received the consent of the company in which the temporary workers are employed to apply the exemption scheme.
Finally, with regard to the special exemption for shift work in the construction sector, it is stipulated that the exemption only applies insofar as the works have been reported to the NSSO in accordance with Article 30bis of the NSSO-Act.
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WWT discount for scientific research
In cases where you, as an employer, make use of the wage withholding tax discount for scientific research, and also claim the tax credit for research and development, the non-paid wage withholding tax may not be included (any more) in the calculation basis of this tax credit.
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Procedural aspects
As of 1 July 2022, claims for refund of wage withholding tax, which are subject to an exemption from payment, will become time-barred after 3 years (counting from 1 January of the year following the year of assessment) – instead of the previously applicable 5 years.
We also emphasise that the (voluntary) withholding of a larger amount of wage withholding tax than the minimum legally owed no longer provides a tax advantage. At least as far as the discounts for scientific research, start-up companies, support zones, sportsmen and merchant shipping/dredging/tugging sector are concerned. In particular, the excess of withheld wage withholding tax is no longer taken into account for the calculation of the exempted amounts.
The temporary employment sector withholds a regulatory minimum percentage of 11.11% of wage withholding tax (if certain conditions are met), but it was agreed at sectoral level to voluntarily withhold 18% of wage withholding tax. The higher percentage of 18% is to be anchored in future regulations.
Conclusion
The submitted draft law contains some welcome clarifications, but at the same time also some unnecessary strictures.
What concrete actions do you need to take urgently?
- Check whether you comply with the minimum premium described above, and by extension , formalise the granting of this premium by collective agreement, labour regulations or employment agreement;
- Make sure that in the future you assess the 1/3rd standard on the basis of working hours (and no longer on the basis of working days);
- If you are a temporary employment agency: inform your clients about the application of the discounts and make agreements if necessary;
- Make sure that the necessary supporting documents are always available. The WWT discounts have been under increased scrutiny by the tax authorities for several years now!
Our specialists will be happy to assist you!