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Did you know that your company may be eligible for a significant tax exemption? The payroll withholding tax exemption is an attractive opportunity for employers to strengthen their financial position while rewarding their employees. Here you will discover how this scheme can support your business and get an overview of most of the possibilities:  

  • Research and development: if your company engages in innovation and R&D activities, there is good news. The exemption from pass-through for withholding tax can provide significant tax benefits, allowing you to dedicate more resources to developing new ideas and projects.  
  • Night and shift work: for companies operating 24/7 or working in shifts, this scheme offers an opportunity to reduce labour costs and boost competitiveness. Our experts will guide you through the complex regulations so that you can take full advantage of this exemption.  
  • Perform works in innovable property: does your company invest in real estate and does it involve works in immovable property (building, remodelling, finishing, furnishing, and more)? If so, the exemption from withholding tax can make your investments even more attractive. We show you how to optimise your real estate portfolio and take advantage of tax benefits.

It is a form of payroll deduction that allows employers to keep for themselves part of the withholding tax they normally have to deduct from their employees’ wages. This means employees receive more net pay without the employer having to pay more gross pay.  

An overview of the possibilities

What is the partial withholding tax exemption for researchers?

The partial withholding tax exemption for researchers is a tax measure designed to encourage investment in research and development (R&D). It implies that private sector employers and knowledge institutions are allowed to keep part of the withholding tax they have to pay on the salaries of their researchers instead of passing it on to the tax authorities. This allows them to free up more resources for their R&D activities.  

By reducing the wage costs of researchers, employers can invest more in R&D, thereby increasing their competitiveness and growth potential. Moreover, the measure contributes to the creation and retention of highly skilled jobs in the R&D sector. The partial withholding tax exemption for researchers is thus a win-win situation for both employers and researchers.  

Who is eligible?

To be eligible, you must meet a number of conditions:  

  • First, you must be an enterprise or a knowledge-based institution, such as a university, college, scientific institution, or a fund for scientific research.   
  • Second, you must employ researchers who have a specific PhD, master’s or bachelor’s degree, or who have acquired this qualification through experience.  
  • Thirdly, you must carry out research or development projects or programmes focusing on basic research, industrial research or experimental development. You must also register these projects or programmes with BELSPO before the start date to benefit from the exemption.  

What is eligible?

This exemption amounts to 80% of the withholding tax due on the salaries of researchers (eligible) with a PhD or master’s degree, and 40% of the withholding tax due on the salaries of researchers (eligible) with a bachelor’s degree.   

  • These percentages can be applied pro rata to the R&D activities.  

The exemption can be cumulated with other exemptions from withholding tax

What is the partial withholding tax exemption for night and shift work?

The partial withholding tax exemption for night and shift work is a percentage of the employee’s taxable remuneration that qualifies for the benefit. This percentage is:  

  • 22.8% for night or shift work that meets the legal conditions;  
  • 25% for night or shift work performed in a full-time work system.  

Who is eligible?

To qualify for the partial withholding tax exemption for night and shift work, you must meet three conditions:  

  • You must be an employer subject to Belgian social security;  
  • You must employ employees who perform night or shift work;  
  • You must grant your employees a shift or night premium for their night or shift work.  

What is eligible?

Night or shift work is work performed according to a particular work regime that differs from normal day work. There are different types of night or shift work, depending on the sector, the company and the employee’s position. The main forms are:  

  • Night work: work performed between 8pm and 6am. Examples of sectors where night work is allowed are hospitality, healthcare, security and transport.  
  • Shift work: work performed according to a fixed or variable hourly schedule, where workers regularly relieve each other at the same work station. There are different types of shift work, such as two-shift, three-shift, four-shift, five-shift, etc. Shift work may or may not involve night work.  
  • Full-continuous labour system: a specific form of shift work, in which employees work 24 hours a day and 7 days a week, with a regular rotation of shifts. A full-time labour system requires a minimum of four shifts, with each shift performing night work at least once a week.  

The exemption can be cumulated with other exemptions from withholding tax

What is the partial withholding tax exemption for works in real estate?

This is a tax measure introduced in 2018 as part of the tax shift. The aim of this measure is to boost employment and investment in sectors that carry out works in real estate. The measure means that as an employer, you do not have to pass on 18% of the taxable remuneration of your employees who work on site in shifts to the tax authorities. You can therefore keep this amount yourself. This applies to remuneration you pay or award from 1 January 2018.  

Who is eligible?

To qualify for the exemption, you must meet a number of conditions: 

  • First, you must be a company where shift work is performed. This means that you must have work carried out by one or more shifts of at least two people, disregarding students and apprentices in sandwich training, doing the same or complementary work both in terms of content and scope. Moreover, the work must be carried out on site, i.e. not in your own business premises.   
  • Secondly, you must be a company that carries out works in an immovable property. These are all works in immovable state, which are all works that involve building, converting, finishing, furnishing, repairing, maintaining, cleaning and demolishing, in whole or in part, an immovable property that is immovable by its nature as well as any act of supplying a movable property and immediately affixing it to an immovable property in such a way that it becomes immovable by its nature. This also includes the delivery and installation of materials or devices that become immovable by destination or by incorporation.
  • Third, you must be a company subject to Belgian social security. This means that you must pay social security contributions in Belgium for your employees.  
  • Fourth, you must be a company that pays or grants a gross hourly wage of at least 16.02 euros, before deduction of personal social security contributions, to shift workers. This amount is indexed annually. However, this does not apply to all shift workers, but only to those who receive the required minimum wage. Thus, the exemption can also be applied to the salaries of shift employees who receive higher wages.  

What is eligible?

The exemption can only be applied to the taxable salaries of the employees working in shifts on site and performing works in immovable property. These are the remunerations subject to withholding tax, such as wages, bonuses, benefits in kind, end-of-year bonus, holiday pay, etc.   

  • The exemption is 18% of these salaries.  
  • This percentage is calculated based on the gross amount of the salaries, before the deduction of personal social security contributions and withholding tax.   
  • The exemption cannot be cumulated with other exemptions from withholding tax, such as the exemption for researchers or the exemption for night and shift work. 

Works in immovable property refer to more than just works carried out by the construction sector (PC 124). They may also include works falling under the purview of the cleaning (PC 121), wood and upholstery (PC 126), agriculture (PC 144), metal construction (PC 111) and electricians (PC 149.01) sectors.

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