Abolition of the 1 % IPA discount for the profit sector

Author: Author: Peggy Criel
Read time: 3min
Publication date: 21/04/2016 - 14:00
Latest update: 10/05/2019 - 09:22

Since 1 April 2016, employers in the profit sector are no longer entitled to the 1% IPA discount (the structural exemption from payment of advance withholding tax). The measures taken in the context of the tax shift have converted this exemption from payment of advance withholding tax into a reduction in employer's social security contributions.

What is the IPA discount?

The IPA discount is a reduction of the tax burden in the form of an exemption from payment of a part of the advance withholding tax which is granted to employers in the private sector and certain plcs of public law. The exemption equals a percentage of the gross amount of the remuneration prior to the deduction of personal social security contributions.

Since 1 January 2010, the exemption amounts to 1 %. An increase up to 1.12 % applies provided that the companies and natural persons comply with the definition of SME as defined in the Code of Companies (Article 15, § 1 to § 6).

What has changed on 1 April 2016 for employers in the profit sector?

Employers in the profit sector are no longer entitled to the IPA discount of 1 %. From 1 April 2016, this reduction of the tax burden has been converted into a reduction in employer's social security contributions. Provided that they meet the conditions of a SME, they will be able to continue to benefit from the structural exemption from payment of advance withholding tax of 0.12 %.

In the context of this measure, an employer in the profit sector is understood to mean, the employer who does not belong to one of the following joint (sub)committees: 318, 318.1, 318.2, 319, 319.1, 319.2, 329,329.1, 329.2, 329.3, 330, 331 and 332. Employers who belong to one of the above joint (sub)committees will continue to benefit from the 1% IPA discount.

Remark: The social workshops that come under Joint Committee 327 belong to the so-called 'profit sector' in the context of this measure. However, when applying this measure, as from 1 April 2016 they would belong to the 'non-profit sector' as result of which they would still be able to continue to benefit from the 1 % IPA discount. We will notify you as soon as this measure is permanently established.

Source: Act of 26 December 2015 laying down measures for the reinforcement of job creation and purchasing power (1), Belgian Official Gazette 30 December 2015.

Author: Peggy Criel

21/04/2016

The Partena Professional website is a channel for making information available in an understandable form to affiliated members and non-members. Partena Professional strives to provide up-to-date information and this information is compiled with the greatest care (including in the form of Infoflashes). However, as social and fiscal legislation is constantly changing, Partena Professional cannot accept any liability for the correctness, the up-to-date or the completeness of the information consulted or exchanged via this website. Further provisions can be read in our general disclaimer that applies to every consultation of this website. By consulting this website, you expressly accept the provisions of this disclaimer. Partena Professional can unilaterally change the content of this disclaimer.