Construction works: increased tax relief in 2020

Do your employees carry out construction works on location and do they work in shifts? In that case, you may already benefit from a tax relief in the form of an exemption from advance payment of part of the withholding tax. As from 2020, this exemption will increase and you will save even more on your wage costs. If you do not yet apply the tax reduction, it is certainly worth investigating whether you are entitled to it.

To refresh your memory

The tax relief effective since 1 January 2018 applies to companies with employees:

• working in shifts, and
• carrying out construction works and
• carrying out shift work on construction sites at least 1/3 of their time (1/3 standard).

Both the concept of shift work and the concept of construction works have been given a specific description.

Companies where shift work is carried out

Companies where shift work is carried out are companies where:

• the work is carried out in one or more shifts;
• the shifts consist of at least two persons, without taking into account students and apprentices in alternance training;
• the shifts perform the same or complementary work as regards the content as well as the volume;
• the shifts carry out their work on site, i.e. on a construction site;
• the shifts perform construction works as explained below;
• the employees concerned of a shift mentioned above (except students and apprentices in alternance training) receive a gross hourly wage of 13.99 EUR in 2019 (in 2018, this minimum gross hourly wage was 13.75 EUR). The indexed amount of the gross hourly wage for 2020 is 14.19 EUR (subject to confirmation by the Tax Administration).

Companies that are recognised for temporary agency work and that post temporary agency workers to the above companies are, for this measure, assimilated to companies where shift work is carried out'.

What are construction works?

These are works envisaged in Article 20, § 2 of Royal Decree No. 1 of 29 December 1992 relating to the regulation for the payment of value added tax.

Essentially, it covers all works relating to building, renovating, finishing, fitting-out, repairing, maintaining, cleaning and dismantling, in whole or in part, of immovable property, and the act of supplying movable property and installing it in such a way on an immovable property so that its nature becomes immovable. 

The following activities are concerned as well:

1. any delivery or attachment to a building of:
   • the components or part of the components of a central heating or air conditioning system, including the burners, tanks and regulating and control devices associated with the boilers or radiators;
   • the components or part of a sanitary installation of a building and, more generally, of all fixed appliances for sanitary or hygienic use connected to a water main or a drain;
   • the components or part of the components of an electrical installation of a building, with the exception of appliances for lighting and lamps;
   • the components or part of the components of an electrical bell system, of fire alarms, of anti-theft alarms and of a home telephone;
   • storage cabinets, sinks, sink units and furniture with built-in sinks, washbasins and furniture with built-in washbasins, extraction hoods, fans and air extractors with which a kitchen or bathroom is equipped;
   • shutters, roller shutters and roller blinds installed on the outside of the building;
2. any delivery of flooring and its installation in a building, regardless of whether this flooring or covering is attached to the building or is simply cut to size on site in accordance with the dimensions of the area to be covered;
3. any work consisting of attaching, fitting, repairing, maintaining and cleaning goods referred to in 1. or 2. above.

The provision of staff to carry out construction works or acts such as those described above is also envisaged.

What does the 1/3 standard mean?

The measure only applies to employees who, in accordance with the working regime to which they are subject, carry out shift work at least 1/3 of their time on site, i.e. on a construction site, and this during the month for which the benefit is requested.

How much will the exemption be from 2020?

The exemption from advance payment of part of the withholding tax will increase from 6 % to 18 % as from 1 January 2020.

This percentage is calculated on the basis of the total taxable remuneration of all the employees concerned, with the exception of:

• bonuses, other than shift work bonus;
• the holiday pay;
• the end-of-year bonus;
• arrears of remuneration.

Our Legal Partners can advise you.

In order to benefit from the tax reduction, a number of strict conditions must be met. For a concrete analysis of your situation, please contact our Legal Partners by email (legalpartners@partena.be) or by phone (02/549.30.20).

Are you eligible for the exemption?

Although the measure is not limited to certain sectors, mainly employers from the following sectors will benefit from the exemption: metal construction (JC 111.01, JC 111.02, and JC 111.03), cleaning (JC 121), construction (JC 124), woodworking and upholstery (JC 126), horticulture (in particular JC 145.02 and JC 145.04), electricians (JC 149.01) and temporary agency work (JC 322).

Do you think you are eligible for the exemption from advance payment of withholding tax, but we do not yet include this in our calculation? Please contact your Payroll Consultant as soon as possible to discuss the practical formalities for the application of the exemption.

If we already include the exemption from advance payment of withholding tax in our calculation for (part of) your employees, we will automatically apply the increased exemption as from 2020.

Sources: Law of 26 March 2018 on improvement of economic growth and social cohesion, Belgian Official Gazette 30 March 2018; Law of 28 April 2019 containing various tax provisions and amending Article 1, § 1ter of the Law of 5 April 1955, Belgian Official Gazette of 6 May 2019.