A new temporary fiscal aid measure should mitigate the far-reaching impact of the COVID-19 crisis. By means of an exemption from the payment of withholding tax for the months of June, July and August 2020, the wage costs for those months can be mitigated. The measure is included in a draft law and is therefore not yet adopted.
For which employers?
Only employers who have made use of the temporary unemployment scheme for an uninterrupted period of at least 30 calendar days between 12 March 2020 and 31 May 2020, both dates included, will be able to benefit from the exemption.
In addition, the employers must at the same time meet all of the following conditions:
- turnover for the period from 14 March 2020 to 30 April 2020 must have decreased by at least 30 percent compared with the same period in 2019;
- the employer has made use of the system of temporary unemployment for at least 30 percent of its employees.
Certain companies are excluded:
- companies which have proceeded in the period from 12 March 2020 to 31 December 2020 to:
- a purchase of own shares; or
- a distribution or attribution of dividends; or
- a capital reduction; or
- any other reduction or distribution of own capital.
- companies which, in the period from 12 March 2020 to 31 December 2020:
- either, have kept a direct shareholding in a company established in a tax haven;
- or, have made payments to companies established in a tax haven, provided that these payments constitute a total amount of at least EUR 100,000 in the course of the taxable period and that it has not been demonstrated that these payments were made in the context of genuine and sincere transactions arising from legitimate financial or economic needs.
Amount of the exemption
The exemption is equal to 50 percent of the difference between:
- on the one hand, the total cost of withholding tax on the remunerations for the months of June, July and August 2020;
- on the other hand, the total cost of withholding on the remunerations of May 2020.
Only the withholding tax on certain types of remuneration of employees is taken into account. Ordinary monthly salaries, premiums, benefits in kind are included. Severance pays, double holiday pay, end-of-year bonus and arrears are excluded, among other things, as is the remuneration of managers.
By comparing the cost of the withholding tax for May 2020 with the cost of the withholding tax for the months of June, July and August 2020, employers who re-employ their employees from June 2020 onwards will, in principle, benefit most from the measure.
The exemption will only be applied after all other exemptions from payment of withholding tax and may never exceed EUR 20 million over the three months in question.
The measure is included in a draft law and is therefore not yet adopted. We follow the measure closely and inform you as soon as there are any changes. A calculation of the exemption is therefore not yet possible, not even for the month of June.
Source: Draft law containing various urgent fiscal provisions as a result of the COVID-19 pandemic (CORONA III), Parliamentary Documents, Chamber 2019-20, no. 1390.