Coronavirus: student work 2nd quarter 2020: tax implications

Hours worked as a student from 1 April to 30 June 2020 are not included in the annual quota of 475 hours. In the meantime, the required legislative initiatives have been taken to ensure that this neutralisation does not result in any unpleasant tax surprises.

No withholding tax on the student's remuneration

According to the traditional rule, no withholding tax is due on remuneration paid or granted to students if the following conditions are met:

• the student has been hired under an employment contract for students;
• the employment as a student may not exceed 475 hours during the calendar year;
• no social security contributions other than the solidarity contribution may be due on this remuneration.

In order to encourage students to come and work for companies operating at full capacity, from a social security point of view, hours worked as a student (under Dimona 'STU') in the 2nd quarter of 2020 (from 1 April to 30 June 2020) may be neutralised. These hours are not deducted from the quota of 475 hours. The wages for these neutralised hours are only subject to a solidarity contribution.

From a tax point of view, it has been ensured that student employment during the second quarter of 2020 is not subject to withholding tax. Indeed, there is a real risk that the 475-hour limit for such employment will be exceeded. Therefore, a Royal Decree stipulates that the remuneration received by students for the hours worked from 1 April to 30 June 2020 will be exempt from withholding tax and that these hours will not be deducted from the quota of 475 hours in 2020.

Dependent children

In order to avoid that students, as a result of additional hours worked in the second quarter of 2020, would receive too much net means of subsistence to continue to be dependent on their parents, it was decided not to take into account the remuneration for the hours of student work from 1 April 2020 to 30 June 2020 when determining the means of subsistence.

As for the remuneration for the hours of student work outside the period from 1 April 2020 to 30 June 2020, the normal ‘exemption’ of the first tranche of € 2,820 (income year 2020) continues to apply.

Consequences for child benefit?

If students work a lot during the coronacrisis, they might lose (part of) the child benefit according to the usual rules. In order to prevent this from happening, the regional institutions that grant child benefit have developed a derogation scheme for 2020. More information about this scheme can be found on the website student@work.

Sources: Royal Decree of 18 May amending Annex III of the Royal Decree/Income Tax Code 92 with regard to withholding tax on remuneration for student work, Belgian Official Gazette of 26 May 2020; Draft law containing various urgent tax provisions as a result of the COVID-19 pandemic, Parl. item Chamber 2019-20, No. 1174.