Coronavirus: temporary fiscal aid measure definitive

Author: Isabelle Caluwaerts (Legal Expert)

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. In the meantime the measure has been published in the Belgian Official Gazette.

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.

Excluded employers

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.

Are you eligible for the exemption?

Employers will soon be contacted about the practical formalities to apply the exemption.

Source: Act of 15 July 2020 containing various urgent tax provisions as a result of the COVID-19 pandemic (CORONA III), Belgian Official Gazette 23 July 2020.

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