Exemptions from payment of payroll tax: various changes

On 1 April 2022, not only did the conditions for the exemptions that apply to shift work and night work change. Several other exemptions from payment of payroll tax were also adjusted. Below you will find a summary of the changes.

Shift work in construction works

Companies in which employees, in shifts, do construction works on construction sites avail of an exemption from payment of payroll taxes.

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

Declaration to the NSSO

As of 1 April 2022, the exemption is reserved only for construction works that have been declared to the National Social Security Office pursuant to Article 30bis of the Social Security Law of 27 June 1969, at least provided that the works fall within the scope of the Article 30bis.

More info on this declaration can be found on the NSSO website.

Cumulation ban

As with the shift work exemption and the night work exemption, a cumulation ban is introduced. There is no exemption for shift work in construction works on the remuneration if the same remuneration is already subject to an exemption for shift work or an exemption for night work.

Accredited temporary work agencies

Temporary work agencies that assign temporary workers to companies where shift work is done in construction works and where the temporary workers work in such a shift system also avail of this exemption for the taxable remuneration of the temporary worker concerned.

In doing so, the temporary work agencies must be able to provide proof that they meet all the conditions for application of the exemption.

As of 1 October 2022, the exemption will be allowed only on condition that the temporary work agencies have obtained the agreement of the company in which the temporary agency workers are employed to apply the exemption for shift work in construction works.

Volontariat fiscal (Tax advance)

Since 1 April 2022, the calculation of certain exemptions from payment of payroll tax is no longer applied to the so-called ‘voluntariat fiscal’, which is the portion of the payroll tax that is additionally withheld on top of the payroll tax that is legally due as a minimum.

The exclusion applies to the following exemptions from payment of payroll tax under:

• the merchant shipping, dredging and towing sector;
• scientific research;
• sportspersons;
• aid regions;
• start-up companies.

Overtime

Certain employers are entitled to an exemption from the payment of payroll tax for some categories of workers who work overtime. The condition for this is that overtime pay is paid for these overtime hours. However, this overtime pay was not defined by law.

Henceforth, it is expressly stipulated that it must concern overtime work which, pursuant to Article 29 of the Labour Code of 16 March 1971 or Article 7 of Royal Decree no. 213 of 26 September 1983 on working hours in companies belonging to the Joint Committee for the Construction sector, gives rise to a statutory overtime pay.

Since in practice the measure was already applied in this way, this clarification has in principle no impact for employers.

Rules of procedure

Several rules of procedure in the framework of the exemptions from payment of payroll tax were modified. We will briefly address the most important changes.

Special limitation period

An employer who has failed to apply for the application of the exemption from payment of payroll tax and who is eligible for this exemption may still obtain this exemption through a claim for refund of payroll tax.

In that case, a regularisation of the payment of payroll tax is possible through an objection. The period within which this regularisation can be requested is five years as of 1 January of the year during which the payroll tax was paid.

This limitation period is adjusted. Claims for refund of payroll taxes submitted as of 1 July 2022, expire at the end of three years from 1 January of the year following that to which the tax year refers.

Example:

An employer failed to apply for the application of the exemption from payment of payroll tax for scientific research for income years 2018 and 2019. He wishes to submit a claim for refund of payroll tax. If he submits this claim 1 before July 2022, then he can claim the refund of payroll tax for both income years. This is because the five-year limitation period for income year 2018 beginning on 1 January 2018 has not yet expired. If he submits this claim as of 1 July 2022, he can only submit the claim for refund of payroll tax for the income year 2019. The three-year limitation period for income year 2018 began on 1 January 2019 and expired on 31 December 2021.

Return exemptions from payment of payroll tax

By Royal Decree, a return can be filed which must include a number of details for each of the employees or some of them whose payroll tax is not paid or is not paid in full to the Treasury.

This new return will apply at the earliest to remuneration awarded or paid as of 1 January 2023.

To date, little information is known about the form or content of this new return.

Tax increase

Since 1 April 2022, an employer may be sanctioned with a tax increase if he files an incorrect payroll tax return that gives rise to an exemption from payment of payroll tax.

This increase is determined according to the nature and severity of the violation, according to a scale whose gradations are determined by Royal Decree and ranging from 10% to 200% of the incorrect return of the exemption from payment of payroll tax.

This increase will not be applied in the absence of bad faith. 

Source: Law on reduction of labour charges, Belgian Official Gazette, 31 March 2022.