Investments in regional aid areas: adjustment of the reduction of tax burdens

Employers who carry out investments in regional aid areas that lead to job creation, benefit from a reduction in wage costs in the form of an exemption from advance payment of withholding tax. The federal government recently adapted the existing framework in order to optimise the measure.

Tax aid measure

Employers who invest in an establishment located in a regional aid area benefit from a temporary exemption from advance payment of withholding tax, provided that this investment leads to the creation of new jobs.

The exemption amounts to 25 % of the withholding tax calculated on the wages of the employees who take up the new jobs. It shall be granted for a period of 2 years from the moment the new job is filled.

Adjustments

The government made a number of adjustments to the aid measure. Below you will find an overview of the main changes.

Regional aid areas

In the event of collective redundancies, the regions are given the opportunity to propose regional aid areas. The definition of collective redundancies is extended. From now on, jobs lost as a result of bankruptcy will be taken into account. In this way, the regions can define a regional aid area more quickly.

In addition, the regions will be able to define up to eight smaller regional aid areas. This is a doubling of the current maximum number. For each large regional aid area, two smaller regional aid areas can be defined. The current possibility of defining up to four large regional aid areas remains.

As a reminder, the Flemish Region has defined two regional aid areas around Genk and Turnhout. A new regional aid area around Zaventem-Vilvoorde has been proposed but is not yet final. The Walloon Region has defined four regional aid areas around Seraing, Sambreville, Charleroi and Frameries.

Investments

The aid measure only applies if the employer invests in an establishment in a regional aid area. This is now changing. From now on, investments carried out by a company which is part of group of companies to which the employer belongs, will also be eligible for the measure. Therefore, the employer does not necessarily have to be the one carrying out the investment.

Form

In order to benefit from the tax aid measure, the employer must submit form No 274 SZ to the competent Documentation Centre. The deadline for submitting this form will be adjusted.

For investments for which a form is submitted as from 1 September 2018, the employer is no longer required to submit this form before the start of the investment. From now on, the employer can submit the form until the third month after completion of the investment. Completion of the investment is understood to mean the time at which the investment is actually put into use by the employer. The employer is thus given greater freedom to submit the form at the time of his choice.

Please note that only a new job which is filled as from the submission of the form and the first day of the 36th month following the month in which the investment is completed, is eligible for this measure. It is therefore in the employer's interest to submit the form before starting to fill the new jobs.

Moreover, the measure will also not apply if the form was submitted before the completion of the investment and its effective completion did not take place within 6 months after the expected completion date indicated on the form.

Temporary employment agencies

On the basis of the current legal provisions, temporary employment agencies can benefit from the aid measure without being obliged to submit form 274 SZ. This is now changing. From a date to be determined by Royal Decree, these companies will have to inform the administration in advance before applying the measure.

Source: Act of 30 July 2018 on the optimization of the aid to employers who invest in an area in difficulty (1), Belgian Official Gazette 10 August 2018.

Author: Peggy Criel

27/08/2018