Reduction of withholding tax for ascendants/collateral kin: changes from 2022

As from 1 January 2022, the monthly reduction of withholding tax for dependent ascendants or collateral kin to the second degree aged at least 65 years will only be applied if these persons are considered to be in need of care. The reduction is also increased. A transitional measure is provided for.

Reduction of withholding tax

Employees or company managers are eligible for a monthly reduction of withholding tax if they have dependent ascendants (parent, grandparent, etc.) and/or second-degree collateral kin ((half-)brother, (half-)sister).

For ascendants/second-degree collateral kin to be dependent, they must satisfy the following conditions:

• they must belong the household of the employee or company manager;
• their net income must not exceed a certain maximum amount;
• they must not receive any remuneration that the employee or company manager declares as professional expenses.

The reduction is applied to the withholding tax established in accordance with scales I (single or spouse with professional income) and II (spouse without professional income). 

Rules in 2021

For income year 2021, the following withholding tax reductions apply to ascendants or second-degree collateral kin:

Rules effective from 2022

As from 1 January 2022, the monthly reduction of withholding tax for dependent ascendants or second-degree collateral kin aged at least 65 years will only be applied if these persons are considered to be in need of care. The reduction is also increased.

At the same time, for a limited period and under certain conditions, a monthly reduction of withholding tax for dependent ascendants or second-degree collateral kin aged at least 65 years will remain.

  1. Reduction for ascendants/second-degree collateral kin aged at least 65 years who are in need of care

As from 1 January 2022, a monthly reduction of withholding tax of € 129 will be granted to employees or company managers who have dependent ascendants/second-degree collateral kin aged at least 65 years and who are considered to be in need of care.

Is considered to be 'dependent', any person whose degree of self-reliance was established at at least 9 points in accordance with the Ministerial Decree of 30 July 1987. The need for care is determined by the Directorate-General for Persons with Disabilities of the FPS Social Security, Medex or the advisory physician of the health insurance fund or an equivalent institution or person from another Member State of the European Economic Area.

  2. Temporary reduction for ascendants/second-degree collateral kin aged at least 65 years

As from 1 January 2022, a monthly reduction of € 84 will be granted to employees or company managers who had dependent ascendants/second-degree collateral kin during income year 2020 who had reached the age of 65 by 1 January 2021. The amount of € 84 will be doubled if the ascendants/second-degree collateral kin are disabled.

For this reduction, it is not required that the ascendants/second-degree collateral kin are considered to be in need of care. This reduction is also limited in time, namely up to and including income year 2024.

For the sake of completeness, for ascendants/second-degree collateral kin to be dependent in income year 2020, the following conditions must be met:

• the ascendants/second-degree collateral kin belonged to the household of the employee or company manager as of 1 January 2021;
• they received no more than € 3,380 net income in 2020;
• they received, in 2020, no remuneration which the employee or company manager declared as professional expenses.

  3. No combination of the above reductions

The reduction for ascendants/second-degree collateral kin aged at least 65 years and in need of care (€ 129) and the temporary reduction for ascendants/second-degree collateral kin aged at least 65 years (€ 84 (x 2 if disabled)) cannot be combined for the same ascendant/second-degree collateral kin. The most advantageous reduction will be applied.

Example:

As of 1 January 2022, an employee will have his father as a dependent member of his household. The father reached the age of 65 on 20 May 2019, was dependent on the employee in income year 2020 and is considered to be in need of care.

In principle, the employee is entitled to two reductions in 2022: € 129 and € 84. Since the two reductions cannot be combined, the most advantageous will be applied, namely € 129.

   4. Reduction for other ascendants/second-degree collateral kin

As from 1 January 2022, a monthly reduction of withholding tax of € 39 will apply to dependent ascendants/second-degree collateral kin who are not eligible for one of the two aforementioned reductions. The age of the ascendants/second-degree collateral kin (older or younger than 65 years) is not relevant here. This amount is doubled if the ascendants/second-degree collateral kin in question are disabled.

   5. Diagram - Reduction of withholding tax for dependent ascendants/second-degree collateral kin as from 1 January 2022

(1)These two reductions cannot be combined for the same dependent ascendant/second-degree collateral kin. The most advantageous reduction will be applied.

Client with Partena Professional?

Do your employees or company managers have dependent ascendants/second-degree collateral kin who have reached the age of 65? If so, we will ask you to update the details of these persons by email, letter or by updating the client tool that you use. This will allow us to apply the correct reduction of withholding tax as from 1 January 2022.