Tax reduction for construction works finally gets green light

Do you employ employees who perform construction works on construction sites? If so, you could possibly be exempted from the advance payment of a part of the withholding tax for these employees, and thus make considerable savings on your wage costs. However, the employees must work in shifts. The start date of the measure was 1 January 2018 but due to various adjustments, it can only now be applied.

For which enterprises?

The tax reduction applies to enterprises with employees:

• carrying out construction works and
• working in shifts according to the following definition, and
• carrying out shift work on construction sites at least 1/3 of their time (1/3 standard).

Enterprises where shift work is carried out

Enterprises where shift work is carried out are enterprises where:

• the work is carried out in one or more shifts;
• the shifts consist of at least two persons, without taking into account students and apprentices in alternance training;
• the shifts perform the same or complementary work as regards the content as well as the volume;
• the shifts carry out their work on site, i.e. on a construction site;
• the shifts perform construction works as explained below;
• all employees of a shift mentioned above (except students and apprentices in alternance training) receive a gross hourly wage of € 13.99 in 2019. In 2018, the minimum gross hourly wage was € 13.75.

Enterprises that are recognised for temporary agency work and that post temporary agency workers to the enterprises above are, for this measure, assimilated to 'enterprises where shift work is carried out'.

What are construction works?

The eligible works are the works meant in article 20, §2 of the Royal Decree no. 1 of 29 December 1992 on the regime for the payment of value-added tax.

Essentially, it covers all works relating to building, renovating, finishing, fitting-out, repairing, maintaining, cleaning and dismantling, in whole or in part, of immovable property, and the act of supplying movable property and installing it in such a way on an immovable property so that its nature becomes immovable. 

The following activities are concerned as well:

1. any delivery or attachment to a building of:

• the components or part of the components of a central heating or air conditioning system, including the burners, tanks and regulating and control devices associated with the boilers or radiators;
• the components or part of a sanitary installation of a building and, more generally, of all fixed appliances for sanitary or hygienic use connected to a water main or a drain;
• the components or part of the components of an electrical installation of a building, with the exception of appliances for lighting and lamps;
• the components or part of the components of an electrical bell system, of fire alarms, of anti-theft alarms and of a home telephone;
• storage cabinets, sinks, sink units and furniture with built-in sinks, washbasins and furniture with built-in washbasins, extraction hoods, fans and air extractors with which a kitchen or bathroom is equipped;
• shutters, roller shutters and roller blinds installed on the outside of the building;​​​​​​​

    2. any delivery of flooring and its installation in a building, regardless of whether this flooring                   or covering is attached to the building or is simply cut to size on site in accordance with the                   dimensions of the area to be covered;

    3. any work consisting of attaching, fitting, repairing, maintaining and cleaning goods referred to in         1. or 2. above.

The provision of staff to carry out construction works or acts such as those described above is also envisaged.

What does the 1/3 standard mean?

The measure only applies to employees who, in accordance with the working regime to which they are subject, carry out shift work at least 1/3 of their time on site, i.e. on a construction site, and this during the month for which the benefit is requested.

What is the financial benefit?

The financial benefit resulting from the exemption from the advance payment of a part of the withholding tax amounts to:

• 3 % as from 01/01/2018;
• 6 % as from 01/01/2019;
• 18 % as from 01/01/2020.

These percentages are calculated on the basis of the sum of all taxable remunerations of all the employees concerned.

Entry into force

The measure was published in the Belgian Official Gazette on 30 March 2018 and entered into force on 1 January 2018.

Because the law contained interpretative ambiguities, it was not applicable. The necessary legal amendments were published in the Belgian Official Gazette on 6 May 2019.

Our Legal Partners can advise you.

In order to benefit from the tax reduction, a number of strict conditions must be met. For a concrete analysis of your situation, please contact our Legal Partners by email (legalpartners@partena.be) or by phone (02/549.30.20).

Are you eligible for the exemption?

Employers from the following sectors will soon be contacted about the practical formalities for applying the exemption: metal construction (JC 111.01 , JC 111.02 , JC 111.03), cleaning (JC 121), construction (JC 124), woodworking and upholstery (JC 126), horticulture (in particular JC 145.02 and JC 145.04), electricians (JC 149.01) and temporary agency work (JC 322).

Sources: Law of 26 March 2018 concerning the strengthening of economic growth and social cohesion, Belgian Official Gazette Of 30 March 2018; Law of 28 April 2019 containing various tax provisions and amending Article 1, § 1ter of the Law of 5 April 1955, Belgian Official Gazette of 6 May 2019.