Tax shift: how to lighten the tax burden on labour?

Author: Author: Anne Ghysels

At the end of July, the Government ended its discussions on the 2015 budget and set out the broad lines of the 2016 budget. It also announced its tax policy (or tax shift, i.e. the reform intended to lighten the tax burden on labour).

Measures relating to employers' social security contributions

One of the major measures announced was the reduction of employers' social security contributions. The nominal rate of employers' social security contributions would be reduced from 33 to 25%. The aim of this measure is to promote job creation and to improve the competitiveness of Belgian companies. Measures will be taken to promote hiring and investment in SMEs, and € 430 million will be set aside for the purpose.

Specific measures will also be taken for high-tech companies.

Shift work and continuous operation will receive increased support.

Tax measures for workers

It was announced that various changes would be taking place, among which a reform of the tax brackets used to calculate income tax (cutting the 30% bracket), a change to the working tax bonus and an increase of the tax exempt proportion. The net wages of workers with low or middle income would be increased by € 100 / month as a result.


Given that these social and tax measures could have an impact on the funding of federal entities, the Government will enter into a "dialogue" with these entities. However, these measures should apply from next year.

Other measures

Other measures were also announced at the end of July. Given that these measures have little to no impact on the management of your staff, we will simply list them below:

  • Increase of the VAT on electricity from 6 to 21% from September 2015;
  • Increase of the excise duties on tobacco, alcohol, diesel (except for professionals and accompanied by a decrease in favour of petrol), and sugary drinks;
  • Upward revision of the Cayman tax on legal constructions abroad;
  • Increase of the withholding tax from 25 to 27% ;
  • Harmonisation of the withholding tax on copyright royalties.

In the end

The announcement made by the Government in late July constitutes the framework for this tax and budgetary policy. These various intentions must now be materialized through legal texts.

In addition, other decisions remain to be taken as there are currently uncertainties regarding other issues. For instance: does the increase of the VAT on electricity fall under the scope of the index? What is considered a low or middle income as regards the € 100 net wage increase?, …


Author: Anne Ghysels