Exemption from advance payment of withholding tax for shift work: clarity on customer-user agreement

Author Arian Roelens  (Legal Expert)
Read time 5min
Last updated 08/10/2024 - 09:28

Since 1 October 2022, temporary employment agencies may only apply the exemptions for shift or night work, continuous work, system navigation and shift work in construction works to the wages of temporary agency workers if the customer-user has explicitly agreed to this. A recently published Royal Decree specifies the conditions that the agreement between the temporary employment agency and the customer-user must meet. This applies to remuneration granted or paid as from 1 January 2025.

Conclusion of an agreement

A properly developed contractual framework between the temporary employment agency and the customer-user is a guarantee for the temporary employment agency that all conditions of application of the exemption have indeed been met, including those over which the temporary employment agency has no direct control. 

As a result, the temporary employment agency and the customer-user must conclude a written agreement or include provisions in their commercial agreement which set out the procedural framework on how the exemption from advance payment of withholding tax is applied and how proof is provided that all conditions for applying this exemption have been met.

Minimum provisions of the agreement

Customer-user declaration

Both parties must agree that the temporary employment agency can only apply the partial exemption from advance payment of withholding tax to work for which the user, after the work has been performed, has unambiguously declared that the temporary agency worker actually performed this work in one of the following systems:

  • A shift work system (bis); or 
  • A continuous shift work system (bis); or
  • A night work system; or
  • A system navigation regime; or
  • Shift work in construction works on site. 

The customer-user must also confirm that they can provide proof that the conditions of application for the exemption have been met.

The agreement must specify how the temporary employment agency can demonstrate in writing and unambiguously to the tax authorities the existence and timing of the declaration drawn up by the customer-user.

Legislation does not stipulate how to provide proof that the customer-user considers the conditions for the respective exemption from advance payment of withholding tax have been met. 

For instance, the parties may agree that work performed that meets the shift work conditions, will be identified separately on the (undisputed) invoice. Work performed can be listed on a timesheet sent by the customer-user.

The customer-user declaration may also implicitly follow from the process included in the agreement. In that case, however, the period in which and the way in which the customer-user can contest this implicit declaration must be clearly indicated, as well as the fact that implicit acceptance means the customer-user must be able to prove that the conditions for applying the exemption have been met.

The process must always result in a written document showing the date on which the customer-user declared, after the work was performed, that the conditions of application have been met. This date is important as this declaration must first exist before it can serve as a basis for the exemption request.

Special provision for the partial exemption for shift work bis or continuous work bis

If the temporary agency worker was employed in a shift work bis or a continuous work bis system, the temporary employment agency can only apply the partial exemption from advance payment of withholding tax for shift work bis or continuous work bis if the declaration contains the percentage of deviation on the scope of work applicable to the company employing the temporary agency worker for the month in which the temporary agency worker performed the work.

Cooperation obligation

In the written agreement, the customer-user guarantees the temporary employment agency their cooperation in providing proof, particularly if the tax authorities request proof from the temporary employment agency that the temporary agency worker was actually employed as indicated by the customer-user.

Liability clause 

Finally, the agreement establishes the liability of the customer-user towards the temporary employment agency for any damage suffered by the temporary employment agency if the former company has declared that the temporary agency worker was employed in one of the shift work systems, but fails to provide proof.

Sanction 

If the tax authorities find that the procedural framework provisions included in the agreement are not actually applied, the agreement will be considered non-existent.

Impact for the temporary employment agency/customer-user? 

Both the temporary employment agency and the customer-user must prepare for the changes introduced by the Royal Decree regarding the agreement. These changes will apply to the remuneration of temporary agency workers granted or paid as from 1 January 2025.

Temporary employment agencies wishing to apply one of the above partial exemptions from advance payment of withholding tax must conclude a written agreement with the customer-user for this purpose. This agreement must meet the minimum legal requirements. The customer-user is obliged to verify and document that all conditions for the exemption have been met.

Both parties must jointly develop a clear and appropriate procedure to ensure this process runs correctly.

Source: 

  • Royal Decree of 16 September 2024 establishing the way in which companies accredited for temporary agency work must demonstrate the agreement for the application of the exemption from advance payment of withholding tax as referred to in Article 2755 of the Income Tax Code 1992 and correcting Article 952 of the RD/Income Tax Code 92, Belgian Official Gazette of 23 September 2024.

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