Extension of the increased number of tax-friendly overtime hours

The temporary increase in the limit of 130 to 180 tax-friendly overtime hours expired on 30 June 2023. It has been decided to extend this measure for all sectors up to and including 30 June 2025.

Tax benefits for overtime work

The favourable tax regime for overtime hours entitling to legal overtime pay is as follows:

• Under certain conditions, the employer benefits from an exemption from advance payment of withholding tax. He therefore does not have to pay part of the withholding tax to the tax authorities;
• The employee is entitled to a tax reduction, which results into a reduction in withholding tax when calculating the withholding tax on remuneration. As a consequence, the employee receives a higher net wage.

The exemption from payment of withholding tax and the tax reduction is equal to a certain percentage of the calculation basis of the overtime pay:

Extension of the temporary increase in the overtime hours limit

Tax benefits for working overtime are only granted for the first 130 hours the employee has worked as overtime during the taxable period.

This limit has been temporarily increased to 180 hours:

• from 1 January 2019 up to and including 31 December 2020;
• from 1 July 2021 up to and including 30 June 2023.

As part of the interprofessional negotiations for the period 2023-2024, the temporary increase in the 180-hour limit has been extended from 1 July 2023 up to and including 30 June 2025.

Maintaining specific overtime limits

The specific overtime limits applicable in certain sectors are maintained:

• 360 hours for the hospitality sector and the temporary agency sector if the user belongs to the hospitality sector;
• 180 hours for the sector of construction works, on condition that the employee is employed by an employer who uses an electronic attendance recording system on the  construction site.

Source: Draft law implementing the agreement framework in the context of interprofessional negotiations for the period 2023-2024, Parl. doc. Chamber 2022-23, no. 3446.