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Amended legislation on target group reduction for first-time recruitments of staff

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As we touched on very briefly in a previous news article, the federal government announced late last year that it would introduce new rules that should curb improper use of the target reduction for an employee's first hire.

These new rules have been in force since 1 January 2022. The new regulations on target group reduction drastically change the system of the so-called 'NSSO discount' that you can enjoy as an employer on the first six employees you hire, and in any case make the hiring of (new) staff more expensive.

Specifically, the following will change starting in 2022:

  • The exemption for a first hire is capped at 4,000.00 EUR per quarter.
  • In a group of companies (technical business unit), the activation of new target group reductions is greatly restricted.

Below, we discuss these changes in a little more detail.


Restriction on the NSSO exemption for first-time hires

Whereas previously one could enjoy an unlimited patronal NSSO exemption on a first hire, from the first quarter of 2022 this 'NSSO discount' will be capped at a maximum of EUR 4,000 per quarter.

Specifically, this means that once an employee earns more than approximately EUR 5,333 gross per month (on which, on average, 25% employer contributions are due), the employer will no longer receive an NSSO rebate on the portion of the salary that exceeds this amount.

The limitation for the first recruitment remains valid indefinitely, as was previously the case. For the second to sixth recruitment, nothing changes: for these employees, the exemption is still limited to 13 quarters.


Discontinuing application of NSSO rebate in technical business units (TBE)

Until recently, employers who employed personnel in several affiliated companies (in technical jargon referred to as 'a technical business unit') could apply the target group reduction in each of these companies. This improper (or creative - if you will) use of the target group reduction is now excluded.

In so-called "simultaneous" technical business units, i.e. groups of companies that are currently linked to each other (e.g. parent-subsidiary companies that are pursuing a common course), from now on it will only be possible to activate target group reductions at the level of the group. In concrete terms this means that a target group reduction can only be applied to the first six recruitments in the entire group, and no longer to the first six recruitments within each company in the group.

  • For example: company X and company Y are part of the same group and therefore together form a simultaneous TBE. If company X has hired one employee, and benefits from a target group reduction for this first recruitment, company Y will not be able to benefit from this target group reduction again if it decides to hire a new employee. Company Y will, however, be able to enjoy a target group reduction for the recruitment of a second employee.

In so-called 'historical' technical business units, i.e. companies that succeed each other (for example, a one-man business that employs personnel, but then transforms into a private limited company (BV) and brings the personnel into this private limited company (BV)), a target group reduction can, however, be activated in each of the legal entity employers under certain specific conditions.


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