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Withholding tax exemptions: tax authorities take a closer look

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Last year, the Administration already imposed some stricter conditions of application for the exemption from withholding tax for shift and night work. But this change in the law created some ambiguity, which is why the Constitutional Court must now provide further clarification. In addition, the Administration is setting its sights on the tax favor system for researchers. Some changes are imposing themselves there as of August 1.


BV exemption from shift work

Companies in which shift work is performed may, under certain conditions, benefit from an exemption from the payment of withholding tax. As a result, only 80% of the withholding tax withheld must be remitted to the Belgian State. To qualify, the company must meet the following conditions:

  • Work is performed in at least 2 shifts of at least 2 workers;
  • The shifts do the same work both in content and scope;
  • The teams follow each other without interruption;
  • Each employee must have at least 1/3the of his working hours performing shift work;
  • Each employee who performs shift work must receive a shift premium;
  • There is no overlap of more than 1/4e of their day's work between successive shifts.

During tax audits, the condition is often discussed: same work in content and in scope. The law does not define what "same" means. Does it then mean that the work performed by shifts must be identical to each other? Or is it sufficient that the works may be similar to each other? This question was also put to the Constitutional Court. It is now up to the latter. And it then remains to be seen how the Administration will incorporate this ruling (for or against) into tax law.


BV research and development exemption

As of Aug. 1, the Administration is tightening the timing condition for qualifying for the exemption from withholding tax on income from work for research and development. With this exemption, companies only have to remit 20% of the withholding tax to the Belgian State.

To benefit from this exemption, the research or development project or program must be notified to BELSPO. The latter then judges whether the work can qualify as R&D. Here, the administrative position until now was that the exemption was applied from the moment the notification was made, regardless of whether the application related to projects that had already started.

As of August 1, the rules will become stricter. Thus, the exemption will only be granted if the exemption was applied for before the start date of the project. The application must therefore precede the start date of the research project. For ongoing R&D projects, which were already notified before August 1, nothing will change provided they have gone through a complete and correct notification procedure in the past.

We could already notice it in recent years, the tax authorities are increasingly checking whether BV exemptions are correctly applied. If you apply an exemption or think you qualify, be sure to check if you meet all application requirements. A cautioned entrepreneur is worth two!


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