If you, as an entrepreneur, have work carried out in immovable property (construction activities, electricity works, cleaning, etc.) or if you call on a (sub)contractor who is active in the meat or security sector, you must check with every invoice you receive whether your contracting party has any tax and/or social security debts. If you fail to do so, you risk being held jointly and severally liable for the tax and/or social debts of your contracting party. We summarize the main rules for you below.
Who must comply with the withholding obligation and to what activity does it apply?
The withholding obligation covers the following activities and sectors:
- Works in immovable property (with the exception of some specific activities in agriculture, horticulture and forestry). Think e.g. of painting or electricity works, renovation works, etc.
- The delivery of ready-mixed concrete;
- Surveillance and/or monitoring services;
- Activities in the meat industry.
However, the withholding obligation does not apply to the principal natural person who has the works carried out exclusively for private purposes. On the other hand, the following do fall within the scope of the withholding obligation: companies, sole proprietorships, liberal professions, etc.
How to comply with withholding obligation?
When concluding an agreement, or when paying any invoice to a (sub)contractor to whom you have outsourced one of the above activities, you must first check www.checkinhoudingsplicht.be Verify that this (sub)contractor has no fiscal and/or social debts.
If the (sub)contractor turns out to have outstanding social and/or welfare debts, you will have to pay part of the invoice directly to the National Social Security Office and/or tax authorities:
- If the company has tax debts, you must pay 15% of the invoice amount directly to the FPS Finance. However, if the invoice amount exceeds 7,143 EUR, you must request a tax debt certificate from the company. If the tax debt turns out to be less than 15% of the invoice amount, you must retain an amount equal to the full tax debt. If the tax debt is greater than 15% of the invoice amount, you may only withhold 15% of the invoice amount.
- If the company has social debts, then in all cases you must forward 35% of the invoice amount directly to the NSSO.
What are the penalties if I fail to comply with the withholding obligation?
If you forget to make the necessary deductions, you can be held jointly and severally liable for the tax and/or social security debts of your contractual partner. In practice, the National Social Security Office or the tax authorities can therefore make you jointly liable for the debts of your contracting partner. However, this is limited to the sum of all invoice amounts for which the correct deductions were not made.
However, for tax debts, there is an additional cap on joint and several liability of 35% of the total price of the works. For social debts, that limit is in principle 100%, but it may be reduced to 65% if joint and several liability for tax debts also applies.
On top of that, you can be fined the amount you should have withheld and passed on.
So if you receive an invoice as an entrepreneur for one of the activities, do not forget to comply with the withholding obligation if you do not want to be saddled with the tax and/or social debts of your contracting party.