The amount of wage withholding taxes to be withheld by the employer is based on the withholding income tax scales published in a Royal Decree. The Belgian Income Tax Code provides for several exemptions (overtime, R&D, night and shift work, etc.) with respect to the remittance of Belgian withholding taxes.
During 2014, the Belgian tax authorities audited 2,000 companies for the correct application of these exemptions. Although we noticed that these audits mainly focused on the partial exemption from remittance of Belgian withholding taxes in the context of R&D and night or shift work, the other exemptions were also audited.
From our contacts with the Belgian tax authorities, we understand that similar tax audits are about to be announced for 2015 (in relation to income year 2013). In the coming weeks and months, a standard request for information – similar to the one that was used in 2014 – will be sent out by the Belgian tax authorities to a large number of companies.
The partial exemption from remittance of Belgian withholding taxes may have produced a substantial saving for a company. However, if an exemption is (partially) refused as a result of a tax audit, this may cause a company to incur significant additional costs.
During last year’s tax audits, we noticed that an issue was raised with regard to certain legal conditions to be met to qualify for the exemption. Based on our experience with the 2014 audits, we consider it is of the utmost importance to determine a defence strategy upfront. Should it not be possible to agree with the tax authorities on the exemption applied, further legal steps can be taken during the administrative phase or before the court.
It is important not only to build a defence file for the tax audit for 2013 but also to see to it that the measure is applied correctly in the future (some legislative changes have been implemented recently) and to ensure that the company fully benefits from the advantages that are available.
If you have received a request for information from the authorities and you would like assistance on the matter, or would have further questions in this respect, please do not hesitate to contact Philip Maertens (+32 3 259 31 77), Peter Vansteenkiste (+32 9 268 83 44), Myriam Boudinar (+32 2 710 44 18) or Kim Meerschman (+32 9 268 83 01).