Exemption of withholding tax for night and shift work, a new measure for variable shifts


On 22 March 2024 (published on 27 March 2024), the Federal government introduced amendments to a draft bill which outline a new transitional measure regarding the withholding tax exemption for night and shift work. 

This transitional measure, referred to as “variant bis” is in response to the uncertainty that arose after the Constitutional Court opened the door for a very restrictive interpretation of the condition of equally scoped shifts in its ruling of 8 February 2024 (see our previous alert).

As a consequence, it became uncertain for the more than  20.000 employers that are currently applying this measure, whether even the slightest variation in the size of a shift, f.e. due to illness or absences, would already lead to the full disqualification of the exemption.

To resolve this uncertainty, the new bill introduces a variant “bis” of the initial exemption, which replaces the condition of equally scoped shifts with a proportional correction factor based on the deviation in the shift sizes.

In light of the upcoming elections, the measure will apply until the end of 2026, pending a more substantial reform of the withholding exemption regime by the new elected government. 

Importantly, the new measure will apply retroactively to the income year 2021 and following.

For clients that want to have a first idea on whether this new measure has an impact for them, PwC has set up a free quick self-scan assessment that allows clients to understand impact and urgency.


The partial tax exemption for night and shift work was called to life in 2003 to compensate for the gap in workforce costs in the industrial sector in comparison with the surrounding countries. The purpose of the incentive was to avoid relocation of industrial players and enhance the competitiveness of our country for the industrial sector. Since then, the measure has seen both an increase in the percentage of the exemption, which has evolved from 1% in 2003 to the current 22,8% (25% for continuous shifts), as well as an increase in the number of companies applying it.

In recent reports, the Court of Audit calculated that the cost of the measure increased from 101 million euro in 2005 to a little under 2 billion euro in 2021. 

In line with the growing budgetary impact, we have witnessed a similar increase in number of tax inspections on this matter, leading to a progressively more restrictive interpretation of the conditions of this exemption.

In particular, one of these conditions requiring that the shifts must perform similar work both in terms of content and scope has been in the spotlight of many of these audits over the past years. The final interpretation on which the authorities landed (until now) is that the qualifying shifts should consist of the same amount of people, with an acceptable deviation of maximum 10% (in some cases up to 15%).

In the event of non-compliance with this interpretation, the exemption was mostly disallowed in full by the tax authorities. This was particularly common in organisations that, due to the nature and the daily flow of the work, were depending on varying shifts to adjust to peak loads throughout the day, such as in call centers, food processing factories, warehouses, etc. In its recent decision, the Constitutional Court concurred with the view of the authorities, opening the door to an even stricter application.

To counter the fall-out of this decision, the Federal government has intervened with a transitional measure, referred to as the “bis” variant. The aim of this measure is to provide more legal certainty to companies currently benefiting from the exemption, but also to mitigate the all-or-nothing effect of the measure in its current form. As a consequence, the transitional regime not only reassures the employers using equally scoped shifts, but re(opens) the opportunity for employers where the scope of work is asymmetrically distributed between consecutive shifts.

The “bis” variant

The transitional regime offers companies the choice between two possible options for the withholding tax exemption: the initial measure for equally scoped shift where the exemption remains applicable in full; or; the “bis” variant,  where the equally scoped shift condition is replaced by a proportional correction factor.

The new calculation of the exemption will thus be performed in 4 steps: 

  1. Calculation of the basic monthly exemption according to the initial rules (i.e. 22,8% on the gross remuneration, assuming all other conditions are met);
  2. Determination of the deviation factor per workday, by comparing the scope of each shift vs. the total scope performed by all the shifts involved;
  3. Calculation of the average deviation factor for the concerned month
  4. Reducing the initial amount calculated in step 1 pro rata with the average deviation factor in step 3.

Example : 

Let’s take the example of a company working in a 3 shift system with the following variations for one month :

  • 3 shifts with shift A 60 people, shift B 50 and shift C 40 people for the first 10 work days; 
  • 3 shifts with shift A 50 people, shift B 55 and shift C 45 people for the following 11 workdays.

Step 1 : for sake of this example, we will assume the basic calculation results in 55.000 € exemption 

Step 2: Daily deviation : 

  • First 10 workdays : [(60-40)+(50-40)]/(60+50+40) = 30 deviation on 150
  • Next 11 workdays : [(50-45)+(55-45)]/(50+55+45) = 15 deviation on 150

Step 3: Monthly average deviation: (30+…+30+15+…+15)/(150+150+…+150) = 465/3.150 = 14,76%  

Step 4: Final exemption amount : 55.000€ x (100%-14,76%)  = 46.881 €

For completeness sake, it should be noted that all the other conditions for the application of the exemption for shift work remain applicable both to the initial as well as to the “bis” variant.

The transitional measure applies to remuneration paid or granted as of income year 2021 up to 31 December, 2026. 


To start with a positive observation, it is fair to say that the legal certainty the new measure brings is welcomed by many organisations and employers in Belgium. Also, the speed with which the Federal government has intervened in reaction to the Constitutional Court decision is quite exceptional.

Moreover, the justification note added to the draft bill provides long awaited additional guidance on the interpretation of the initial regime. In this note, the Minister of Finance has clearly indicated that it is not the intention of the legislator to apply the initial regime in its most strict sense. When a company has the intention to organise the work in equally scoped shifts, limited variations that occur due to circumstances such as illness, technical failures, etc, should not give rise to the disqualification of the exemption. An example is provided where there is a deviation of 5% which is disregarded. 

The shift of focus to the intention of the employer, rather than the mathematical comparison is certainly a positive clarification. Yet one can regret that the author of the justification note used an example with a deviation of 5%, while current audit practice is commonly 10%. The question thus remains what the flexibility will be on the deviation when in spite of the intention of the employer, the tax inspector observes a mathematical deviation beyond this 5 or 10%, even if the deviation is justified by practical circumstances.

Furthermore, although the “bis” variant moderates the “all-or-nothing” effect of the initial measure, it does so by descending to the granular level of a workday. The fact that employers will have to determine on a daily basis the deviation factor will likely give rise to a substantial additional workload, with potentially more frequent corrections on the payroll processing and negative withholding tax return. Especially in the context of the temporary work agencies that can equally benefit from this regime when deploying personnel to a company with qualifying shifts, one can imagine the complexity of the process to figure out the exemptions to apply. 

Finally, it remains uncertain how the retroactive character will be applied by the tax authorities in practice. Although the measure will certainly ease some of the discussions in on-going audits, the question remains whether companies that have already been rectified following a previous audit may also reopen their case.


While the overall evaluation of the new measure is positive, increases legal certainty and opens new opportunities, companies should remain vigilant on the adverse effects that may result from the new regime, such as the higher administrative burden and an unintended reduction on equally scoped shifts due to circumstances.

We strongly recommend our clients to proceed with care when opting for the “bis” variant, preceded by a thorough analysis of both context and data to ensure the best route is selected and a sustainable system is put in place.

For more insights on partial withholding tax exemptions, fiscal audits and further assistance with the application thereof, please reach out to your regular PwC contact, Pieter Nobels (pieter.nobels@pwc.com) or Pierre Demoulin (pierre.demoulin@pwc.com). 

For clients that want to have a first idea on whether this new measure has an impact for them, PwC has set up a free quick self-scan assessment that allows clients to understand impact and urgency.