Wage cost reduction for shift labour in the construction sector


The Act of 26 March 2018 has introduced a specific regime for wage withholding tax exemption for shift labour in the construction sector. The legislation as existing in article 275/5 BITC regarding shift labour has thus been amended with an additional definition for shift labour in the construction sector. The Belgian tax administration issued on 11 June 2018 a Circular Letter providing further guidance on the application of this wage cost reduction for the construction sector.

The wage cost reduction

As from 1 January 2018, companies with activities in the construction sector can apply a wage cost reduction of 3% (6% as from 2019 and even 18% as from 2020) of the taxable salary of their employees performing shift labour. The incentive is more specifically a partial exemption of remittance of withholding taxes, which results in a wage cost reduction for the employer. The incentive can be applied through the payroll, and retroactive application as from 1 January 2018 is still possible.

The Circular Letter

The Circular Letter (i.e. official practice note) primarily provides more clarification on the concepts of ‘construction work’ and ‘shift work’.

Construction work

In this context, for the term ‘construction work’, reference is made to VAT legislation, and the extent of the activities in scope is broad. In addition to “regular” construction activities such as building and renovating immovable property, related activities are within scope. The term also covers for example activities such as the installation of central heating, alarm systems, sanitary equipment, sinks and cupboards, window shutters and (exterior) window blinds, and carpeting.

Shift labour

Most noticeable as regards this wage cost reduction and, as stated by the Circular Letter, is the definition of ‘shift work’ that is less restrictive for construction work than for other activities. For example, the condition that the “shifts” may not overlap and have to directly succeed each other does not apply for construction work. In addition, the work of one team can already be seen as shift work if the team consists of minimum two employees.

The Circular Letter also provides further guidance on the calculation basis for the exemption, which is more restrictive than in the Act.


As from 2018 – and increasingly in the coming years – this measure will result in a substantial cash benefit for companies performing construction work (broadly defined). It is therefore of the utmost importance to ascertain whether or not and, if so, to what extent the incentive is applicable to your company.

Furthermore, we expect that tax audits on the shift labour incentives will occur shortly. The impact on the government budget is significant and the long-awaited publication of clarifications on the general shift labour incentive is upcoming.

Therefore, it will be important to have sufficient documentation to support the application of the incentive.

With our expertise on this matter, PwC can provide support for the application of this incentive (e.g. by obtaining legal certainty through a ruling to be applied for) and assist with any kind of questions related to this specific regime for construction companies and the shift labour incentives in general.