Wage withholding tax incentives: COVID-19 measures and extension of 2019 deadline


Various tax support measures were developed to support entrepreneurs and employees during the COVID-19 crisis. This news flash provides an overview of the most recent measures with an impact on the wage withholding taxes, combined with more news on the extension of the deadline for 2019 wage withholding tax corrections.

Royal decree published regarding temporary exemption wage withholding taxes due to the COVID-19 pandemic

As mentioned in our newsflash of 10 August 2020, the law of July 15, 2020 (Corona III) introduced a new withholding tax exemption to support businesses affected by the COVID-19 pandemic. Employers – who have made use of the temporally unemployment for at least one employee during a 30 day period from 12 March up to 31 May 2020 – can benefit from a partial exemption of transferring the wage taxes under certain conditions and this for the months of June, July and August 2020.

22 August 2020, the Belgian tax authorities now issued a Royal Decree concerning this incentive to specify the modalities for applying this exemption, meaning the incentive can now effectively be applied. In order to apply the exemption correctly, the employer must submit two separate returns in the withholding tax. The first return  relates to the salaries paid to all employees. The second, negative, return under the “71 COVID-19” code only relates to the salaries of employees for which part of the withholding tax must not be transferred. In addition, the employer must keep a nominative list at the disposal of the administration with a detailed list of information.

Circular 2020 / C / 110 on the tax exemption for voluntary overtime in critical sectors in the context of the COVID-19 pandemic

Since the COVID-19 pandemic resulted in an increased need for overtime in certain sectors, the tax legislation now favourably treats this overtime. In critical sectors – such as health care, police services, elderly care, telecom infrastructure, etc. – up to 120 hours of overtime performed between April 1st  and June 30th 2020 are exempted from personal income tax.

Extension of deadline for 2019 wage withholding tax returns

Recently, it was communicated by Finprof that the deadline for filing 2019 wage withholding tax returns was extended from 31st August 2020 to 30th  September 2020. This means that for example the application of the wage withholding tax incentive for research and development, for night – and shift labour, etc. related to 2019 can still be corrected until the end of this month.

For both measures related to COVID-19, the deadline for 2020 corrections / applications is in principle 31st of August 2021 but as for 2019 extensions are likely.

Questions about these new measures? Do not hesitate to contact Christiaan Moeskops.