Withholding tax exemption for shift work – Update

Christiaan Moeskops 2 October 2019


Incorrect application of the withholding tax exemption for shift work can result in very substantial claims from the tax authorities. In a recent newspaper it was for example pointed out that VAB is risking to pay millions of euros to the Belgian tax authorities in case it would lose its case before court.

Shiftwork is defined by law for years already. The seemingly simple definition of shiftwork has, however, already led to multiple uncertainties in the application of the exemption and in discussions between companies and the tax authorities. This concerns, for example, the impact of a day regime in combination with a one-shift system, the precise scope of the concepts of the same work (content and scope), the impact of performing overtime and so on.

This exemption was introduced in 2003 as compensation for the extra costs that shift work entails. In short, the measure means that employers who employ employees in a shift system and grant a shift premium for that purpose, do not have to transfer part of the withholding tax withheld on wages of these employees to the treasury. Under the current scheme, the benefit amounts to 22,8 % of the taxable remuneration excluding the holiday pay, year-end premium and overdue payments of the employees concerned. If the employees are active in a fully continuous shiftsystem, the exemption is increased to 25%.

PwC has a team available specialized in the application of this measure with extensive experience in tax audits, analysis of the legal conditions, application of the incentive, etc. Having a look at the incentive will result in more certainty about the application and in a lot of cases in identifying further opportunities.

Questions about this exemption? Do not hesitate to contact Thomas Goemaere.