Withholding tax incentives: time to take action – deadline extended to 1 October 2021


Various tax incentives (e.g. for overtime, R&D, night and shift work, etc.) take the form of an exemption of transferring wage withholding taxes. These tax incentives are thus to be processed through payroll. 

Extension of deadline for 2020 wage withholding tax returns

Although the wage withholding tax returns for 2020 are already submitted during the year, corrections and adjustments can still be made to these returns in the year following the income year. The principal deadline for those corrections is the 31st of August of the year following the income year (i.e. 31 August 2021 for 2020 corrections). 

Recently, Finprof communicated that the deadline for filing 2020 wage withholding tax returns is extended from the 31st August 2021 to the 1st October 2021. 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 2020 can still be corrected until the 1st of October 2021. 

Prepare yourself (when it is still possible)

Just like last year (see our earlier newsflash), the Belgian tax authorities have been launching extensive and numerous tax audits with respect to the application of the wage withholding tax exemptions. More tax audits can again be expected next year with regard to the application of the exemption for income year 2020.

With those tax audits, the burden of proof is on the taxpayer claiming the incentive. From the recent tax audits it has become clear that (also based on very strict case law) this burden of proof is not easily fulfilled. And this can give rise to discussions with the tax authorities on substantial amounts whereby the time to reply is limited.

Based on our experience in previous tax audits related to this exemption, PwC has developed an approach to help your company adhere to this burden of proof and to mind the formalism. 

Due to the extension of the deadline of the withholding tax return, corrections are still possible until October 1, 2021. It is recommended to review the application of the exemption over income year 2020 while it is still possible.

A team with extensive experience in this matter is there to assist you from strategy through execution. 

For more information on this topic, please don’t hesitate to contact Thomas Goemaere.