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Individual Tax, Social Security and Immigration Alerts
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Update on COVID-19 wage withholding tax incentive and overtime remuneration
7 September 2020
Several important updates have been published regarding measures taken by the government to help employers and their workforce respond to the impact brought by the pandemic and support them in the recovery phase.
Mutual agreements for cross-border workers extended until 31 December 2020
2 September 2020
Belgium’s mutual agreements with the Netherlands (Dutch | French), Luxembourg (Dutch | French), Germany (Dutch | French) and France (Dutch | French), in place to address cross-border worker taxation during pandemic driven restrictions, have recently been extended until 31 December 2020.
Belgium lifts travel ban for Single Permit holders (B34)
20 August 2020
The Immigration Authorities have today informed Deloitte that non-EU single permit holders with a valid annex 46 and their family members are again able to obtain a visa D at the Belgian consular authorities abroad. As such, they are able to travel to Belgium to start their employment.
COVID-19 wage withholding tax incentive and other tax measures published
23 July 2020
The law concerning various tax measures in response to COVID-19 (corona-III) was published in the Belgian Official State Journal on 23 July 2020. It aims to support the post-COVID-19 recovery of companies, individuals and the Belgian economy as a whole.
COVID-19 wage withholding tax incentive and other tax measures in the pipeline
3 July 2020
The Belgian government has recently been very productive, with various tax measures proposed or adopted to support the post-COVID-19 recovery of companies, individuals and the economy as a whole.
What follows is an overview of what is relevant for employers and individual taxpayers. Particular attention is given to two flagship measures, namely the pending COVID-19 wage withholding tax incentive and the consumption vouchers.
PWD 2020 transposed in Belgian legislation: minimal impact but some key changes
29 June 2020
On 28 June 2018, the European Union adopted the European Directive 2018/957 (revised Posted Workers Directive, PWD 2020). As covered in the April Update on PWD 2020, all Member States are required to align their domestic legislation to the revised posting rules by 30 July 2020.
On 28 May 2020, Belgium adopted the Act containing various provisions on the posting of workers. On 18 June 2020, the Act was published in the Belgian Official Journal. This new law transposes the PWD 2020 principles into Belgian domestic legislation and will enter into force from 30 July 2020.
As expected, the Act does not have any substantial impact for employees assigned to Belgium, given that PWD is very broadly implemented in Belgium. Belgian labour law, in its near entirety, is already applicable to posted employees as of the first day of their assignment. Although there is no substantial impact, the Act still implements new principles that need to be taken into account going forward.
More shipping activities exempt from employer contributions in Belgian social security scheme for seafarers
26 June 2020
During the 12 June 2020 Council of Ministers, the Flemish government decided to extend support measures regarding social security contributions for merchant shipping to other shipping categories.
New FAQ on cross-border workers and tax implications of COVID-19 travel restrictions
24 June 2020
In line with the recommendations made by the OECD secretariat, Belgium concluded a series of mutual agreements with neighbouring countries to temporarily derogate from rules laid down in the article 15 of the double taxation agreements concerning the taxation of employees.
These temporary mutual agreements provide a tolerance allowing employers to assimilate days teleworked from the home office to days worked from the (foreign state) location, where the worker would have normally carried out their activity if COVID-19 travel restrictions were not imposed by authorities. The tolerance does not apply automatically but must be requested by workers who would like to benefit from it.
The tax authorities have published a new FAQ (Dutch | French) that provides a series of clarifications on the mutual agreements’ scope of application, and details the practical modalities for worker opt-in to benefit from the tolerance.
Brexit Immigration and Social Security Update
9 June 2020
The UK formally ceased to be a Member State of the European Union at midnight on 31 January 2020. The Withdrawal Agreement foresees a transition period until 31 December 2020, during which the relationship between the EU and the UK will remain largely the same. The UK will continue to follow current trade, immigration and all other EU laws and regulations, including rulings by the Court of Justice of the European Union, until at least the end of 2020. Any extension of the transition period must be agreed upon before 1 July 2020.
What is the latest on the immigration and social security landscapes?
Social security liability on foreign HQ granted Restricted Stock Units: appeal ruling in Esko case reaffirms authorities’ position
8 June 2020
In a recent case from 20 April 2020 (Esko) and regarding Restricted Stock Units (RSUs) attributed by the US HQ to Belgian based employees, the Ghent Labour Court of Appeal specifically addressed the question of whether a benefit should be considered as being at the employer’s charge.
Belgium concludes temporary mutual agreements for cross-border workers during COVID-19
5 June 2020
In line with the OECD’s recommendations, Belgium is concluding mutual agreements with neighboring countries regarding the allocation of taxing rights where employees have been unable to travel to their usual country of employment, and have instead been required to work from home as a consequence of COVID-19.
Belgium has to date concluded agreements with France (19 May 2020), Germany (6 May 2020), Luxembourg (19 May 2020), and the Netherlands (30 April 2020) regarding cross-border workers. In addition, specific agreements for frontier workers have been concluded with France (13 March 2020), and Luxembourg (17 March 2020). For further details, see the Deloitte alerts of 8 May 2020 and 17 March 2020.
Wage tax incentive for shift work unaffected by temporary social distancing adjustments in shift work schedules
26 May 2020
Following the COVID-19 pandemic, the tax authorities published additional guidelines for shift workers, clarifying an administrative tolerance where temporary adjustments to shift work schedules for social distancing purposes do not prohibit the continued benefit of the wage tax exemption for shift work.
Yearly compliance audit for holders of single permits that are valid for more than 1 year
25 May 2020
With the 2019 introduction of the new Belgian immigration legislation, single permits for foreign workers can be issued for a period of up to 3 years, under certain conditions.
As announced in previous communications, the legislation provided Belgium’s three regions with an option to introduce “annual compliance checks” for such cases.
Belgian agreements with the Netherlands and Germany to manage COVID-19 impact on cross-border workers
8 May 2020
The COVID-19 pandemic has forced many cross border commuters to work from home and ensure business continuity. Given that cross border workers are hence working in their country of residence, as opposed to where they would normally operate, the tax position of the employee and/or employer may be affected.
International Social Security under COVID-19 circumstances
23 April 2020
Due to the COVID-19 confinement measures, the envisaged employment situation of many employees has changed, with companies struggling to pay their social security contributions, employees facing questions regarding sickness or unemployment, among other issues. The most important talking points regarding COVID-19 and international social security are highlighted in this update.
New FAQ regarding wage tax incentive for companies conducting real estate works with teams on location
23 April 2020
The wage tax exemption for the construction sector is among the measures available for employers to control and reduce their salary costs. Given the current COVID-19 situation, this measure is all the more important. Companies are adjusting their production capacity to meet changing demand, with some seeing an increase (such as food retailers and logistics services), but many more undergoing a decrease due to lockdown measures and consequent economic slowdown. These adjustments must be taken into account to correctly and optimally apply the wage tax exemption and other incentives enabling the reduction of salary costs. For these reasons, the clarifications provided in the administration's FAQ, and outlined in this text, are worthwhile in the current economic circumstances.
PWD 2020 Belgium Update
15 April 2020
On 28 June 2018, the European Union adopted European Directive 2018/957 (revised Posted Workers Directive, “PWD 2020”) which aims to expand the breadth of core working conditions to be observed by companies with respect to their mobile workforce.
Pursuant to PWD 2020, Member States have until 30 July 2020 to align their domestic legislation with the revised posting rules.
New FAQ on obligations for remuneration attributed by a foreign affiliate
10 April 2020
On 7 April 2020, the tax authorities published a new FAQ on the reporting and withholding obligations for remuneration attributed by a foreign affiliated company.
The FAQ contains a number of useful examples and clarifications.
OECD publishes guidelines on COVID-19’s impact on cross border-workers
7 April 2020
Following Deloitte’s 17 March 2020 update covering the Belgian tax authorities’ position in considering the COVID-19 situation as force majeure in relation to tax treaties with France and Luxembourg for cross-border workers, the OECD has issued an update regarding its own position.
As correctly stated by the OECD Secretariat, “this unprecedented situation is raising many tax issues”, given that travel bans, lockdowns, etc. are preventing employees from performing their professional activities on location in the other country, potentially causing an adverse tax situation.
Adjusted credit percentages for income tax prepayments by taxpayers with liquidity problems
6 April 2020
On 3 April 2020, the Ministry of Finance announced a new measure to support business during the COVID-19 outbreak (Dutch| French). The measure applies to income tax prepayments made by Belgian companies and self-employed individuals.
To help businesses facing liquidity problems, the government decided to increase prepayment credits for the third and fourth quarter to 6.75% and 5.25% respectively. This support measure should make the postponement of income tax prepayments to the second half of the taxable period less disadvantageous.
Indexation of Overseas Social Security contributions as of March 2020
28 February 2020
Under the Belgian voluntary Overseas Social Security Scheme (OSS), contributions have to be paid by the employer (or employee) for individuals affiliated with the scheme, as part of their overseas employment.
In accordance with article 19 of the 17 July 1963 law on overseas social security, OSS contributions are adapted to the consumer price index. Since the pivotal index has been reached in February 2020, OSS contributions will increase by 2% from 1 March 2020.
Unexpected message in the recently published ‘message to the debtor’
20 February 2020
Each year, the Belgian tax authorities publish the so-called ‘message to the debtor’ by mid-December of the income year, in order to instruct on the completion of salary forms (i.e. 281.10 (Dutch | French) and 281.20 (Dutch | French)).
Brexit readiness for immigration and social security purposes
20 February 2020
As you know, the UK ceased to be a Member State of the European Union at midnight on 31 January 2020. The Withdrawal Agreement foresees a transition period until 31 December 2020, during which the relationship between the EU and the UK will remain largely the same. The UK will continue to follow current trade, immigration and all other EU laws and regulations, including rulings by the European Court of Justice, until at least the end of 2020. This period can be extended by mutual agreement between the EU and the UK before July 2020, but the UK has declared that they will not seek such an extension.
Update on Belgian tax treatment of Dutch self-administered pensions
19 November 2019
The Belgian tax authorities have provided an update on the Belgian tax treatment of Dutch grandfathering rules applicable to self-administered pensions (“pensioenen in eigen beheer”), in the hands of director-major shareholders (“directeur-grootaandeelhouder” or “dga”) qualifying as resident taxpayers of Belgium.
The new EU Practical Guide on Posting: key highlights
5 November 2019
The European Commission published a Practical Guide on Posting, which aims at helping employees, employers and national authorities understand the rules on the posting of workers, including the applicable labour law, upfront notification obligations and the upcoming 2020 “equal pay for equal work” changes.
Understanding these rules is essential to ensure that workers are aware of their rights, and that the rules are correctly and consistently applied by national authorities and employers across the EU.
Several noteworthy points from the guide are highlighted.
Five-year threshold approaches in Belgium-Brazil social security agreement
23 October 2019
The social security agreement between Belgium and Brazil, implemented on 1 December 2014, enables employees from Belgium on temporary assignment in Brazil to remain subject to the Belgian social security scheme (and vice versa).
The agreement will soon have been in place for five years, a milestone that requires employers’ attention.
Wage tax exemption for overtime (art. 275/1 ITC): Royal decree published
17 September 2019
We reported in our previous tax alert that the law of 23 March 2019 has temporarily increased from 130 to 180 hours (for remuneration paid during the period from 1 January 2019 to 31 December 2020) the amount of tax-efficient overtime that can be paid to employees.
Income tax return: Dividend withholding tax recoverable
1 July 2019
Following up from the 20 May 2019 tax alert on the Belgian resident income tax return, and in view of the new dividend exemption, this alert summarises the main rules to recover dividend withholding tax.
Belgian Supreme Court confirms the broad definition of salary
21 June 2019
In its 7 March 2018 ruling, the Brussels Labour Court claimed social security contributions on benefits awarded directly to employees of a third party. As these benefits were to be considered as reward for work completed under an employment contract, social security contributions are due, even without any employer intervention, or any cost at charge of the employer.
In their ruling of 20 May 2019 (published very recently), the Belgian Supreme Court rejected the appeal and confirmed the Belgian social security authorities’ position (covered by the Social security alert of 11 September 2018).
Belgian income tax practices for football clubs and players clarified
7 June 2019
Several parliamentary questions were submitted to the Minister of Finance regarding several tax specific practices in football clubs. The responses to these questions were recently published, clarifying several points outlined in this update.
Updates on professional withholding tax developments for employers
6 June 2019
The new withholding obligation with respect to foreign benefits, introduced at the end of 2018, is one of the most recent and high profile measures regarding professional withholding tax. Coverage is provided by the previous Tax Alerts of 4 February 2019 and 22 March 2019.
What follows is a look at other recent measures and clarifications regarding professional withholding tax.
Employers to pay EU social security on non-EU activities of employees
6 June 2019
In principle, EU Regulation 883/2004 determines the applicable social security legislation for cross-border situations within the European Union.
However, the Court of Justice of the European Union (CJEU) recently rendered a noteworthy judgment, which may have consequences for certain cross-border employment situations where the employee is working outside of the EEA or Switzerland, while maintaining clear links within these territories.