Perspectives

Domestic personal income tax 

COVID-19 Workforce measures and insights

The domestic personal income tax measures in place to help companies deal with COVID-19's impact on the workforce.

Most important measures

Consumption voucher

22 October 2020 | A circular letter confirming the tax treatment of the consumption voucher was published containing the conditions under which the voucher can be exempt from personal income tax as well as social security contributions (Dutch | French).

The law regarding various tax measures in response to COVID-19 (corona-III) introduced a tax exempt consumption voucher of up to EUR 300 which can be granted, upon conditions, by employers to their employees until 31 December 2020 (Dutch | French). For the employee, the consumption voucher is exempt from personal income tax as well as social security contributions. In addition, it is fully tax deductible for the employer.

 

No longer possible: “Fast track” tax ruling for lump sum teleworking allowance

Companies could file a ruling request to obtain confirmation that they could temporarily grant a teleworking allowance to staff, while measures issued by the National Security Council to tackle the COVID-19 outbreak apply. The ruling request would  ask for confirmation that this indemnity would be considered as a reimbursement of costs, proper to the employer and not part of employees’ taxable remuneration.

14 July 2020 | The Belgian tax administration published circular 2020/C/100 (Dutch | French), replacing the “fast track” process. Based on this circular letter, the maximum telework allowance (EUR 129.48) can be granted to all workers that perform regular and structural telework, i.e. at least 5 days per month. The same amount must be granted to all employees concerned. This circular has clarified the scope of telework allowance grants and is not limited in time. It will therefore continue to apply even after the COVID-19 crisis (provided the above-mentioned conditions are met).

Requests for fast track rulings are therefore no longer possible on the tax authorities’ website, and the ruling committee will only issue fast track COVID-19 decisions for applications already submitted on this notice’s publication date (14 July 2020). 

 

Reduction of withholding tax on legal unemployment benefits during COVID-19

12 November 2020 | The Belgian Tax Authorities issued a new guidance note in FAQ format (Dutch | French), which includes useful details on, among others, specific rules for temporary workers and temporary work agencies, the eligible remuneration components and a list of required supporting documents.

More information is available in our individual tax alert “COVID-19 wage tax incentive: useful clarifications in new administrative FAQ”.

23 October 2020 | New practical guidelines have been published as to how employers can claim the (temporary) COVID-19 wage tax exemption, with newly simplified formalities allowing employers to cash claimed incentives faster.

The Royal Decree of 27 September 2020, published on 1 October 2020, introduces new formalities to speed up tax incentive cashing by enabling the offset of the temporary COVID-19 wage tax exemption (applicable for June, July and August 2020) against wage taxes due for:

  • September or October 2020 if monthly reporting applies;
  • The third quarter of 2020 if quarterly reporting applies.

These new formalities were introduced to ensure an administratively straightforward process, and prevent potential delays in the reimbursement of overpaid wage tax.

In addition, the temporary COVID-19 wage tax incentive can be combined with other wage tax incentives, such as the partial exemption for night and shift work, overtime, work in the construction sector and/or researchers.

However, the COVID-19 wage tax exemption should be applied on the remaining wage tax (i.e. after the other wage tax exemptions have been applied). An accurate calculation is needed to ensure a correct application.

More information is available in our individual tax alert “COVID-19 wage tax incentives: faster incentive chasing made possible”.

On 13 May 2020, the parliament approved a law regarding diverse urgent tax measures due to COVID-19. This law foresees an exceptional and temporary reduction of the wage withholding tax rate on legal unemployment benefits to 15% (down from 26.75%).

This reduction applies to legal unemployment benefits paid from 1 May until 31 December 2020. Please note, that the wage withholding tax scale for extra-legal unemployment benefit will remain unchanged (26.75%).

 

Personal income tax exemption for overtime in critical sectors between 1 April and 30 June

11 June 2020 | A law was adopted which foresees the tax exemption for remuneration for up to 120 hours of overtime performed between 1 April and 30 June 2020, provided that the employer belongs to a recognised critical sector. The full list of 62 sectors and corresponding Joint Labour Committees can be found here.

An overview of the other provisions accepted in this law can be found under the “Other measures“ section below.

 

Wage tax incentive for shift work unaffected by temporary social distancing adjustments in shift work schedules

The application of the wage tax incentive for shift work is subject to multiple conditions. One of these conditions is that the work should be organised in specific shift arrangements:

  • The work is carried out in at least two shifts with at least two employees
  • The teams complete the same work in terms of both content and scale
  • The teams succeed each other without interruption
  • There is no work schedule overlap of more than 25% between successive teams

Reference is made to the work schedule as indicated in the work regulation (unless there are systematic deviations in practice).

Following the COVID-19 pandemic, the tax authorities published additional guidelines for shift workers (Dutch | French). These guidelines introduce an administrative tolerance, stating that temporary adjustments to shift work schedules in the work regulation, to meet social distancing requirements (e.g. adding a short break between two successive teams), do not prohibit the continued benefit of the wage tax exemption for shift work.

This tax incentive does not alter worker remuneration and constitutes an immediate additional cash flow for the employer.

More information on the wage tax exemption for night and shift workers is available in the recorded webinar “Are you sure your company benefits from all available payroll incentives?” and the online brochure.

Postponements of deadlines

Payment deferral of professional withholding tax (under specific conditions) if required before 30 June 2020

An automatic extension for payment deadline has been granted, depending on the taxable period:

  • Monthly February return: until 13 May 2020
  • Monthly March return and 2020/Q1 quarterly return: until 15 June 2020
  • Monthly April return: until 15 July 2020

Link: Dutch | French

 

Postponement of personal income tax payment deadline

An automatic additional payment period of two months is granted to taxpayers for tax liabilities relating to assessment year 2019 and assessed after 12 March 2020.

An additional payment period and relief for late payments of interest and penalties can be requested from the tax authorities for tax liabilities assessed before 12 March 2020.

Link: Dutch | French

Other measures

Non-indexation of certain tax credits/exemptions

For income years 2020 to 2023, there will be an indexation freeze on a number of tax credits (Dutch | French). During these four years, tax credits will not be indexed and will remain at the 2019 level.

This means that the maximum amounts of a series of personal income tax reductions/exemptions over these four years will no longer be increased (e.g. tax exemption for dividend income (EUR 800), interests of regulated savings account (EUR 980, etc.), with the exception of the tax credit for pension saving, for which the maximum basis to calculate the tax credit will be indexed in 2020.

As of 2024, annual indexation should be reinstated.

 

Tax prepayment credits for self-employed individuals

On 3 April 2020, the Ministry of Finance announced a new measure to support self-employed individuals during the COVID-19 outbreak (Dutch | French). The government decided to increase prepayment credits for the third and fourth quarter. This support measure should make the postponement of income tax prepayments to the second half of the taxable period less disadvantageous.

 

Credits for Self-employed individuals

Q1

3%

Q2

2.5%

Q3

2.25%

Q4

1.75%

For self-employed individuals, the first and third tax prepayment deadline have been postponed to 14 April 2020 and 12 October 2020 (instead of 10 April and 10 October 2020 (Dutch | French).

 

Gifts in kind

Gifts in kind made between 1 March 2020 and 31 July 2020 to health care institutions, universities, public authorities, etc. (or between 1 March 2020 and 1 September 2020 for Belgian schools) can be considered as professional expenses for taxpayers obtaining profits, or profits from a liberal profession.

A tax credit for gifts in kind made between 1 March 2020 and 30 June 2020 to health care institutions, hospitals, schools, etc.

 

Child care expenses

Child care expenses between 14 March 2020 and 30 June 2020, but not corresponding to an effective day of child care, may still be considered as child care expenses for tax purposes.

An extension of the child care measure for payments made in 2019, and between 14 March 2020 and 31 December 2020, was included in the draft law published on 30 June 2020.

 

Prepayments

Increased benefits for third and fourth quarter prepayments, offering individuals an incentive for still making larger payments in the third and fourth quarter due to current circumstances.

 

Postponement of all non-essential audits

The Federal Public Service for Finance had announced to temporarily postpone all non-essential or less urgent audits at taxpayer premises during the lockdown. However, since June we have noticed an increase in audit activity.

Link: Dutch | French

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