Withholding tax in case of shift and night work
February 2022 – The conditions and modalities of the exemption from payment of the withholding tax on earned income (Pr. P.) in case of shift and night work are regularly discussed. In a circular dated mid-November, the tax authorities give their opinion on the one-third standard: from now on, this standard must always be calculated on an hourly basis.
Exemption from payment of the Pr. P. tax
The exemption from payment of the Pr. P. means that the employer is exempt from paying part of the wage tax withheld from the salary to the Treasury. The withholding tax must still be calculated according to the normal rules and cannot be paid to the workers.
Although the Pr. P. does not have to be paid to the Treasury, or not in full, the employee can declare the total withholding tax in his personal income tax return.
Conditions
Provided certain conditions are met, companies in which work is carried out in at least two shifts can benefit from an exemption from the payment of the withholding tax. The main conditions to be met in order to benefit from the exemption from the payment of the withholding tax on earned income for shift work are that there must be at least two shifts, with at least two people. The two teams must do the same work, both in terms of content and volume. Finally, the teams must follow each other without interruption and without overlapping by more than a quarter of their daily task.
With regard to the exemption from payment of the withholding tax for night work, the law requires that workers perform their work between 8 p.m. and 6 a.m., excluding workers who perform their work exclusively between 6 a.m. and midnight, and workers who usually start work at 5 a.m.
An additional condition applies to both shift work and night work: the one-third standard. In order to be entitled to the exemption from the payment of the withholding tax, the workers must be engaged in shift work or night work for at least one third of their working time (Article 2755, § 1, paragraph 4 ITC 1992).
The question of how this third should be calculated was submitted to the Mons Court of Appeal. This standard could be calculated in days as well as in hours.
In 2015, the tax authorities published an FAQ on this subject, in which they stated that the taxpayer-employer could decide this himself. The only restriction was that once the employer had opted for a method, it had to apply it consistently.
But in 2020, the Mons Court of Appeal found no legal basis for this choice and ruled that the employer had to calculate the one-third standard on an hourly basis, not on a daily basis.
16 November 2021
In a circular of 16 November 2021, the administration adapts its view to the ruling of the Mons Court of Appeal and now only allows a calculation in hours. The new regulation comes into force with immediate effect, but the obligation to systematically calculate the one-third standard on an hourly basis will only apply from 1 January 2022, which will give social secretariats and employers time to adapt their IT systems.
In other words, until 1 January 2022, employers will still have the choice between calculating on a daily basis and on an hourly basis.
In concrete terms
The tax administration itself gives the following simple examples.
An employee has the following working hours:
In week 1, he works 38 hours, entirely in the morning shift;
in week 2, he also works 38 hours, but not in a shift;
In week 3, he works a total of 38 hours, entirely in the morning shift;
in week 4, he works 38 hours, but not in a shift.
This worker worked 152 hours, of which 76 were in shifts. This makes a proportion of 76/152, or one hour in two, which is more than one hour in three. The worker therefore meets the one-third standard.
Let us imagine that in week 3, the worker is not part of the morning shift, the proportion would be 38/152, i.e. one hour out of four, which means that the one-third standard would not be met. The worker would therefore not be entitled to an exemption from payment of the withholding tax.
