Mini-taxshift - A reform of the tax exemption for night and shift work

Mini-taxshift - A reform of the tax exemption for night and shift work

The so-called "mini-tax shift" - a sweeping tax reform - has been on Gov. De Croo's table for quite some time. Meanwhile, the Council of Ministers approved the mini-tax shift and the mini-tax shift is at the draft bill stage.

The mini-taxshift introduces a lot of new measures regarding the constantly changing labor market. The tax exemption for night work and shift work was also thoroughly addressed by the mini-taxshift.

What does this tax exemption for night work and shift work mean?

A company that employs employees on night and/or shift schedules - and thus often incurs additional costs over and above payroll costs - may, under certain conditions and after declaring them, be eligible for a partial exemption from withholding tax.

In accordance with Article 275/5 of the Income Tax Code, the employer will retain 22.80 % of the withholding tax withheld from wages.

• • Shift work

Shift work occurs when work is performed in at least two shifts of at least two employees, the shifts perform the same work (both in content and scope), the shifts follow each other without interruption, and there is no overlap of more than one-fourth of the day's work between successive shifts. If this involves working at night, this is also considered shift work.

With the new bill, small breaks of 15 minutes or less between consecutive shifts will also no longer be considered.

• • Night Work

Night work occurs when work is performed between 8 p.m. and 6 a.m., not working consecutive shifts.

• • The one-third standard

The one-third standard means that a company is entitled to the tax exemption only if employees work shifts or nights for at least one-third of their monthly working hours.

Until now, night and shift work benefits were allowed to be added together to determine whether the employee meets the one-third standard. However, starting April 1, 2022, this will change and the exemption for night and shift work will be split into two separate exemptions (this is a shift work exemption and a night work exemption).

If an employee performs both night work and shift work, these performances may no longer be compounded to determine whether an employee meets the one-third standard. Moreover, since Jan. 1, 2022, the one-third standard must be calculated on an hourly basis.

• • Minimum premium

In addition, to claim the tax exemption, a night or shift premium on top of the contractual hourly wage must be paid to the affected employees.

Previously, no minimum amount was set. However, the new draft law provides for a minimum rate of 2 % for shift work and 12 % for night work. These rates must be calculated per hour to be performed.

From April 1, 2024, the allocation of the premium must be included in a collective bargaining agreement, work rules or individual employment contract.

Conclusion

A company that employs workers on night and/or shift schedules and also meets the above conditions will be entitled to a withholding tax pass-through exemption of some 22.80 %.

Entry into force

The effective date of the reform of the tax exemption for night and shift work is currently scheduled for April 1, 2022. A transitional arrangement applies until Jan. 1, 2024.   

Would you like more information about this or to be assisted by a specialized lawyer? Please feel free to contact us at info@bannister.be or at 03.369.28.00.