1. General context
Belgium has a plethora of exemptions from withholding tax on earned income: night work, shift work, R&D, fishing, start-ups, etc. In 2023, 148,000 companies made use of these exemptions, generating a total cost of around €4.11 billion for the State, and almost €4.7 billion is expected for 2024.
2. Sharp rise in budgetary impact
Over a period of five years, the cost of these exemptions has increased by almost €1 billion. The tax authorities have stepped up their arsenal of controls, from €35 million in reassessments in 2019 to €193 million in recoveries in 2024.
3. Main beneficiaries
– Shift/night work: almost €2 billion, with €123 million recovered in 2024 (compared with €20 million in 2021).
– R&D: €1.4 billion, with €58 million recovered via 3,000 controlled entities in 2024.
– Other sectors: professional football, fishing, start-ups, harvesting, etc. In all, 13 different exemptions.
4. Significant increase in tax audits
– In 2024, almost 70% of audits resulted in a rectification.
– The tax authorities now send out awareness-raising letters urging businesses to check their exemptions proactively.
– The investigation period has been extended from 3 to 5 years, with a special tax period of 12 months if fraud is identified.
– The penalties are severe: tax increases of 10 to 200%.
5. Focus on R&D
Since August 2023, in order to benefit from the exemption (up to 80%), projects must be registered with Belspo before they start.
New guidelines from 2025 specify that only one registration per project is permitted, with the possibility of seeking advice to secure the file.
6. Problems raised
– The Court of Audit has criticised the legislation for being too complex.
– SMEs find it difficult to navigate through this maze, fearing a posteriori reassessments, which can occur two years later.
– Some (e.g. Tiberghien) believe that the framework needs to be simplified to avoid abuses and administrative burdens.
7. Outlook to 2027
An in-depth review of the system, particularly for exemptions linked to shift work, is already on the way: by 2027, 19,000 companies concerned will have to comply with a new tax framework. Ministers Jambon and Van Peteghem are working on clarifications and reforms to the current arrangements.
Our mission in the field of corporate taxation is to help you manage a reasonable tax burden that aligns with your income and the opportunities provided by tax legislation.
