Ban on financial subcontracting – initial interpretations and clarifications
Since 1 January 2025, subcontractors have been prohibited from subcontracting the entire contract they have concluded with their own co-contractor. It is also prohibited for a subcontractor to retain only the coordination of the execution of the contract. The first interpretations of this ban on financial subcontracting, as provided for in the new Social Penal Code, were recently published. These clarifications may have important implications for contracting structures, particularly in projects involving a property developer.
Property developer with dual capacity
In construction projects where the property developer sells apartments, they are considered both the client and the contractor (known as dual capacity) under Article 30bis of the National Social Security Act. In this case, contractors working on behalf of the property developer are classified as subcontractors in the context of the declaration of works.
If, on the other hand, the property developer remains the owner of the apartments and rents them out, they are considered solely as the client. The contractor working for them is then classified as the main contractor and not as a subcontractor.
The question then arose as to whether the ban on financial subcontracting also applies to a contractor working for a property developer-seller. After all, the ban applies to all forms of subcontracting (see our previous article on this subject for more information).
The government has confirmed that the specific definitions of contractor and subcontractor in Article 30bis of the National Social Security Act are not decisive for the application of the ban on financial subcontracting. In concrete terms, this means that a contractor working for a property developer with dual capacity is not considered a subcontractor within the meaning of this ban. They remain the main contractor and are therefore not within the scope of the ban.
Further clarification of “entire execution of the contract” and “coordination”
Additional clarification has recently been provided on the key concepts of the “entire execution of the contract” and “coordination”.
With regard to the first concept, it is important to note that the activities that the subcontractor retains and therefore carries out itself must also be tasks that are specific to the sector in question (whether construction, removals or meat processing).
Example: A subcontractor who does not carry out any construction activities themselves, but only supplies materials to the site and subcontracts all the masonry work to sub-subcontractors, is in breach of the ban.
It must be possible to demonstrate, on the basis of the actual circumstances, that the subcontractor still carries out tasks themselves in line with their contractual obligations towards their co-contractor.
Furthermore, the concept of “coordination” has been clarified. This includes tasks such as planning, organisation, communication between the parties involved, but also monitoring and control of the progress of the work, risk management and problem solving.
This comes down to a supervisory role to ensure that the contract is executed in accordance with expectations and agreements.
If the subcontractor only retains these coordination tasks without performing any sector-specific operational tasks themselves, this constitutes a breach of the ban.
When assessing whether effective execution is taking place, the following factors are taken into account:
- Own personnel;
- Technical capability to perform the work themselves;
- The contractual rates;
- The chain of subcontractors;
- Etc.
We are closely monitoring further developments and will keep you informed of any new interpretations or case law. If you have any questions or would like to discuss a specific case, our specialists at Van Havermaet are at your service.