Working on Belgian construction sites: when do you have to pay less withholding tax?
Does your foreign company carry out construction, installation, maintenance, repair or cleaning work at locations in Belgium? If so, it may not be required to pay part of the withholding tax it has deducted to the Belgian tax authorities. This can result in a significant financial advantage.
However, this tax scheme is subject to strict conditions. In recent years, the burden of proof has also been tightened. Correct application therefore requires careful monitoring and thorough documentation. Below, we have summarised the conditions for application, the calculation of the benefit and the required supporting documents.
Conditions of application
In order to be eligible for the withholding tax reduction for works on immovable property, foreign companies must cumulatively meet the following conditions:
- The employees concerned are employed in a shift
For work on immovable property, the term “companies where shift work is carried out” refers to companies in which work on immovable property is carried out by one or more shifts, with each shift consisting of at least two individuals who perform the same or complementary work in terms of content and scope on site.
A shift must consist of at least two individuals, but not necessarily two employees. A shift may also be formed, for example, by a self-employed person/diorector and their employee. However, the reduction may only be applied to employees (and not to self-employed persons). Students or apprentices on work-study schemes may not be taken into account when determining whether a shift exists.
2. The work in question entails works on immovable property
The reduction only applies to works that qualify as “works on immovable property” in accordance with the VAT regulations.
It is therefore essential that the nature of the works carried out can be correctly demonstrated. A general reference to the company’s activities or to the job titles of employees is insufficient to meet the requirements.
3. The employees involved are employed on site
Works on immovable property carried out by a team on site at the employer’s customer’s premises are regarded as on-site work.
By contrast, work carried out by a team at the employer’s head office or a branch, or in the employer’s workshop or warehouse, is not regarded as on-site work.
4. The gross hourly wage of the employees concerned is at least EUR 17.64 (calendar year 2026).
To be eligible for the reduction, the employee’s gross hourly wage must amount to at least EUR 17.64 in the year 2026. This amount is indexed every year on 1 January. The salary that must be taken into account for the calculation of the reduction is the gross hourly wage before deduction of personal social security contributions as can be found in the employment contract.
5. 30 bis site notification
From 1 April 2022, an employer can only make use of this advantage if, in cases where this is mandatory, the site notification “30 bis” for works on immovable property has been correctly submitted.
If the site notification is not mandatory, everything remains unchanged and the employer can continue to apply the reduction, provided that the other conditions are met.
6. The 1/3 rule
Companies can only apply the reduction to employees who have performed at least one third of their total working time (expressed in hours) performing works on immovable property in shifts and on site during the month in question.
To determine whether the 1/3 rule is met, the following fraction formula is used based on the hours worked:
- the numerator: the number of hours of work actually performed in a shift, as well as the hours during which the performance of the employment contract was suspended but the wages continued to be paid by the employer, provided that it can be demonstrated that the employee in question would have carried out work in shifts on site in accordance with their working arrangements;
- the denominator: the total number of hours actually worked as well as the total number of hours for which the performance of the employment contract was suspended but for which wages continued to be paid.
If the threshold is not met, the reduction for that employee cannot be applied in the given month.
Which activities are eligible?
The reduction can only be applied in regards to employees who perform the following work:
- The building, renovation, finishing, furnishing, repair, maintenance, cleaning and demolition, in whole or in part, of immovable property by nature.
In addition, the act of supplying movable property and attaching it to immovable property in such a way that it becomes immovable by nature.
An immovable property is the land and buildings on this land and are therefore non-movable;
2. Other transactions that are treated as works on immovable property:
a. any transaction which has as its object both the supply and the attachment to a building:
- of the components or part of the components of central heating or air-conditioning, including burners, tanks and regulators and control devices attached to boilers or radiators;
- of the components or part of the components of a sanitary installation of a building and, more generally, of all fixed sanitary or hygienic appliances connected to a water supply or sewer;
- of the components or part of the components of an electrical installation of a building, with the exception of lighting appliances and lamps;
- of the components or part of the components of an electrical bell system, of fire alarm devices, of theft alarm devices and of a home telephone;
- of storage cupboards, sinks, sink cabinets and furniture with built-in sink, washbasins and furniture with built-in washbasins, extractor hoods, fans and air fresheners with which a kitchen or bathroom is equipped;
- shutters, roller shutters and roller blinds that are placed on the outside of the building;
b. any operation which has as its object both the supply of wall coverings and their installation in a building, whether that covering is attached to the building or simply cut to size on site according to the dimensions of the area to be covered;
c. any work consisting of attaching, installing, repairing, maintaining and cleaning goods referred to in a. or b. above.
Reduction amount
Companies that meet the above conditions are exempt from paying 18% of the taxable remuneration of the employees concerned as withholding tax. Bonuses (other than the shift bonus, including end-of-year bonus), holiday pay and arrears are excluded from the calculation basis.
The calculation is not made per employee individually, but is based on the total of all taxable remuneration of the eligible employees. If there is still a surplus of reduction for an employee, this surplus can be transferred to one or more other employees in order to reduce the withholding tax.
However, the reduction amount is limited to the withholding tax that was actually withheld from the taxable remuneration to which the reduction applies.
Burden of proof and documentation
In order to apply the reduction, the employer must be able to demonstrate that the above-mentioned conditions have been met. It must be clearly demonstrated that the workers actually carried out works on immovable property, that they did so in shifts, that they performed the same or complementary work, and that these works took place at the relevant location and within the relevant period.
Since April 2022, the burden of proof has been significantly tightened, with the administration requiring specific and verifiable evidence. In practice, this means that contracts, specifications, work orders, site reports, division of tasks and other supporting documents must be carefully kept. After all, the full burden of proof lies with the employer.
Furthermore, the employer must keep a nominative list available to the administration, with the full identity of each employee and the period of the year in which they have performed shift work. The administration may at any time check the accuracy of this data and request and examine the necessary supporting documents.
For each location where work shift work on immovable property is carried out, it must be possible to demonstrate that the 30bis notification has been made or that it is not required.
With regard to the withholding tax declaration, the employer benefiting from the reduction is obliged to submit a double declaration: a global declaration 274.10 and a specific declaration with code 57.
Capping the reduction
From 1 January 2027, a correction factor will be applied. This ensures that the reduction amount will be lower and therefore more withholding tax will have to be paid.
The correction factor is:
- 97% for remuneration paid or granted between 1 January 2027 and 31 December 2027;
- 93.35% for remuneration paid or granted between 1 January 2028 and 31 December 2028;
- 95.9% for remuneration paid and granted as from 1 January 2029.
It is still unclear today whether the percentage will be fixed or adjusted after 2029.
The general method of calculating the exemption will not change.
Conclusion
The reduction of withholding tax can be an important financial lever, but requires a careful, well-founded and documented approach to avoid discussions with the tax authorities about the application.
Would you like to know whether your current documentation is sufficient, or find out what the withholding tax reduction for works on immovable property can mean for your company? Our specialists are ready to support you.