Taxes in Europe Database v2
Income Tax Code 1992, articles 3 to 178/1.
Law of 10.08.2001 (BOJ 20.09.2001) with reform of personal income tax.
For PIT after the Sixth State Reform : see Special Act of 6 January 2014 reforming the financing of Communities and Regions, increasing tax autonomy for the Regions and financing the new competences. Law of 08.05.2014 modifying the Income Tax Code 1992 as a consequence of the introduction of the regional additional tax on PIT (BOJ 28.05.2014)
The ways of implementation applicable to the withholding tax on earned income allocated or made payable as from 1 January 2014 are published in the BOJ of 18 December 2013.
For further details on Personal income tax, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:
Application of indexation provisions provided for by law.
Regional authority : determination of the regional surcharges (tax rate) and matters under their material competences (tax credits/ reliefs).
The federal authority remains exclusively competent for determining the taxable base, and as a consequence, exclusively competent for the deductions applied to gross income.
Since 2009 : part of the withholding tax on earned income has been attributed to the alternative financing of social security.
Belgian territory and, for the regional additional tax, the Region in which the taxpayer's tax residence is located on 1 January of the tax year (Flemish Region, Walloon Region or Brussels-Capital Region).
(*) Under the new Special Finance Act, the concept 'seat of wealth' has become a subsidiary criterion which is only used secondly.
In case a company car is provided, the taxable benefit is assessed on the basis of the catalogue value, multiplied by a percentage related to the age of the car, and multiplied by a coefficient based on the carbon dioxide emission of the car. The formula in order to calculate the benefit in kind per year is the following :
6/7 * catalogue value * Age percentage * CO2 coefficient
Since 1 January 2005, the cadastral income of the own dwelling house is no more taxable.
The first 1,880 euro (for 2014 income) bracket of a yearly income from ordinary savings deposits is exempted from withholding tax on movable property if the beneficiary is a natural person.
Each spouse or legal cohabitant is entitled to the exemption. The double exemption also applies when only one savings account has been opened in the name of both spouses or legal cohabitants.
Capital gains on immovable property
Short-term capital gains on immovable property are taxable.
Capital gains on movable property
In principle not taxable but :
for capitalisation SICAVs/BEVEKS having invested at least 25% in interest-bearing debt securities (notably bonds, Treasury certificates), capital gains obtained through the repurchase of own shares or through a partial or total distribution of the social assets of the SICAV/BEVEK, are liable to a 25% withholding tax in respect of the part corresponding to, on the one hand, the interest received by the SICAV/BEVEK and, on the other hand, capital gains generated by the debt securities portfolio, after deduction of losses.
Annuities from life insurance
Contracts concluded in the context of life insurances combine a tax advantage granted where premiums or contributions are paid, with a taxation upon withdrawal, i.e. where the capital or the annuity resulting from premiums capitalisation are paid out. Where life insurance is used for the reinstatement of a mortgage loan, withdrawals are taxed when the capital is fully rebuilt.
The profits and proceeds not connected with a professional activity are considered here. Are not concerned:
The total amount of occasional profits and proceeds is taxable after deduction of actual expenses.
Prizes and subsidies are only taxable in as far as they exceed 3,810 euro.
They include loans made to the taxpayer bearing no or less interest than the basic interest rate determined by royal decree; use of company car; free occupation of a dwelling; free supply of heating and electricity.
Are not taxable some minor benefits like small gifts received on certain festive occasions and some commuting expenses paid by the employer (partial or total exemption).
The employer's financial intervention in meal, sport and culture vouchers is an exempted social advantage for the beneficiary, provided some conditions are met.
Eco-vouchers can also be tax exempted. These vouchers must be registered and granted in the framework of a collective agreement either sectoral or concluded within the company. If there is no collective agreement, a written individual agreement is required. The exemption is limited to 250 euro per year.
Tax unit: In Belgium, the tax unit is the adult, single or married, with children or other dependent persons. The legal cohabitants are assimilated to spouses.
Taxable income includes real-estate income, income from movable property, miscellaneous income and earned income. There are specific rules for the calculation of the net income for each of these categories.
1. Real estate income - General rules
The taxable amount of the real property is established separately for each spouse and the jointly owned property is apportioned on a fifty-fifty basis between the spouses. The fifty-fifty apportionment also applies to own real estate income if the spouses are married under the legal regime.
The taxable amount of real estate income is determined, according to the case, either on the basis of the cadastral income or on the basis of the rent. The net amount is then obtained by deducting interests on loans (other real estate than the own dwelling house).
2. Income from movable property
The amount of the chargeable movable income is established for each spouse separately. Income from jointly owned movable property is apportioned according to the property law.
Under the new Special Finance Act, the tax on income from movable property is not reduced by the autonomy factor of 25.99% and it is not part of the basis for the calculation of the regional surcharges. The “movable property income box” includes dividends, interest, income from renting, lease-farming or concessions of movable property, income from prizes attached to debenture bonds, capital gains on securities taxed as miscellaneous income.
The following income is however subject to regional surcharges: income included in life annuities or temporary annuities, income from copyright, income from a sublease or the transfer of a lease, income from the permission to place advertising boards on buildings and income from sporting rights (hunting, fishing, trapping).
3. Miscellaneous income
This category of income includes all income with the common characteristic of not being earned by performing a professional activity. Among categories of miscellaneous income, only current maintenance payments are included in the aggregated taxable income. Every other miscellaneous income is taxed separately.
The amount of the taxable miscellaneous income is determined separately for each spouse. Any shared income is apportioned according to the property law.
4. Earned income
There are seven categories of professional earnings: employee salaries and wages; company manager remunerations; assisting spouse remunerations; profits from agricultural, industrial and commercial activities; proceeds from a liberal profession; profits and proceeds from former professional activities; replacement income.
The net income is determined in six stages:
The deductibility of professional expenses is a general principle which applies to all categories of income, including replacement income.
May be deducted, expenses the taxpayer has incurred or borne during the assessment period with a view to acquiring or preserving taxable income, provided he can establish the reality of such expenditures and the amount thereof.
For certain categories of earned income, the law provides lump sum expenses which substitute actual expenses, unless the latter are higher.
The basis for calculation of the lump sum expenses is the gross taxable amount, less social security contributions and contributions assimilated thereto
For company managers, the lump sum deduction is set at 3% of the basis of calculation, with a maximum of 2,370 euro.
For remunerations paid to the assisting spouse, the lump sum deduction is set at 5% of the basis of calculation, with a maximum of 3,950 euro.
The same 3,950 euro limit applies to the lump sum expenses which may be awarded to employees and members of a liberal profession; these are calculated according to the scale below.
Basis of calculation
above the limit
An additional deduction for lump sum expenses can be granted to employees when the distance between their home and their work is at least 75 km.
Distance between home and work
Additional fixed amount
Under the new Special Finance Act, only alimony payments remain deductible from the total net income. The Regions may grant no advantages in the form of a deduction from the taxable base.
The basic zero-rate band is 7,070 euro (both for a single person and for a spouse).
An additional amount of 280 euro is granted where the taxable income does not exceed 26,280 euro (for low- or middle-income taxpayers).
When the taxable income amounts to between 26,280 euro and 26,560 euro, a phasing out rule applies: the additional amount granted is progressively reduced proportionately to the difference between the taxable income and the 26,280 euro limit.
The basic exemption is increased by 1,500 euro where the taxpayer is disabled (and where the taxpayer’s spouse is disabled).
Exemptions for dependent children are allocated by priority to the spouse with the higher tax base.
An additional exemption of 560 euro is awarded for each dependent child who is less than three years old and for whom the tax credit for child care expenses has not been requested.
A disabled child counts for two (the child will be awarded the deduction according to his/her own rank plus the deduction granted to the child next in rank).
A child legally considered as stillborn is also considered as dependent for the year in which the death occurred. The additional exemption for each dependent child who is less than three years old, is automatically awarded for a stillborn child.
When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit.
Exemptions for other dependent persons
In case of joint custody, each single parent has right to the total exemption for single persons with dependent children.
Please note that these allowances for dependents are credited against the lower part of the personal income tax scale, contrary to other allowances which are credited against the upper part of the scale.
Deductions, allowances and credits differentiated by region (Flemish / Walloon / Region of Brussels-Capital).
From assessment year 2015, the federal tax credit for mortgage loans on owner-occupied dwellings and the credit for energy-saving expenditures is abolished (except transitional measures) and replaced by similar regional tax credit facilities.
For further details on those tax credits, please refer to the Tax survey publication on the website of Federal Public Service Finance - Belgium available at:
Tax credits remaining a federal competence
Tax credits transferred to the Regions
Pension savings scheme
Personal premiums for group insurance contracts and pension funds
Acquisition of employers’ shares
Individual life insurance premiums not related to real estate
Expenses for another dwelling than the own dwelling house:
federal tax credit for long-term savings (individual life insurance premiums + capital repayments)
Expenses for acquiring or maintaining the own dwelling house: regional tax credit for own dwelling house (housing bonus) or regional tax credit for long-term savings (loans and agreements which are not meeting the conditions giving entitlement to the housing bonus)
Expenses for renovating low-rent dwelling houses
Transitional provisions: federal tax credits at the marginal rate (for another dwelling than the own dwelling house) – loans contracted until 31 December 2013.
Regional tax credit for standard interest, regional tax credit for additional interest, regional tax credit for “housing-savings”, regional tax credit for interestrelating to the conversion of the old creditable withholding tax on real estate.
Tax credit carried over for some energy-saving expenses made in 2011 and 2012
Roof insulation (dwelling house of at least five years)
Tax credit for passive, low-energy and zero-energy houses
LEA vouchers and service vouchers
Child care expenses
Remunerations domestic workers
Shares of recognised development funds
(*) As the royal decree determining the zones of 'positive metropolitan policy' has not been renewed, the tax credit may no longer apply in practice.
Losses incurred by a taxpayer in the course of previous taxable periods can be set off by him against profits from subsequent taxable periods with no time limit.
Compensation of losses between spouses :
Where the income of one of the spouses is negative, the loss can be deducted from the income of the other spouse, after taking into account all the deductions to which the latter is entitled.
The amount of the transferable losses cannot exceed the income of the spouse to whose income the deduction applies.
As a general rule, taxable income includes real-estate income, income from movable property, miscellaneous income and earned income.
Hereafter are developed however cases of exempted income.
A temporary exemption of personal income tax is given for premiums for innovation paid or granted from 1 January 2006 and is valid for the year 2014.
Commuting expenses have to be borne by the employee; they are deductible as professional expenses. Where these expenses are refunded by the employer, they are in principle a taxable income. The latter can partly be exempted however.
The mileage allowance for bicycling commuting is also exempted from tax up to 0.22 euro a kilometre.
A new exemption has been introduced for severance payments. Those are paid by the Belgian National Employment Office to compensate for the damage suffered by redundant workers (employed before 1 January 2014) resulting from the fact that a part of the notice period has been calculated according to the old less favourable rules.
Workers who received severance payments are no longer entitled to the redundancy allowance paid by the Belgian National Employment Office (see hereafter).
The redundancy allowance which is payable by the Belgian National Employment Office and which dismissed workers (employed before 1 January 2014) can benefit, is tax exempted and exempted from social security contributions (*). The exemption applies to allowances received as from 1 January 2012, provided the dismissal is notified by the employer on 1 January 2012 at the earliest. As soon as the worker is entitled to severance payments, he loses entitlement to the redundancy allowance.
As regards remunerations relating to activities performed in the framework of local employment agencies, 4.10 euro are exempted from tax for each hour worked.
The employer's financial intervention in meal (up to 5.91 euro per voucher) and in sport and culture vouchers (up to 100 euro per year) is an exempted social advantage for the beneficiary, provided some conditions are met.
Eco-vouchers can also be tax exempted. The exemption is limited to 250 euro per year.
The system of non-recurrent advantages linked to results or "wage bonus" is tax exempted. The bonus is an additional allowance granted to each worker or group of workers in the company and linked to the results of the company (more specifically to previously defined goals, financial or not, which can objectively be ascertained). The tax exemption is granted for a maximum amount of 2,722 euro per worker. The portion of the bonus exceeding the upper limit is considered as wage.
Allocation granted to artists and considered at social level as lump sum settlement of expenses for performing “small-scale” artistic activities, are exempted to 2,444.21 euro per calendar year.
Although, as a general rule, replacement incomes are taxable, some social transfers are exempted. Are concerned:
EXPENSES ENTITLING TO A TAX RELIEF
Certain expenses entitle to a tax relief. The Regions are now exclusively competent for granting some tax incentives.
REFUNDABLE TAX CREDITS
For further detail, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:
TYPE OF REFUNDABLE TAX CREDIT
Refundable tax credit for increase of “own assets”
Taxpayers declaring profits or proceeds are entitled to a tax credit if they have increased the company's « own assets ».
Refundable tax credit on low income from professionnal activities
The tax credit is computed on the net amount of the activity income, i.e. the amount of the earned income not being a replacement income or a separately taxed income, after deduction of the actual or lump sum professional expenses. Income from an occasional independent activity is not taken into account either.
Wage income is not taken into account except for statutory civil servants. Wage income not taken into account is entitled to a reduction in personal social security contributions and to the refundable tax credit for low-income workers.
Refundable tax credit for low-income workers
This refundable tax credit is intended for low-income workers (and company managers subject to the employees' social security system) entitled to the employment bonus.
!t amounts to 14.40% (as of April 2014; before: 8.95%) of the reduction in personal security contributions which is actually granted on remunerations earned during the taxable period.
When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit. The double exemption for disabled children and the additional exemption for children under three are to be taken into account. The refundable tax credit is computed at the marginal rate for the spouse with the highest income and is limited to 430 euro per dependent child.
The refundable tax credit for energy saving expenses only remains applicable where it concerns some carried-over tax credits relating to energy-saving expenses .
A global zero-rate band, varying according to the composition of the household, is tax exempted. This global band consists in the first place of the basic zero-rate band granted to each of the spouses. This band is then increased by the exempted income for dependents and for certain specific family situations.
Where the global zero-rate band of one of the spouses exceeds the income it is credited against, the balance can be transferred onto the other spouse’s income in order to be credited against his/her income.
These exemptions are calculated "from the bottom up".
Rate in capital city : 6.00% to the municipalities and 1.00% to the 'special administrative district' of Brussels (i.e. the Brussels Agglomeration which includes 19 municipalities of the Brussels-Capital Region).
The rate of municipal surcharges is specific to each municipality. Municipal surcharges do not apply to the tax on interest and dividends, provided those interest and dividends have no professional nature.
The calculation of municipal surcharges is based on the total tax, i.e. after offsetting of federal and regional tax credits.
In tax year 2013 the local surtax varied between 0% and 9% of the federal PIT amount (7,42% on average).
The special social security contribution is levied on the salaries of employees (or their counterparts) whose net taxable household income exceeds 18,592.01 euro a year. Unlike other social security contributions, it is not deductible.
See the separate tax file relating to it.
The law has provided for separate taxation in respect of three categories of income:
These incomes escape aggregation and are taxed at special rates. Total aggregation (inclusion of this income in the aggregated taxable income - and application of the progressive rate) is nonetheless applied where doing so is to the taxpayer’s advantage.
The choice is made for separately taxable income as a whole.
The assessment rates vary between 10% and 25% according to the case.
Assessment rates of the main income from capital and movable property (2014 income)
Dividends from the distribution of taxed reserves injected in the capital
Dividends from 'residential' real estate investment companies
Income from ordinary savings deposits
Interest from government bonds 24 Nov 2011 - 2 Dec 2011 (so-called "Leterme bonds")
Interest relating to thematic citizens lending
ROYALTIES, LIFE ANNUITIES AND TEMPORARY ANNUITIES
The tax rates applying to these incomes are the following:
Rates of separately taxed miscellaneous income (2014 income)
Type of income
Occasional profits and proceeds
Allowances “research workers”
Prizes and subsidies
Prizes attached to debenture bonds
Income from sublease or from transfer of a lease
Income from permission to place advertising boards
Income from sporting rights (fowling, fishing, shooting)
Capital gains from built property
Capital gains from unbuilt property
33% if the capital gains are realised less than 5 years after the acquisition, 16.5% in the other cases
Capital gains on the transfer of an important parcel of shares
In many cases earned income which can enjoy the separate taxation is taxed at an average rate. The average rate is based on the tax amount to be paid after application of the tax credits for the zero-rate band, the tax credits for replacement income, the federal and regional tax credits (as from 2016 income, only the fereral tax credits will be taken into account), but without considering the tax credit for foreign income.
Separate taxation of earned income (2014 income)
Salary arrears, replacement income arrears
the previous year’s average rate
Gross termination compensation
Prepaid holiday pay
the current year’s average rate
Arrears of maintenance payments
Capital gains from professional activities
Gross regional employment premiums < 180 euro per month
Young sportsmen’s remunerations, first 18,720 euro gross bracket
Volunteer sporting activity as a self-employed secondary activity, first 18,720 euro gross bracket
Setting-up allowance for general practitioners (*)
Remunerations of casual workers in the Horeca sector (**)
(*) A setting-up allowance amounting to 20,000 euro is granted to general practitioners who decide to set up in a 'priority area" with a lack of general practitioners.
(**) In force as from 1 October 2013 and provided certain conditions are met (remunerations for services provided during maximum 50 days a year, etc.)
Capital and annuities from a group insurance contract
In case a capital is paid out, a separate taxation is made for the paid-out capital where a group insurance is liquidated. There are different taxation methods depending on whether the capital is liquidated on the “usual date” or earlier.
“Usual date” means:
Taxation upon the liquidation of the capital of a group insurance
Liquidation of capital or surrender values upon usual termination or assimilated date
Contributions made until 31 December 1992
Contributions made from 1 January 1993
separate taxation (rates applicable to capital paid as from 1 July 2013)
payment at the age of 60 years: 20% (*)
payment at the age of 61 years: 18%
payment between 62 and 64 years: 16.5%
payment at the age of 65 years: 10% (**)
separate taxation at a 16.5%rate
separate taxation at a 10%rate
Liquidation of capital or surrender values before legal date
taxation at marginal rate
taxation at marginal rate
taxation at a 33% rate
(*) The taxation increase from 18% to 20% is the continuation of the increase to 62 years in the minimum retirement age and, as a result, only applies where capital and surrender values are paid or allocated before this minimum age.
(**) Taxation at a 10% rate where the beneficiary actually remained professionally active at least until the legal retirement age. In case of liquidation resulting from the death after the legal retirement age, the 10% rate remains acquired where the deceased actually kept on working until this age.
Movable income has been subject to a first reform applicable to income allocated as from 1 January 2012. The key elements of this reform were the giving up of the principle of the withholding tax on income from movable property as a final tax, the increase to 21% of the rate of the withholding tax on some interest and dividends, and the introduction of an additional levy of 4% on high movable income. The report of movable income became compulsory in principle.
Given the numerous problems related to the concrete application of this reform, the latest has been changed for income allocated in 2012 and given up for income allocated as from 1 January 2013 : the principle of the withholding tax as a final tax has been restored, the additional levy of 4% has been abolished and the standard rate of the withholding tax has been increased to 25%.
The rate of the withholding tax on income from movable property amounts henceforth as a standard to 25%, with the exception of six income categories (it concerns liquidation surpluses (transitional system applicable until 1 October 2014), dividends from residential real estate investment companies, income from ordinary savings deposits, interest from the so-called “Leterme government bonds”, interest from thematic citizens lending and a portion of income from copyright).
For further details, see the corresponding file (withholding tax on income from movable property).
The withholding tax on movable property must be paid within two weeks after the attribution or payment of the taxable income.
The withholding tax on earned income must be paid within two weeks after the end of the month in which the income has been paid or attributed.
As regards direct taxes and the advance tax payment on property which have been assessed, the tax liability arises at the time the assessment roll became enforceable. They shall be paid within two months after the date of dispatch of the tax notice. The tax due date, as regards the amounts registered in the assessment roll after submission of the tax return, is the date which can be found on the notice of assessment in respect of PIT.
Taxpayers declaring income from a self-employed activity must make advance payments (1). Moreover, any taxpayer can make advance payments to discharge the tax which is not covered by a withholding tax: these payments entitle the taxpayer to a tax bonus.
Advance payments must be made:
(1) A tax increase is applied when these payments are not made or when they are insufficient.
Federal Public Service Finance.
From assessment year 2015, the regions may levy surcharges on 25.99% of the federal taxable income. For assessment year 2015, the rates of the surcharge ("centimes additionnels régionaux") have been fixed at 0.35117% for the three regions.
Calculation of the federal and regional part of the tax due
From assessment year 2015, the regional tax competences are extended. The total PIT due is now composed of a federal part and a regional part.
The regional part of the tax consists of additional (proportional) surcharges, reductions and credits determined by the Regions. The regional surcharges are levied on a fraction (25.990%) of the reduced total of tax due ("impôt Etat réduit"). The “reduced total” is the total of tax due on aggregated income and separately taxed items of income, reduced by the personal allowances and the taxes due on dividends, interest and royalty income. The regional tax reductions and credits are linked to the material competences attributed to the Regions.
The following relates to withholding tax on income earned in 2014. The data hereafter are not the most recent available but are used to determine the personal income tax on income earned in 2014.
The withholding tax on earned income is in principle withheld by the employer and paid to the tax administration.
In some cases, the employer is entitled to an exemption of payment which has no impact on the amount withheld. The employer retains the exempt amount; as a result, the exemption works as a wage subsidy to the employer.
1. Employees’ remunerations
The tax deducted at source is withheld by the employer and computed in seven main steps:
A. Deduction of social security contributions
From the gross income are subtracted the employee’s social security fees and other levies made in pursuance of the social legislation or assimilated legal or administrative regulations. The special social security contribution is not deductible though.
B. Deduction of lump sum professional expenses
The annual income is then transformed into a net annual income by subtracting the lump sum professional expenses.
Professional expenses and computation of the withholding tax on earned income
Gross annual income
on lower limit
% above lower limit
0 - 5,710.00
5,710.00 - 11,340.00
11,340.00 - 18,880.00
18,880.00 - 64,587.67
64,587.67 and more
The common scale applies as it is,
From 1 January 2004, legal cohabitants have been assimilated with married people. So the term “spouse” also covers a “legal cohabitant”.
Computation of withholding tax on earned income – Common scale
Net taxable annual income
0 - 8,690
8,690 - 11,800
11,800 - 17,100
17,100 - 37,760
37,760 and more
A particular provision applies:
The withholding tax on earned income is then computed as follows:
D. Taking into consideration of the zero-rate band
When the common scale applies as it is, the base tax computed according to that scale shall be reduced by € 1,607.68, but this reduction shall on no account result in a negative base tax.
When the particular provision applies, which divides the taxable income in two parts (one-earner families or equivalent), the basis tax obtained by adding the results of the application of the scale to “Income A” and “Income B”, shall be reduced by € 3,215.36, but this reduction shall on no account result in a negative base tax.
E. The family situation
Step five takes account of the family situation by granting the following tax credits:
Reductions of the withholding tax for dependent children and specific family situations
Number of dependent childrenand peculiar family situations
for each child beyond the eighth
single person (except where the taxable income consists of pensions or prepensions)
widow(er) not married again, with dependent children
single parent family
for ascendants and collaterals up to the second degree and aged 65 at least: for each dependent person
for all other dependent persons
Disabled children and other disabled dependent persons count for two.
A tax credit of 1,284 euro is yearly granted where the income beneficiary’s spouse has own professional income not consisting of pensions, annuities or assimilated benefits and not exceeding 214 euro per month.
A tax credit of 2,568 euro is yearly granted where the income beneficiary’s spouse has own professional income exclusively consisting of pensions, annuities or assimilated benefits and not exceeding 428 euro per month.
The ceilings of 214 euro and 428 euro per month are assessed on the basis of 80% of the gross income after deduction of the social security contributions.
F. Other tax credits
G. Computation of monthly amount
The amount of tax thus obtained is then divided by twelve so as to determine the amount of withholding tax to deduct from monthly earned income.
2. Holiday pay and other exceptional allowances
For holiday pay and other exceptional allowances paid by usual employer, the withholding tax on earned income to be deducted is calculated according to a special scale, whereby the rate varies according to the normal gross annual income and not to the income actually paid out.
3. Salary arrears and redeployment allowances
The withholding tax on salary arrears and on redeployment allowances is calculated according to a "reference salary".
This corresponds in principle to the annual amount of the normal gross salary the beneficiary of the income enjoyed immediately before the revision which led to the payment of the arrears.
4. Termination compensation
The withholding tax on earned income levied on termination compensation, is calculated according to the rules set forth above in respect of arrears.
The reference salary to be taken into account is the one upon which the calculation of the compensation was based, or, failing that, the salary which was paid to the recipient during the last period of normal activity in the service of the employer who pays the compensation.
5. Company managers
Remunerations paid or allocated to company managers are liable to withholding tax on earned income. A distinction is made between periodical and non-periodical remunerations.
No withholding tax is due on remunerations paid or allocated to students with a written employment contract not exceeding fifty working days per calender year.
This tax exemption is granted only where, apart from the solidarity contribution, no social security contributions are due on the payments.
7. Young workers
No withholding tax is due on remunerations paid or granted to young workers who meet the conditions of eligibility for school-leavers’ unemployment benefits, provided the work is carried out under the terms of an employment contract starting in October, November or December of the preceding year and provided the gross amount of the remunerations does not exceed € 2,700 a month.
8. Horeca sector - casual labour
The rate of the withholding tax on earned income has been uniformly (without reduction) fixed at 33.31% for remunerations entitled to separate taxation. The conditions are the following:
- the remunerations must relate to services supplied during maximum 50 days per calendar year;
- the employer and the worker must conclude a fixed-term employment contract or a contract for a clearly determined job not exceeding 2 consecutive days;
- the employer must come under the joint committee for the hotel industry or under the joint committee for temporary work if the user comes under the joint committee for the hotel industry;
- the calculation of the social security contributions must be based on a hourly or daily lump sum amount.
WITHHOLDING TAX ON EARNED INCOME – SOME SPECIAL FEATURES
Exemptions of payment
The withholding tax on earned income is in principle withheld by the employer and paid to the tax administration. In some cases, the employer is entitled to an exemption of payment which has no impact on the amount withheld. The employer retains the exempted amount; as a result, the exemption works as a wage subsidy to the employer.
These exemptions of payment refer to the structural reduction ; remunerations paid to research workers ; team bonuses and night shift differentials ; overtime pay ; sportsmen. For further information please refer to the Tax survey publication mentioned above.
The ESA95 code d51a includes subcodes which are also the subject of other files, such as "Withholding tax on movable property" and "Tax on the worker's participation in the benefit or the capital of the company".
This results in double-accounting of some tax revenue amounts, once in the PIT file and once in the file describing the associated tax.