Payroll withholding tax exemptions: an overview of key regulatory developments

From the introduction of the alternative shift work scheme (“shift work bis”) to the recent reform of night work, alongside administrative obligations that have become a key focus of tax audits, we review the most significant developments of recent years. We also look ahead to the corrective factor scheduled for introduction in 2027, which will reduce the value of these exemptions.

A quick reminder: how do these exemptions work?

The payroll withholding tax exemption allows companies to retain part of the withholding tax deducted from their employees' salaries, provided that specific eligibility requirements are met.

The main schemes include:

• Shift work and continuous shift operations: an exemption equal to 22.8% of eligible taxable remuneration, increasing to 25% for continuous shift operations.
• Night work: an exemption of 22.8%, subject in particular to the payment of a night shift premium and compliance with the one-third working time requirement.
• Work on immovable property: an exemption of 18% for qualifying work carried out by teams on construction sites, subject to specific conditions.

These schemes offer businesses a valuable opportunity to reduce labour costs. However, benefiting from them requires compliance with the legal, payroll and administrative requirements specific to each scheme.

For more information on the eligibility criteria, visit our dedicated pages: Shift Work and Night Work and Real Estate work.

1. Shift work: the introduction of the alternative “bis” scheme

One of the most significant developments in recent years concerns the requirement for successive shifts to perform the “same work” in order to qualify for the shift work exemption.

Under the traditional scheme, successive shifts must perform identical work, both in terms of its nature and the volume of work carried out. The strict interpretation of this

requirement, confirmed by the Constitutional Court in February 2024, created uncertainty for many companies whose production volumes vary between shifts.

To address this issue, the Belgian legislator introduced the alternative “shift work bis” scheme in May 2024.

Under this scheme, companies can continue to benefit from the exemption even when workloads differ between shifts, provided that the nature of the work remains the same. The adjustment is based on the percentage variation in staffing levels between successive shifts. The tax benefit is then reduced proportionally to reflect these differences through a workload adjustment factor.

Rather than an “all-or-nothing” approach, the exemption can therefore be adjusted to reflect actual working conditions.

However, applying this alternative scheme requires detailed calculations. Differences in staffing levels between successive shifts must be assessed on a daily basis and then aggregated over the relevant period. This requires reliable, sufficiently detailed operational data. The scheme also involves additional administrative requirements, which companies should carefully consider before applying it.

This measure was originally introduced on a temporary basis and is currently set to expire on 31 December 2026. Its potential extension or replacement by a permanent framework therefore remains an important point for affected companies to monitor as 2027 approaches.

2. Night work: significant changes since June 2026

Another recent development is the reform of night work, which came into force on 1 June 2026, together with corresponding changes to the tax rules.

The reform primarily affects the distribution sector and related industries, including e-commerce.

For employees hired on or after 1 June 2026 by companies covered by the reform, entitlement to night work premiums and related benefits is now, in principle, limited to work performed between 11 p.m. and 6 a.m., rather than the previous period of 8 p.m. to 6 a.m. Existing employees retain their acquired rights, while more favourable arrangements may continue to apply.

This change also affects how eligibility for the tax exemption is assessed. The tax legislation now takes into account the definition of night work under employment law. Consequently, hours worked between 8 p.m. and 11 p.m. may only count towards the one-third working time requirement if a night shift premium is also paid for those hours.

Companies affected by the reform should therefore carefully review working schedules, the night shift premiums actually paid and compliance with the one-third requirement to ensure that they continue to qualify for the exemption.

3. Work on immovable property: NSSO declarations under increasing scrutiny during tax audits

Since April 2022, companies benefiting from the payroll withholding tax exemption for work on immovable property have also been required to comply with their work declaration obligations towards the Belgian National Social Security Office, where applicable.

Failure to comply with these obligations may jeopardise eligibility for the exemption, even where the other requirements relating to working hours and team composition are met.

Although this requirement is not new, its practical significance has become particularly apparent during tax audits conducted in 2026.

Drawing on our many years of experience supporting companies through tax audits, we have observed increased scrutiny by the tax authorities of compliance with NSSO work declaration requirements. Audits now extend beyond working schedules and team organisation to examine whether work declarations were required, whether they were submitted correctly and whether adequate supporting evidence is available.

This development highlights the importance of maintaining accurate administrative records for construction projects, particularly regarding NSSO declarations, subcontracting arrangements and the retention of supporting documentation.

4. From 2027: the introduction of a corrective factor

A further development was recently introduced under the Programme Law of 30 May 2026: a corrective factor that will apply to payroll withholding tax exemptions from 1 January 2027.

The government's objective is to control the budgetary cost of these schemes, particularly by offsetting the impact of inflation and wage indexation.

The amount of the exemptions will therefore be adjusted using the following coefficients:

• 2027: 97%
• 2028: 93.35%
• From 2029 onwards: 95.9%

For example, a theoretical exemption of €100,000 will be reduced to €97,000 in 2027, representing a €3,000 reduction in the tax benefit.

These coefficients may be revised under the conditions set out in the legislation. Certain implementing arrangements have yet to be clarified.

The measure will affect the various exemption schemes and will need to be reflected in employers' calculations and payroll withholding tax declarations from 2027 onwards.

Ongoing monitoring: essential to securing and optimising tax benefits

These successive developments highlight the increasing complexity of the regulatory framework and the importance of closely monitoring payroll withholding tax exemptions.

Our experience with tax audits has shown that data quality, accurate calculations and the availability of supporting documentation are increasingly critical to safeguarding these tax benefits. The audits observed in 2026, particularly those focusing on NSSO declarations for work on immovable property, reinforce this trend.

Beyond regulatory compliance, a thorough review can also help identify opportunities for optimisation, including for previous years. In this respect, it may still be possible to recover exemptions relating to 2023 before the end of 2026, subject to the applicable conditions and deadlines.

ABV supports companies in applying and optimising these schemes, ensuring the accuracy and reliability of their calculations, and providing assistance during tax audits, according to their specific needs.

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