New reporting and withholding tax obligation for remuneration granted by foreign parent company adopted by Parliament
The Parliament approved in plenary session a law organizing the introduction of a reporting and withholding tax obligation for all Belgian employers with respect to remuneration paid to or granted to their employees by a foreign parent company or affiliate.
The law introduces a reporting obligation (form 281) and a withholding tax obligation.
The reporting obligation and the withholding tax obligation with respect to remuneration paid by a foreign parent company or affiliate – applicable regardless of whether or not the Belgian employer has been involved – is introduced for income paid or attributed as from 1 March 2019.
We refer to our previous E-tax flash of 20/12/2018 for the implication of the new obligations for Belgian companies.
A transitional regime is also foreseen for the period between 01/01/2019 and 28/02/2019. On the remuneration paid during this period no withholding tax needs to be applied but this income will also have to be reported to the tax authorities on a specific form with the deadline set at 01/03/2020. The model of the form will be specified by Royal Decree.
The adopted text also add penalties in cases of non-compliance to the new obligations: a fine of 10 percent of the accrued or paid remuneration to the Belgian employee will apply.
Nevertheless, no fine will be due if the taxpayer can prove the remuneration has been included in the income tax return of the employee.