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New tax audits regarding exemptions of payment of wage withholding tax

After the extensive audit wave in 2021, the tax authorities have started a new wave of tax audits regarding the different exemptions of payment of wage withholding tax.

A warned company is worth two…

New is the so-called ‘warning letter’. Some companies that apply one or more exemption(s) of payment of wage withholding tax (e.g. exemption for shift and night labor, the COVID-19 exemption or the R&D exemption) have already received a ‘warning letter’ from the tax authorities. In this letter companies are reminded that a correct application of those exemptions is of great importance.

From the audits of the tax authorities regarding last year it resulted that 64% of the audited companies received a rectification.  According to the tax authorities the rectifications are the consequence of the incorrect application of the legal conditions for the exemption. The tax authorities appeal to the companies to proactively proceed to a critical ‘self-evaluation’. This way, companies are recommended to verify whether the legal conditions are effectively met and whether the necessary evidence can be presented. As a result, rectifications and/or penalties can be avoided.

Such a ‘warning letter’ has no formal procedural value (like a request for information has) but can be the prelude to a tax audit. The letter also indicates that the tax authorities will perform audits in this respect in 2022 and beyond.

BELSPO-formalities regarding R&D

From our practical experience with the audits of last year it appears that the rectifications primarily focus on shift and night labor and on R&D. Regarding R&D, the tax authorities usually pay attention to the reporting of the R&D projects and/or programs on the electronic platform of the federal public service for science policy (‘BELSPO’). We notice that the interpretation of the tax authorities regarding the correct reporting to BELSPO often leads to discussions.

Proactive screening is recommended

To avoid unpleasant surprises during a tax audit it is recommended – as indicated by the tax authorities – to take proactive action and to verify whether the legal conditions are met. KPMG has built an extensive expertise in the matter and can provide assistance and offer solutions. Do not hesitate to contact us should you have any further questions or wish to receive assistance in this respect.

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Wouter Caers
Tax Partner

Corporate Tax
Antwerp

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Hendrik Putman
Director

Corporate Tax
Gent

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