Shift work: 10% rule eases application, increases administration

Alternative to the Withholding Tax Exemption for Shift and Continuous Work: More Clarity, More Administration

For over two decades, Belgian companies organizing their operations in shift or continuous work systems have benefited from a partial exemption from remitting wage withholding tax. This measure, intended to offset higher labor costs, allows up to 22.8% (standard scheme) or 25% (continuous work system) of certain wages to be exempt from remittance to the Treasury, provided strict conditions are met.

One of the most debated conditions is that the involved shifts must perform “the same work, both in content and in scope.” This wording led to years of interpretational disputes between companies and the tax authorities, culminating in the Constitutional Court’s ruling of 8 February 2024, which confirmed that strict application of this condition is not unconstitutional.

This alert delves into the Circular of 30 July 2025, which provides further clarification on the administrative positions regarding this exemption and introduces a tolerance.
 

Standard Scheme: Strict Application of ‘Scope’ vs. Tolerance

The Constitutional Court’s ruling (No. 21/2024) confirmed that the exemption applies only when successive shifts perform the same work in both content and scope. Companies with fluctuating shift sizes due to peak and off-peak hours, or where the scope is merely “comparable,” fall outside the standard scheme.

The circular clarifies that scope is typically measured by the number of shift members (full-time equivalents and/or hours worked). A tolerance of up to 10% is allowed between the largest and smallest shift, calculated as: 

This deviation is assessed daily per shift system. If the difference remains within the 10% margin on every working day of the month, the standard exemption may be applied. Deviations above 10% are only permitted if demonstrably due to circumstances beyond the employer’s control, such as illness or accident.

Legislative Intervention: Alternative Regime (“bis” variant)

To accommodate companies with fluctuating shift sizes, the law of 12 May 2024 introduced an alternative scheme (via Article 275.5, §1/1 and §3/1 WIB 92). This ‘bis’ variant offers more flexibility but entails a proportional reduction of the exemption amount.

In this scheme, the equal scope condition is dropped. Instead, a corrective factor is applied, reducing the exemption amount as the deviation in scope between shifts increases. The calculation involves four steps:

1. Determine the maximum exemption amount (22.8% or 25% of taxable wages);
2. Measure the daily scope difference between shifts;
3. Calculate the monthly corrective factor: sum of all deviations ÷ sum of total scope;
4. Reduce the capped exemption amount by this corrective factor.

This alternative scheme is optional and applies to wages paid or granted between 1 January 2021 and 31 December 2026.
 

What Remains Unchanged?

• The standard scheme continues to exist;
• All other conditions remain in force: shift premium, one-third rule, substantive equality of work;
• The alternative scheme still requires employees to perform at least one-third of their working time in shift work;
• It is confirmed that a night shift may be considered a third shift (for shift work) or as night work (under the night work exemption rules).
   

Timing and Retroactivity

• The alternative scheme applies retroactively from 1 January 2021;
• Corrections for the year 2024 are possible until the end of August 2025 via positive declarations (codes 74 for shift work and 53 for continuous work);
• The ‘bis’ scheme expires on 31 December 2026, pending broader reform.
   

Practical Considerations

Payroll Processing

Calculating the exemption amount, especially under the alternative scheme, requires monthly analysis of shift structures and sizes. Payroll managers must have accurate deviation percentages per shift system by mid-month following the wage period (month X+1). Late processing may incur interest charges. Corrections in month X+2 are possible but risky.

Multiple Shift Structures

Companies with multiple sites or departments may have different shift structures. For example, shift AA in distribution center X and shift BA in center Y may differ in content. Each shift system requires separate handling. Employees switching shifts must be correctly assigned, and deviation percentages may vary by location.

Nominative List

The monthly nominative list summarizing the applied exemption must be expanded or internally substantiated. It should include all employees involved, applied deviation percentages, and the corrective factor calculation method. This ensures alignment between the declaration and underlying calculation and provides transparency during audits.

Choice Flexibility

The circular allows companies to choose monthly between the standard and alternative ‘bis’ scheme. It is unclear whether this choice must be formally documented or reported to the tax authorities (currently no separate code). It’s also unclear whether the choice applies per month and per shift system or to the entire company, potentially leading to interpretational differences.

Temporary Workers

For temporary workers, the temp agency is equated with the company where the worker is employed. Under the alternative scheme, the agency must receive daily and per-shift information from the client company about work scope and deviations. This significantly increases the administrative burden and may affect total employment costs. Existing agreements may need revision.
 

Remarks

• The alternative offers legal certainty but increases the administrative burden;
• The corrective factor may significantly reduce the benefit;
• Retroactivity presents both opportunities and risks, even for previously audited years.
   

Conclusion

The introduction of an alternative scheme and the 10% tolerance are important steps toward greater clarity. However, implementation requires careful monitoring. Choosing the alternative must be a well-considered decision, taking into account structural shift setup, administrative capacity, and fiscal impact. Thoughtful implementation is essential to avoid errors and penalties.

Our expert teams are ready to validate the application in a structured manner.