Wage tax exemption in ‘support zones’ extended
Companies that invest in a demarcated ‘support zone’ can obtain an exemption of 25% of wage tax during a period of 2 years per additional job created as a result of this investment provided the additional employment is maintained at the same level during 3 years for SME’s and 5 years for large companies. This means that the employer must withhold the tax from the employee’s salary but must not pay it to the state, thus generating a cash benefit for the employer.
Support zones
Governments may take support measures to areas affected by massive collective redundancies. Flanders has currently demarcated three zones: around Genk, Turnhout and Zaventem-Vilvoorde. In the Walloon region there are four zones: around Seraing, Sambreville, Charleroi and Frameries.
The support period for the Flemish zones around Genk and Turnhout has now been extended until October 31, 2022 and the one around Zaventem-Vilvoorde until May 31, 2026. The Walloon zones have been extended until April 30, 2025.
Size of the company
To verify whether a company can benefit from the exemption, it must first be assessed whether the company is a SME company or a large company.
A SME company is a company that does not exceed more than one of the following criteria, the case being on a consolidated basis, in at least two out of the three last closed taxable periods:
- Annual average workforce: 250 employees
- Annual turnover excluding VAT: 50 million euros
- Balance sheet total: 43 million euros
SME companies can benefit from the measure in the entire zone while large companies can only benefit from it within a limited area in each zone. This can be verified on www.geopunt.be for Flanders or on www.geoportail.wallonie.be for the Walloon region.
Some companies are excluded anyway for instance companies that are in a business continuity procedure or whose net assets have decreased below less than 50% of the fixed part of their equity, companies that are held for more than 25% by a government,….
Additional conditions
Companies are only eligible if they create additional jobs at an establishment located in the demarcated zone. There should also be a clear link between the investment and the location concerned on the one hand and the additional jobs and the location concerned on the other hand. This can be newly created jobs or the increase of jobs and this within 36 months after the completion of the investment. The additional jobs must be maintained at the same level during 3 years for SME companies and 5 years for large companies.
The employer must make qualifying investments. This can go from the incorporation of a new establishment, the expansion of the capacity of an existing establishment (not for large companies), the diversification of production, a fundamental change in the complete production process (not for large companies) or the take-over of material or immaterial assets from a non-associated employer following closure, bankruptcy or judicial reorganization.
Formalities
The exemption must be requested within 3 months after completion of the investment but before the start of the employment.
The employer can immediately benefit from the exemption during 2 years. The exemption is however only final after proof has been provided that the job created has been kept during 3 years for SME companies and 5 years for large companies.
Conclusion
When starting or expanding an establishment, it is recommended to verify whether the employer can apply for the wage tax exemption in view of the significant cash benefit it generates, especially in the Flanders region where almost the entire region is demarcated as support zone.