The federal government’s new Program Law, voted on 28/05/2026, introduces significant changes to the wage withholding tax (WHT) exemption regime. As the government seeks to close the budgetary gap and consolidate public finances, the WHT exemptions — long regarded as a cornerstone of Belgian employer incentives — are being curtailed. Two measures stand out: a general correction factor that caps the financial benefit of all existing WHT exemptions, and a tightened definition of night and shift work for the purposes of the related WHT exemption. Both measures will require employers to carefully reassess their current exemption claims and payroll processes.
A correction factor to cap the benefit of WHT exemptions
What is changing
A new article 275§2 is inserted into the Belgian Income Tax Code (ITC 1992), introducing a “correction factor” that proportionally reduces the amount of WHT that employers are allowed to retain (i.e., not remit to the Treasury) under the various existing WHT exemption categories. The correction factor provisions enter into force on January 1st, 2027 and is set as follows for remuneration paid or attributed:
- Between 1 January 2027 and 31 December 2027: 97%
- Between 1 January 2028 and 31 December 2028: 93.35%
- From 1 January 2029 onwards: 95.9%
In practical terms, this means that an employer currently retaining 100% of a given WHT exemption amount will only be allowed to retain 97% of that amount in 2027, 93.35% in 2028, and 95.9% from 2029 onwards. The difference must be remitted to the Treasury. An adjustment mechanism by Royal Decree will be installed in order to allow an adjustment of the above-mentioned percentages on a yearly basis. This adjustment is linked to the evolution of the total amounts not remitted to the Treasury, benchmarked against calendar year 2026. The burden of proof regarding the correct application of the correction factor will equally be discussed by Royal Decree.
A sweeping scope
The correction factor applies across the board to virtually all existing WHT exemptions, including those for:
- Overtime work (article 275§1 ITC)
- Shift and night work (article 275§5 ITC)
- Research and development (articles 275§6 and 275§7 ITC)
- Young employees, mentors, and start-ups (articles 275§8 to 275§9/1 ITC)
- Sportspeople (article 275§3 ITC)
- Sea fisheries (article 275§4 ITC)
- High-tech companies and maritime transport (articles 275§10 to 275§12 ITC)
- Occasional workers in horticulture (article 275§13 ITC)
Key actions for employers
Given the breadth of this measure, it is essential to be prepared for these changes and to:
- Quantify the financial impact of the correction factor on their current WHT exemption claims for 2027, 2028, and 2029 onwards, and incorporate these reduced amounts into their payroll budgeting and forecasting.
- Review payroll systems and WHT reporting processes to ensure the correction factor is correctly applied and that supporting evidence can be provided upon request by the tax authorities.
- Assess cumulative impact in combination with other measures in the Program Law (e.g., wage moderation measures, social security contribution changes) to understand the full effect on the employer’s total cost of employment.
Tightened definition of night and shift work for WHT exemption purposes
What is changing?
The Program Law introduces targeted amendments to article 275§5 of the ITC92, which governs the WHT exemption for employers who organise night or shift work. These changes align the tax definition of night work more closely with the Belgian Labour Law of 16 March 1971 and impose stricter conditions on the night premium. Very important in this regard is the entry into force. These amended definitions apply to remunerations paid or attributed from 1 June 2026 onwards.
New definition of night work
Under the current rules, the WHT exemption for night work applies to workers performing work “between 20:00 and 06:00”. The Program Law replaces this with a reference to “night work as defined in article 35, §1, of the Labour Law of 16 March 1971”. Article 35, §1 of the Labour Law defines night work as work performed between 20:00 and 06:00. While this time window may appear identical to the previous wording of the WHT exemption, the explicit cross-reference to the Labour Law is significant: it anchors the tax concept of night work firmly within the broader labour law framework, including the conditions and derogation mechanisms set out in §§2 to 5 of the same article (which govern when and under what circumstances night work is permitted). This means employers can no longer interpret the night work concept for WHT purposes in isolation from labour law requirements, potentially narrowing the scope of the exemption for employers whose arrangements do not fully comply with the Labour Law framework. This alignment with the Labour Law definition is a significant change, as it anchors the tax concept of night work to the broader labour law framework, potentially narrowing or broadening the scope depending on the employer’s specific working arrangements.
Revised night premium conditions
The definition of the “night premium” is also being tightened. The night premium must now:
- Be attributed in accordance with the provisions of article 35, §§2 to 5, of the Labour Law of 16 March 1971 ;
- Constitute an increase of at least 12% of the remuneration attributed to the worker for one hour of night work performed; and
- Be determined by a collective bargaining agreement (CBA), the work regulations, or an individual employment contract between the employer and the employee.
A night premium that meets these requirements is also regarded as a “shift premium” for the purposes of applying the shift work exemption under paragraphs 1 and 3 of article 275§5.
Shift premium — unchanged threshold
The definition of the shift premium continues to require an increase of at least 2% of the remuneration attributed to the worker for an hour of shift work, and must be determined by a CBA, work regulations, or an individual employment contract.
Why it matters
The Belgian tax authorities have increasingly scrutinised the application of the WHT exemption for night and shift work WHT in recent years, with a focus on whether employers’ working arrangements genuinely qualify as “shift work” or “night work” under the existing rules. By tying the definition to the Labour Law, the legislator is creating a clearer — and potentially stricter — framework, reducing room for interpretation that some employers may have relied upon. Employers in sectors that operate non-standard schedules should carefully review whether their current arrangements still meet the updated criteria.
Broader context
These measures are part of the Belgian federal government’s broader fiscal consolidation effort, as outlined in the 2026 Program Law. The WHT exemptions represent a significant cost to the Treasury — a cost that has grown substantially over the years as more employers have made use of the various exemption categories. By introducing the correction factor and tightening eligibility criteria, the government aims to rein in these costs while maintaining the exemptions as a structural feature of Belgium’s employer incentive landscape. The approach signals a pragmatic “trim rather than cut” strategy: the exemptions remain in place, but their financial benefit is being reduced in a measured, across-the-board fashion. Remains to be seen how these exemptions will be audited by the Belgian Tax Authorities.
Authors: Bart Van den Bussche and Pierre Demoulin. (PwC Belgium)
