Belgium – New Emphasis on Penalties for Payroll-Related Non-Compliance

Belgium – New Emphasis on Penalties for Payroll-Related

This GMS Flash Alert reports that the Belgian tax authorities recently announced a policy shift with respect to penalties for non-compliance with certain payroll procedures.

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Belgium’s tax authorities recently announced a policy shift concerning penalties for non-compliance with certain payroll procedures.  The authorities, starting in 2016, will readily apply, more so than in the past, their statutory authority to impose penalties and additional tax when taxpayers are non-compliant in respect of their proper filing of wage withholding tax returns, timely payment of wage withholding taxes, and timely submission of salary slips.  The announcement represents a stark departure from the tax authorities’ former practice of only applying these penalties and surcharges in exceptional circumstances.

WHY THIS MATTERS

Employers will have to be more vigilant in managing their payroll, both with respect to calculating withholding tax due and timely filing of wage withholding tax returns and salary slips to mitigate the risk of penalties and additional tax.

Background

Article 225 to 229/4 of the Royal Decree implementing the Belgian income tax code provides that in case of non-compliance with payroll procedures, the tax authorities may apply penalties and additional tax.  More specifically, these procedures relate to proper filing of wage withholding tax returns, timely payment of wage withholding taxes, and timely submission of salary slips (form 281).

Penalties

The penalties are as follows:

  • Late submission of salary slips or failure to submit salary slips: a penalty ranging from EUR 50 to EUR 1,250; 
  • Incorrect wage withholding tax returns, failure to file wage withholding returns, late payment of wage withholding tax due: a penalty ranging from EUR 50 to EUR 1,250 and/or a tax surcharge of 10 percent to 200 percent of withholding tax due.

The applicable penalty or percentage depends on the taxpayer’s record of non-compliance.

In the past, the tax authorities applied these penalties and surcharges only exceptionally.  However, they have recently announced on their Web site that as of 1 January 2016, the above-mentioned penalties and surcharges will be applied automatically with each breach of the rules.1  For failure to file or late filing of salary slips, penalties will already be applied for salary slips with respect to 2014 income.  These salary slips had to be filed on different due dates in 2015. 

KPMG NOTE

Employers may wish to consult with their tax service providers to establish whether their payroll systems and processes are adequate and functioning in a manner that will help foster proper compliance with Belgian rules.

FOOTNOTE

1  See Amendes et accroissements d’impôt pour fiches fiscales et déclarations de précompte professionnel non rentrées (6 November 2015) on the Web site for Belgium’s Service Public Fédéral Finances.

CONTACTS

For additional information or assistance, please contact your local GMS or People Services professional or the following professional with the KPMG International member firm in Belgium:

 

Ferdy Foubert

Tel. +32 2798 3817

Ferdy.Foubert@kpmg.be

The information contained in this newsletter was submitted by the KPMG International member firm in the Belgium.

© 2016 KPMG Tax and Legal Advisers, a Belgian Civil Cooperative Company with Limited Liability (burg. CVBA/SCRL civile) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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