Belgium: Policy change for employer’s payroll compliance

Belgium: Employer’s payroll compliance

Belgian tax authorities announced a policy change with respect to penalties for non-compliance with payroll formalities. The penalties are to be automatically assessed beginning in 2016, whereas under prior treatment, the penalties were imposed only in “exceptional” instances.

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Background

Article 225 to 229/4 of the Royal Decree implementing the Belgian income tax law provides that in instances of non-compliance with “payroll formalities,” penalties and tax increases may be assessed. The “formalities” relate to the proper filing of withholding tax returns on wages, timely payment of withholding taxes on wages, and timely submission of salary slips (form 281). 

The penalties are, as follows:

  • Late or absence of submission of salary slips—the penalty amount ranges from €50 to €1,250.
  • Incorrect wage withholding tax returns, failure to file wage withholding returns, late payment of wage withholding tax—the penalty ranges from €50 to €1,250 and/or a tax surcharge ranging from 10% to 200% of the amount of withholding tax due.

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

Policy change

Historically, the tax authorities applied these penalties and surcharges only in “exceptional cases.” However, the new policy is that beginning 1 January 2016, these penalties and surcharges will be applied automatically with each breach of the rules. For failure to file or late filing of salary slips, the penalties will already be applied for salary slips with respect to income, 2014. These salary slips had to be filed on different due dates in 2015.

KPMG observation

This policy change implies that taxpayers will have to be more vigilant in managing their payroll, both with respect to calculating the amount of withholding tax due and the timely filing of wage withholding tax returns and salary slips.

 

Read a November 2015 report prepared by the KPMG member firm in Belgium: Belgian tax authorities announce policy change with respect to penalties for non-compliance with payroll formalities

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