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Massive withholding tax audit wave –
material exposure
EY reported previously that the Belgian tax authorities have shifted gears since the
beginning of this year in auditing the withholding tax exemptions and reductions
applied by employers (a.o. for overtime, R&D, night and shift work,...).
This had led to an unprecedent wave of tax audit notices (more than 2.000 so far)
on this particular topic.
As the first audits are coming to initial conclusions, we wanted to share an update
on the challenges and pitfalls we have seen to date.
1. Timeframe and administrative burden
While it is clear that the information that is requested by the tax authorities is often
massive, extensive, and in some instances excessive, we have experienced an
appetite from the tax inspectors to generally embark in a cooperative and
constructive process that limits the administrative burden for the employers (site
visit rather than paper answer for example).
It is therefore important that companies who are facing issues with the volume or
the level of detail of information that is requested, or with the deadline that is set
forth by the authorities, take the initiative to come to a workable solution with the
competent tax inspector.
Please note however that negotiation margin to obtain additional extensions is very
limited.
2. Sensitivity of the notices
The internal instructions sent to the tax inspectors did not contain a stringent
template of the inquiries to be launched. As a result, there is a wide range of
notices with different questions that are being issued to the employers.
We noticed on several occasions that the questions or information asked by the
authorities were either not in line with the legislation in force, ambiguous or even
irrelevant for withholding tax purposes. However, our experience suggest that
failing to provide an answer to any of the question raised, would lead to a
reassessment of the withholding tax position of the company.
Support from an expert team is a must to minimize the exposure to procedural
mistakes or providing incomplete or inaccurate answers .
3. Second wave
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HC Withholding tax
Task Force
Jean-Nicolas Lambert
Partner
+32 2 774 92 64
jean-nicolas.lambert@be.ey.com
Robin Collard
Partner
+32 2 774 93 28
robin.collard@be.ey.com
Hendrik Serruys
Executive Director
+32 3 270 14 68
hendrik.serruys@be.ey.com
Pieter Nobels
Senior Manager
+32 2 774 94 68
pieter.nobels@be.ey.com
Jonathan De Meuter
Senior Consultant
+32 2 774 95 56
jonathan.de.meuter@be.ey.com
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2. While the first wave of notices targeted mainly larger companies or companies with
substantial deductions and reductions, we have learned that the authorities plan to
begin to issue notices also to smaller companies, especially if they are combining
two or more types of withholding tax exemptions or reductions.
Our recommendation
Companies who have already received a notice of tax audit or tax inquiry are
advised to
• Respect the short deadlines and administrative contingencies imposed by
the Income Tax Code
• Get an expert opinion on the notice received as well as on the reply which
will be provided
• Request their advisor to act as an intermediate with the relevant inspector
As we expect that a second wave of notices are due to be issued shortly, clients
are advised to review the current reductions and exemptions they are applying and
ensure they are still in line with the conditions as they evolved over time.
Clients are invited to contact their regular HC contact or a member of the
dedicated HC task force on the matter for further information and support.
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