Constitutional Court adopts a restrictive interpretation of the tax incentive for shift work

In response to two preliminary questions raised by the Belgian Supreme Court, the Constitutional Court (“the court”) published judgment No. 21/2024 (Dutch | French) on 8 February 2024 with respect to the application of the partial wage withholding tax exemption for shift work. The court ruled that one of the conditions to qualify for the exemption, namely that the work must be performed in at least two shifts that perform the same work both in terms of purpose and magnitude, is not discriminatory. This means that performing work that is similar in purpose and magnitude is not sufficient to qualify for the partial wage withholding tax exemption.

Prior to the court’s ruling, it had generally been accepted that shifts had to be broadly the same size in terms of number of employees to qualify for the exemption. In practice there was a deviation tolerance of plus or minus 10% (e.g., 50 employees working the early shift and 55 employees working the late shift). A strict interpretation of the court’s decision means that shifts need to consist of exactly the same number of employees.

The question remains how the tax authorities will apply the decision in specific cases. The case before the court concerned employees providing vehicle recovery services and others providing roadside assistance, and concluded that they carried out their work individually. If this strict interpretation is followed, it may exclude many companies from benefiting from the tax incentive for shift work.