Important modification to wage withholding tax exemptions

On 1 June 2026, a program law (Dutch | French) that includes - under section 3 - important modification to wage withholding tax exemptions was published in the Belgian official journal.

The latter modifications are made in response to a September 2025 report from Belgium’s Monitoring Committee highlighting the expected increased tax cost resulting from the partial exemptions from wage withholding tax.The report of the Monitoring Committee was provided in response to a parliamentary question raised on 2 October 2025 (Dutch | French) and predicts an increase in the tax cost of the exemptions from EUR 4.6 billion in 2025 to EUR 5 billion in 2030.The law seeks to maintain the budgetary sustainability of these exemption schemes without eliminating their substance.

Proposed correction factor

The correction factor would apply as from January 2027 to all the partial withholding tax exemptions (e.g., research and development, overtime hours, night and shift work).

More specifically, the program law introduces a new article 2750/2 CIR 92 to the Belgian Tax Code describing the correction factor which may be summarised as follows:

• 97% for remuneration paid or allocated from 1 January 2027 through 31 December 2027;

• 93.35% for remuneration paid or allocated from 1 January 2028 through 31 December 2028; and

• 95.9% for remuneration paid or allocated as from 1 January 2029 onwards.

As a consequence, the partial wage withholding tax exemption would be directly reduced by 3% in 2027.

The King may adjust the correction factor annually by decree deliberated in the Council of Ministers, and no later than 31 December of the year preceding the year to which the correction factor applies.