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Royal Decree clarifies aspects of the alternative application of the tax exemption for shift work and continuous work

Global Employer Services | Reward & Mobility Alert

On 31 December 2024, a Royal Decree (Dutch I French) was published integrating the alternative application of the tax exemption for shift work and continuous work (also referred to as the “bis application”) into the provisions of the Royal Decree to the Income Tax Code (RD/ITC92). The alternative application broadly allows the exemption to be applied where the size of the work between succeeding shifts is not the same, but reduces the exemption by a “correction factor” to reflect the difference in size between the successive shifts. For more information on the alternative application, please see our previous Tax Alerts of 25 March 2024 and 16 May 2024. The Royal Decree clarifies various aspects of the alternative application, as summarised below, but leaves a number of questions unanswered.

Correction factor

The alternative application of the tax exemption for shift work must be based on one correction factor per month for the entire company. The same applies for the tax exemption for continuous work. The Royal Decree provides two examples of how to calculate the correction factor.

Calculation method

The benefit of the tax exemption is limited to the lower of the following two amounts:

  • 22.8% (shift work) or 25% (continuous work) of the qualifying taxable remuneration; or
  • The amount of withholding tax deducted from that qualifying remuneration.

Where the alternative application of the tax exemption is applied for each of shift work and continuous work, each amount should be reduced by the relevant correction factor. 

The Royal Decree indicates that frequently asked questions or a circular letter will be published by the tax authorities to provide further guidance on how to calculate the correction factor in certain specific cases. Deloitte Belgium will provide further insight in a payroll webinar once the guidance has been released.