Exemption from payment of withholding tax for training courses - Clarification provided by Circular 2022/C/69
In order to encourage private sector employers to have their employees undergo more training, a new tax advantage – in the form of a partial exemption from the payment of withholding tax – was introduced by the Programme Law of 20 December 2020. The conditions of application of this aid measure were recently specified by the circular of 15 July 2022.
Conditions for granting the exemption
In order to benefit from this exemption from the payment of withholding tax, several conditions must be met.
First of all, the employee concerned must have been employed by the employer for at least 6 months. This condition is intended to prevent routine training in order to learn about the new job from being taken into account for the exemption from payment of the withholding tax.
Secondly, the employee concerned must follow a minimum number of eligible training courses during a given period. Thus, where the employer is considered as a small enterprise within the meaning of Article 1:24 of the Companies and Associations Code, the minimum number of training hours is 38 hours over an uninterrupted period of 75 calendar days. Where the employer is an enterprise where shift work or night work is performed and which pays or awards a shift premium, the minimum number of training hours is 76 hours over an uninterrupted period of 60 calendar days. For other employers, the threshold is 76 hours of training to be taken over an uninterrupted period of 30 calendar days. In the case of reduced working hours, the minimum number of training hours is reduced proportionately.
In order to reach this threshold, the duration of several courses can be added together. Training courses that take place in the evening or that last only a few hours are therefore also considered. The days on which the training is attended are also irrelevant. It can therefore be both working days and days off.
All training that has not been made compulsory by a legal or regulatory provision, by a collective labour agreement or by any other similar provision is eligible. Consequently, compulsory further training is not eligible. Similarly, training courses taken within the framework of the interprofessional objective of 5 days per year provided for in the Law concerning Feasible and Manageable Work are not eligible. This law is intended to encourage employers to make additional efforts in the area of training.
With regard to the specific interprofessional target of 5 days (applicable only to companies with at least 10 employees), it should be noted that this number is 3 days for the year 2022. It will increase to 4 days in 2023 and to 5 days in 2024. However, for companies that have between 10 and 20 employees, this target is reduced by one day per year per employee. While this target is currently measured as an average per full-time equivalent employee in the company, the new employment deal provides for the target to be individualised per employee.
In addition, the cost of such eligible training must be fully borne by the employer. In other words, these training courses must constitute professional expenses for the employer. The circular also specifies that training courses followed as part of a cafeteria plan are not eligible.
Benefits of the measure
When the above-mentioned conditions are met, the withholding tax, exempt from payment to the Treasury, amounts to 11.75% of the total taxable remuneration of the employees concerned, excluding double holiday pay, end-of-year bonus, arrears of remuneration, income not subject to withholding tax or exempted by treaty. Moreover, this remuneration is only taken into account up to a maximum of EUR 3,500 taxable per employee, it being specified that this amount is reduced proportionally in the case of part-time work.
This exemption applies only once in the calendar month in which the training was completed.
Formalities required
The employer wishing to apply this measure must submit a second declaration to the Professional Tax Office for this purpose.
It is also the employer’s responsibility to keep at the disposal of the tax authorities a nominative list containing, for each employee concerned, certain information such as in particular: his/her full identity, the national number, the training courses followed, the dates on which the training was followed, the amount of remuneration taken into consideration and the calculation of the withholding tax retained.
Action point
There is little statistical data to enable us to assess the success of this measure among companies to date, however interesting it may be. In addition to the tax advantage of providing training, we should not lose sight of the benefits that training can bring in the long term to the skills and motivation of employees. Let us hope that this measure will encourage employers to invest in the training of their employees.