Employment Tax

Belgium | Shift work regulations — Understanding the BIS variant and the new correction factor

Summary

The Belgian Royal Decree of December 20, 2024 introduced significant changes to the tax exemption for shift work. One of the most impactful adjustments is the correction factor, which modifies the withholding tax exemption when shifts do not have equal workloads. This mechanism aims to ensure a fairer distribution of the tax benefit by proportionally reducing the exemption in cases where work shifts vary in size.

This newsflash provides an in-depth explanation of how the correction factor is calculated and applied.

The correction factor 

Why was the correction factor introduced?

Historically, if certain conditions are met, companies could claim a wage withholding tax exemption for shift work as long as employees worked in teams, regardless of slight differences in shift sizes.
However, a decision rendered by the Belgian Constitutional Court (in February 2024) raised concerns about whether this system unfairly benefited companies with highly flexible workforce structures.
To address these concerns while still allowing companies to benefit from the exemption, the government changed the law in May 2024 and introduced the so-called “BIS variant”. This alternative allows companies to continue receiving tax relief even when shift sizes vary, but reduces the exemption percentage proportionally based on the degree of variation in workload.

Calculation method

The correction factor is calculated at the company-wide level and is based on variations in workload across shifts. The process follows these key steps:

• Step 1 – Identify workload differences: The workload for each shift is measured using the number of full-time equivalent (FTE) employees.
• Step 2 – Determine total workload: Sum the total number of FTEs working across all shifts for the period being assessed (e.g. one month).
• Step 3 – Calculate the correction factor: The correction factor is obtained by dividing the total workload variation (Step 1) by the total workload (Step 2).
• Step 4 – Apply the reduction: The calculated percentage is applied to the original withholding tax exemption amount.

Example: let’s consider a company with two departments that involve shift work, each having different shift sizes over a one-month period.

Department	Total Workload (FTE)	Workload Variation (FTE)*
Department A	1.824 FTE	202 FTE
Department B	989 FTE	253 FTE
Total (Company-Wide)	2.813 FTE	455 FTE

*Regarding the workload variation during a given month, it is worthwhile mentioning that this represents the total workload variation over four weeks in a company. It is calculated by summing the weekly differences in workload across the departments.

Applying the correction factor formula:

•  Correction Factor = (Total Workload Variation) / (Total Workload)
•  Correction Factor = 455 / 2813
•  Correction Factor = 16.17% Reduction of the Exemption

Impact on tax exemption

Assuming an initial withholding tax exemption of EUR 50.000:

• Exemption = EUR 50.000 – (16.17% × EUR 50.000)
• Final Exemption = EUR 41.915

Impact for employers

Employers need to be aware of several key implications:

• Mandatory monthly application: The correction factor must be applied each month when calculating the wage withholding tax exemption. There is only one correction factor per company per month.
• Reduced tax benefits: The greater the variation in shift sizes, the higher the correction factor, leading to a lower exemption amount.
• Administrative compliance: Companies are required to maintain detailed records of their workforce structure and calculations to ensure compliance during audits.
•  Irreversible choice: Once a company opts for the BIS variant, it cannot revert back to the previous exemption system (with the strict conditions and full exemption).

Conclusion

The introduction of the correction factor represents a major shift in compliance requirements for companies benefiting from the shift work tax exemption.
Employers must ensure they accurately calculate workload variations, apply the correct adjustments, and maintain proper documentation to remain compliant.
Vialto Partners will continue monitoring how the Belgian tax authorities enforce these changes in practice and provide guidance to help companies optimize their tax position while adhering to the new regulations.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Anton Scornea
Manager

Filip Van Praet
Director

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