Invoice withholding: an obligation largely unknown to entrepreneurs

Are you using a contractor to carry out work on your business premises, shop or offices? Did you know that you must check that the company carrying out the work has no tax and/or social security debts?
If it has debts, you must not pay the entire bill to your contractor, but instead take part of the amount and pay it directly to the government. If you fail to comply with this withholding obligation, the State will hold you jointly and severally liable for these debts and will claim the amounts from you!

For what type of business?

The invoice withholding obligation applies to four types of activity:

1. Property construction, conversion, completion and refurbishment work, e.g. painting, electrical work, custom-made furniture and fittings, installation of wall or floor coverings. Demolition work, as well as the installation of equipment such as sanitary facilities, heating or air-conditioning, fire protection and burglary protection systems. Maintenance and cleaning work, whether boiler maintenance, office cleaning or gardening.
2. Guarding and/or surveillance work or services as defined by Joint Commission 317, e.g. guarding a building or monitoring entrances during an event.
3. Certain activities in the meat sector.
4. The delivery of ready-mix concrete.

The scope of application is fairly extensive, particularly for work and other services related to property. So make sure you obtain all the information you need as soon as you use one of these business categories for your professional activities. This document explains the cases in which the withholding obligation applies for each sector (starting on page 11).

The NSSO has also created a service for checking whether the withholding obligation is in force for a list of companies. For further information, please email billretainment30bis@onss.fgov.be

To whom does this obligation apply?

A self-employed person or company that commissions work - or engages in any other activity listed in the previous point - must apply the principles of the withholding obligation if the work involves property used for business purposes.

Work carried out in the professional part of a dwelling is also subject to withholding, as is certain work carried out on an entire dwelling or mixed-use building, such as roofing or heating systems.

However, no withholding is required for work carried out by you as an individual for strictly private purposes, in your home for example, and which you pay for out of your own pocket. If you own a property privately (personal assets) and rent it out as a business or office, you are also not bound by this obligation, even though the end use is professional.

In the event of doubt, particularly for work on a mixed-use building, we advise you to apply the principle of the withholding obligation and seek professional advice.

Lastly, if you are a building contractor, you are also subject to the withholding obligation when you act as the project owner and have work carried out by a subcontractor. In this case, each subcontractor is responsible to the next.

Here are a few concrete examples:

• you are hiring a contractor to renovate your restaurant.
• you are a consultant renovating your family home to set up your professional office.
• you are having the boiler in your mixed-use building repaired or serviced.
• you are a plasterer subcontracting painting work to another contractor on one of your projects. 
• you are a bricklayer ordering ready-mix concrete for one of your projects.

What amounts are involved?

For tax debts, you must withhold 15% of the VAT-exclusive amount of each invoice and pay it to FPS Finance.

For social security debts, you must deduct 35% of the VAT-exclusive amount of each invoice and pay it to the National Social Security Office (NSSO).

If the work is invoiced in several instalments, you must repeat the consultation and check, with each payment, whether the contractor has any tax and/or social security debts and whether you need to withhold amounts.

If you do not apply the withholding correctly, you will be held jointly and severally liable for the contractor's social security and tax debts, up to the total amount of the work excluding VAT, which means you could end up paying the invoice twice! You may also have to pay surcharges...

How and when to check?

Checks can be carried out very quickly online at https://www.checkobligationderetenue.be/ application. Simply enter the company number of the contractor to whom you have entrusted the work and you will know immediately whether or not there is a withholding obligation thanks to a colour code (green or red).

Check out this video tutorial on how this application works :

If there is no obligation to withhold, you can generate a consultation certificate proving that you have carried out the check. Keep this certificate with the corresponding invoice! However, its validity is limited in time. If you pay the invoice before the certificate expires, you do not need to check it again. If you pay the invoice after this date, you must check the database again when you make the payment and withhold amounts if any debts have been recorded in the meantime.

If there is a withholding obligation for tax debts, the withholding amount must be paid into the account of FPS Finance, the General Administration of Tax Collection and Recovery (GATCR), Tax Collection Centre: IBAN: BE33 6792 0023 2046 - BIC: PCHQBEBB.  Please contact FPS Finance if you have any questions regarding the procedure or the amount to be paid (contact details below).

If there is a withholding obligation for social security debts, the application allows you to calculate the amount and pre-fill an online payment in the secure version. The contractor concerned will also receive notification of your invoice withholding in their e-Box Enterprise and/or in hard copy by post.  The amount is payable to the National Social Security Office: IBAN BE76 6790 0001 9295 - BIC: PCHQBEBB.

In short

• are you using a contractor for building work or any of the other activities described above, and your company (self-employed or company) is paying the invoice? You must respect the withholding obligation and check that the contractor has no tax and/or social security debts via the https://www.checkobligationderetenue.be application.
• does the work concern a mixed-use building, your home that also houses your professional activity (office, workshop, etc.) or a property that you rent out to a company? Check with a legal or tax advisor to see whether this obligation also applies to you.
• you must also comply with the withholding obligation if you are a contractor and have property work carried out or subcontracted to other contractors.
• if in doubt, ask a specialist or the authorities.

Reference websites and contacts 

For all practical questions, contact :

• FPS Finance - The GATCR Withholding Obligation Team
  • Website with FAQ section
  • Contact: +32 (0)2 572 57 57 working days from 8.30am to 5pm.
• NSSO
  • Website
  • Contacts: +32 (0)2 509 59 59 Monday to Friday 8.30am to 5pm or via this online form

Sources

• Law of 28 February 2022 containing various provisions on social matters (1), Belgian Official Gazette of 9 March 2022
• Articles 30bis and 30ter of the Law of 27 June 1969