Following the adoption of the program law by the Chamber, the FPS Finance announced that Annex III of the Royal Decree/Income Tax Code 92 will be amended as soon as possible.
To ensure the most accurate application of the withholding tax, this measure may therefore already be applied.
Previously published: 'Overtime: new government focuses on expansion and permanent regimes'
Involuntary overtime with tax-favourable regime for 180 overtime hours
⏳ Temporary extension pending permanent expansion
The federal government agreement for 2025-2029 states that the expansion to 180 overtime hours per year will be permanent, providing a legal basis for indefinite duration.
However, the government will not be able to secure this indefinite basis before June 30. Therefore, an amendment has been submitted to the programme law to extend the current arrangement until the end of 2025. This tax reduction will be applicable until December 31, 2025.
📌 What is it about?
For overtime that requires legal overtime pay, the tax authorities have been offering tax-favourable treatment for years. This includes a reduction of the advance tax levy for both the employer and the employee.
This tax-favourable regime currently applies to 130 overtime hours per year. In recent years, this limit has been increased to 180 hours per year, but each time it has been for a limited duration of two years. The current end of this expansion is set for December 31, 2025.
The rules for involuntary overtime today
Formalities Strict: valid reason needed; depending on the reason, also information procedure, adjust work schedule, etc. Grant compensatory rest? Yes (exceptions are possible) Pay overtime? Yes (above certain limits) Social security contributions owed? Yes Advance tax levy owed? ✔️ Favourable regime for 180 overtime hours per year:
- Exemption from advance tax levy for employer
- Reduction of advance tax levy for employee
Maximum number of overtime hours per year ✔️ No maximum number. Overtime must be compensated as soon as 143 consecutive overtime hours have been worked (internal limit). There are daily and weekly limits. What does the government agreement 2025-2029 provide?
The tax-favourable regime for 180 overtime hours per year will be of indefinite duration.
Voluntary stimulus overtime (net and without overtime pay)
⏳ Current 120 overtime hours extended pending expansion to 360 overtime hours
The government agreement includes an expansion of this system to 360 voluntary overtime hours per year, for indefinite duration:
- 240 net overtime hours without overtime pay and without compensatory rest
- 120 overtime hours with overtime pay and without compensatory rest. For this, you pay social security contributions and advance tax levy, with possible application of the tax-favourable regime (see above).
- The written agreement as a formality remains in place.
However, the government will not be able to secure the indefinite expansion before June 30. Therefore, an amendment has been submitted to the programme law to extend the current arrangement until the end of 2025. The possibility to perform 120 stimulus overtime hours will thus be applicable until December 31, 2025.
📌 What is it about?
In the aftermath of the coronavirus crisis, the previous government developed a temporary arrangement for 'stimulus overtime'. This regime ends on December 31, 2025. It allows for 120 voluntary overtime hours with the following benefits:
- No compensatory rest
- No overtime pay
- No social security contributions or advance tax levy (gross = net)
- A written agreement with the employee suffices as a formality
Similar to regular voluntary overtime, you need a written agreement from your employee.
In combination with the ‘regular’ voluntary overtime, employees can work a total of 220 voluntary overtime hours:
- 100 regular voluntary overtime hours with overtime pay, with possible application of the tax-favourable regime (see above)
- 120 stimulus overtime hours for which you do not pay overtime (gross equals net)
The rules for stimulus overtime today
Formalities ✔️ Flexible: written agreement from employee needed, to be renewed every six months Grant compensatory rest? ✔️ No Pay overtime? ✔️ No Social security contributions owed? ✔️ No (gross = net) Advance tax levy owed? Maximum number of overtime hours per year 120 hours, to be combined with max. 100 regular voluntary overtime hours
What does the government agreement 2025-2029 provide?
A doubling to 240 net overtime hours without overtime pay, for indefinite duration. To be combined with 120 regular voluntary overtime hours with overtime pay.
What does this mean for you?
As an employer, you will be able to use the current stimulus overtime until the end of 2025. Meanwhile, the government and parliament are working on an indefinite expansion.
You will also be able to apply the tax reduction for 180 overtime hours with overtime pay until the end of 2025. The government and parliament are also working on a definitive implementation for that.
Do you want more information about overtime and the content of the government agreement? Then consult our article from February 24.
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