Professional withholding tax exemption also for shift work in the building sector

Professional withholding tax exemption also for shift work in the building sector

Employers are obliged to transmit the professional withholding tax which they withhold on the wages of their personnel to the Treasury. On this obligation, a number of exceptions exist. E.g. for shift work in certain sectors. The exemption for shift work now also applies to the building sector.

Obligation to transmit and exemption

Companies withhold professional withholding tax on the wages of their personnel. This tax is transmitted to the Treasury. In the past the legislator introduced a number of exemptions, whereby the employer withholds the professional withholding tax, but does not transmit it. Under certain conditions, the employer can keep the withheld tax himself.

Shift and night work

For shift and night work there is already an exemption. Until now it was only applicable to subsequent shifts. As a consequence the exemption was only applicable in the industry. The condition of subsequent shifts is now cancelled for construction work as defined for VAT purposes. Therefore the building sector now also qualifies. The new rules apply retroactively as of 1 January 2018.

The shift work can actually be performed on location (meaning: on a construction site). A 'shift' should consist out of at least two employees performing the same or complementary work.

Exemption of 3%

The exemption percentage amounts to 3% of the salary. As from 1 January 2019 the percentage will increase to 6% and as from 1 January 2010 it will further increase to 18%.

New (for industry and building sector) is that the amount which the employer should withhold, but can keep, is calculated at the level of all employees which qualify. This means that in case the actual amount to be withheld is lower than the exemption percentage, the difference can be withheld with someone else.

In the industry the exemption percentage currently amounts to 22,8%.
Employer A has two employees X and Y:

Employee X has a salary of 100. According to the price scale for the professional withholding tax, the employer should withhold 20% professional withholding tax. However, the actual applicable amount for A is 22,8%. Consequently 2,8% is 'lost' since it cannot be used.

Employee Y also has a salary of 100, but according to the price scales 25% should be withheld for him. 22,8% can be kept by the employer. Leaves 2,2% which should normally be transmitted to the Treasury. This 2,2% can be used by the employer to compensate for the 2,8% which was with X. As a result the exemption for the employer A increases up to 45 (20 for X + 22,8 for Y + 2,2 transferred) instead of 42,8 (20 for X + 22,8 for Y). Consequently the employer obtains a higher exemption.

Only the last 0,6% (2,8 - 2,2) is lost and should be transmitted by A to the Treasury.

Condition: minimum wage shift worker

The exemption only applies for employees with a gross hourly salary of at least 17,42 (indexed amount for tax year 2019).

Not for one-off payments

The exemption does not apply to:

Payments which only occur once a year, such as holiday allowance and year-end bonus.


Additional premiums.

Why extension to the building sector?

The changes are made to make shift work in the building sector more interesting fox tax purposes. The government herewith wants to:

Reduce the labour costs.

Avoid social dumping.

Reduce illegal labour.