Correction factor for tax exemptions from 2027 onwards
by Chelsy Deventer and Thea Debbaut
The exemptions from remittance of payroll withholding tax are currently an important support measure for many companies. More and more employers are making use of these exemptions, for example for research and development (R&D), shift and night work, or overtime. However, due to the growing use of these measures, combined with the impact of inflation and wage indexations, the cost for the government is rising sharply. In 2024, this cost amounted to no less than €4.36 billion. To limit the impact on the budget, the Programme Act of 30 May 2026 introduces a correction factor as of 1 January 2027.
What exactly is changing?
Specifically, a new Article 2750/0/2 is inserted into the Belgian Income Tax Code 1992 (BITC 92). The existing exemption percentages remain unchanged (for example 80% for R&D). However, the effective benefit enjoyed by employers will be reduced from 1 January 2027 through the application of a correction factor.
The correction factor will be:
97% for remuneration paid or granted between 1 January 2027 and 31 December 2027;
93.35% for remuneration paid or granted between 1 January 2028 and 31 December 2028;
95.9% for remuneration paid or granted from 1 January 2029 onwards.
These percentages are based on the expected evolution of inflation. Depending on actual inflation developments, the King may still adjust these correction factors no later than 31 December of the year preceding the year to which the correction factor applies. Such adjustments may be made either upwards or downwards.
Why this measure?
With this intervention, the government aims to control the budgetary cost without completely dismantling the payroll tax exemption system. Since the exempt amount automatically increases along with wages, this effect will be curbed from 2027 onwards by multiplying the calculated benefit by a correction factor.
The estimated savings:
107 million euros in 2027
246 million euros in 2028
148 million euros in 2029
Practical impact for employers
For employers, this means that they will still be able to apply the existing exemption percentages from 2027 onwards, but the final amount that does not have to be remitted will be reduced by the correction factor.
Example
Suppose that in March 2027, the company Research & more employs three industrial engineers working on R&D projects. For these employees, the company applies the R&D exemption (80%). Below, you can see step by step how the benefit is calculated and what the correction factor from 2027 onwards will mean.
| Employee | Retained withholding taxes | Basis for exemption (80%) | R&D time | Exemption (pro rata) |
|---|---|---|---|---|
Employee 1 | € 800 | € 640 | 40% | € 256 |
Employee 1 | € 900 | € 720 | 70% | € 504 |
Employee 1 | € 1,000 | € 800 | 75% | € 600 |
Without the correction factor, the monthly exemption in this example amounts to €1,360.00.
With the 2027 correction factor (97%), the exemption is reduced to €1,319.20.
When does it take effect?
This law enters into force on 1 January 2027. From that date onwards, the calculated exemption amount will be reduced through the application of the correction factor.
Questions about the impact?
Would you like to know what this measure specifically means for your company?
Our experts will review together with you:
the impact on your current situation;
possible optimizations;
how best to prepare for 2027.
Feel free to get in touch with your account manager or via the contact form below.
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Chelsy Deventer
Advisor Social Legal chelsy.deventer@vdl.be
Thea Debbaut
Manager Social Legal thea.debbaut@vdl.be
Disclaimer
In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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