Even if your company is not active in the construction sector, but does commission construction work, it is essential to be aware of the legal obligations to prevent double payments and fines. An important aspect of this is the withholding obligation in accordance with Art. 30bis of the NSSO Act in the event of social or tax debts of your contracting party.
In this article, we explain what this withholding obligation entails and how your company can comply with it to avoid legal problems.
What is the withholding obligation?
The withholding obligation means that your company is obliged to withhold a portion of the invoice amount when paying invoices for construction work. This withheld amount must then be deposited into a blocked account with the NSSO. The purpose of this arrangement is to ensure that social security contributions are paid by the contractors carrying out the work.
Why is compliance important?
Compliance with the withholding obligation is important for several reasons:
-
Legal consequences:
The client is obliged to transfer 35 percent of the amount due directly to the NSSO. Naturally, only if the contractor has social security debts at the time of payment.
If this is not done, the client can be held jointly and severally liable for the payment of the social security debts of its contracting party. In addition, an extra 35% surcharge can be imposed.
For joint and several liability, the following conditions must be met:
1° the contractor has tax or non-tax debts at the time the contract is concluded;
2° there are also tax or non-tax debts on the part of the contractor at the time the invoice is paid;
3° the contracting party fails to apply the withholding on the invoice and transfer it to the FPS Finance account within 30 days.
-
Financial impact:
The financial impact of not complying with the withholding obligation should not be underestimated. If the company fails to transfer 35% to the NSSO, it risks being held jointly and severally liable. In practice, this means that, even if you have already paid the full amount to your contracting party, the NSSO can again claim the full amount from you. In addition, an extra contribution of 35% can be levied on this.
-
Reputation:
Equally important is the impact on your company’s reputation: compliance with legal obligations shows that your business is reliable and has integrity. This can strengthen your company’s reputation and customer trust.
How does your company comply with the withholding obligation?
To comply with the withholding obligation, your company must take the following steps:
- Identify the applicable situations: check when the withholding obligation applies to your construction projects;
- Check whether your contracting party has debts: you can easily check this via the online register at https://www.checkinhoudingsplicht.be/
- Withhold contributions: when paying invoices, your company withholds the required percentage as determined by law;
- Transfer to the NSSO: Ensure that the withheld amount is deposited on time and correctly into the blocked account with the NSSO;
- Keep documentation: carefully keep the records of the withheld amounts and deposits
By strictly observing the withholding obligation, your company can prevent double payments and fines. In this way, the financial interests of your business are protected and compliance with the law is guaranteed.
Do you have questions about the withholding obligation or are you facing joint and several liability? Please feel free to contact us for advice. We will be happy to help you.