Withholding obligation

What does the withholding obligation (inhoudingsplicht) mean?

If, in certain sectors, you engage a (sub)contractor, you not only have to keep an eye on the quality of the work delivered, but you also bear responsibility for that partner's tax and social security position. If your (sub)contractor has outstanding debts with the government, you may not simply pay their invoice in full. Before each payment, you are obliged to check whether that partner has outstanding tax or social security debts. If so, you must withhold part of the invoice amount and transfer it directly to the government instead of to your (sub)contractor. This check applies per invoice, every time: this principle is known as the withholding obligation (inhoudingsplicht). 

In which sectors does the withholding obligation apply?

The withholding obligation applies to anyone acting as principal for work on immovable property: construction, renovation, shell construction, electrical work, plumbing, painting, roofing and similar activities. In addition, the scheme also applies to the cleaning sector, the meat sector and the security and surveillance sector.

Important to remember: it is about the nature of the work carried out, not the sector in which your own business is active. For example, if an IT company has its office building renovated, that company does fall under the withholding obligation for that job. Private individuals who have a purely private renovation carried out, on the other hand, are exempt.

How do you check whether the withholding obligation applies?

Do you work with onFact? Then the program checks this for you straight away. onFact is directly linked to the government database on the withholding obligation. When processing a purchase, we look at the company number of your (sub)contractor and the tool immediately shows whether there are outstanding tax debts, NSSO (RSZ) debts or social security debts as a self-employed person. If no withholding obligation turns out to apply, we save the result of your lookup in a history. 

What percentage must you withhold?

The amount withheld depends on the type of debt:

• Tax debts: you withhold 15% of the invoice amount (excluding VAT) and transfer it to the FPS Finance
• Social security debts with the NSSO (RSZ) (employees): here the withholding rises to 35% of the invoice amount (excluding VAT), to be transferred to the NSSO (RSZ)
• Both debts at the same time: then the percentages add up, to a maximum of 50% of the invoice amount

For larger invoices (generally from around €7.143 excluding VAT), the (sub)contractor can submit a debt certificate themselves. If the actual debt is lower than the percentage that would normally have to be withheld, it is sufficient to withhold only the amount actually owed. If such a certificate is not submitted, you can apply the full percentage as indicated in the calculation. In onFact you will find a link to MyMinFin, where you can view and download the certificate.

Please note: if you do not comply with this withholding obligation, you risk:

• An administrative fine equal to double the amount that should have been withheld and transferred
• Being held jointly and severally liable (to a certain extent) for the payment of the tax and social security debts

How do you pay these amounts? 

If the withholding obligation applies, you need to make several payments - depending on the obligation either to the NSSO (RSZ) or to the FPS Finance (or both), and to your supplier. For each payment, onFact suggests a QR code containing the necessary payment information. This way you can pay smoothly and correctly!