Registration as contractor completely abolished

Until recently, working with a non registered contractor lead to a joint and several liability for the contractor's fiscal and social debts. The non registration also has certain financial consequences. For many support measures the registration as contractor is an obligatory condition. The Federal Government will now completely abolish the contractor registration after criticism of the European Union.

Joint and several liability and withholding obligation

As principal you should verify whether the contractor has fiscal and/or social debts. As from 1 January 2009 the withholding obligation and the joint and several liability for the principal of immovable works depends no longer on the fact whether the contractor is registered or not. You are obliged to withhold 15% of the invoice amount on every payment to the contractor with fiscal debts and to transfer this amount to the tax authorities. When omitting this obligation, you are jointly and severally held for the fiscal debts of the contractor up to 35% of the total price of the project. Whether the contractor is registered or not is of no importance. You can consult the database with fiscal debts through the site www.minfin.fgov.be (under “My Minfin”).
A similar obligation for the social debts exists as from 1 January 2008. The social database can be consulted through the portal site of the social security service www.socialsecurity.be.

Draft law on fiscal and social provisions

The Council of Ministers of 2 September 2011 has in second reading approved a draft law on fiscal and social provisions. This law contains amongst others the abolition of the registration as contractor (art. 401 WIB 1992). It is being replaced by an improved control on construction yards. This is done after remarks by the European Commission. The Commission opines that the registration as contractor in Belgium is not in line with the EU-Treaty and the Directive on services in the internal market.

Registration procedure for direct tax and VAT

The obligation to work with a registered contractor previously encountered criticism from Europe. Therefore the obligation has been deleted on different places in our tax codes. As from 23 April 2010 you should no longer use a registered contractor to obtain a tax reduction for solar panels and other energy reduction expenditure. You can also use a contractor which is registered according to a similar regulation applicable in the EU member state where the contractor is established. The same relaxation applies to the tax reduction for security expenditure and expenditure against burglary and fire.
The tax reduction for the renovation of a house located in a “positive city policy zone” remains valid if the principal appeals to a non registered contractor to do the works. The same goes for the tax reduction for houses rented out at a reasonable price. The more relaxed regime is applicable to all works performed as from 1 January 2011.

And now?

The draft law containing fiscal and social provisions will be filed as soon as possible in Parliament. The Parliament is on holiday until mid October. In the mean time the registration as contractor remains a condition to obtain certain tax advantages (e.g. for the Flemish roof and floor isolation premium and the premiums of the provinces and cities for energy reduction investments).