The campaign against tax and social security fraud has always been on the agenda of the Belgian government – whatever its political persuasion. The construction industry, particularly sensitive to this issue, did not escape the regulatory determination of our politicians. The main aim of current regulations, is to establish joint liability between the contractor and his sub-contractors, in cases of non-payment of tax and social charges. If one sub-contractor, therefore, does not pay his fiscal and/or social dues, the contractor must withhold 15% (tax debt) and/or 35% (social debt) from amounts owing to the subcontractor, and transfer the amounts withheld to the tax and/or social authorities.

The principle was established in the Articles 402 and 403 of the Income Tax Code (tax debt) and Article 30bis of the Act of 27 June 1969 (social debt).


Originally, the withholding principle was only applicable to the direct relationship between (i) the principal and his contractor, and between (ii) the contractor and its sub-contractors. The two providers were jointly liable for the tax or social debt of one of them, with a threshold equal to the price of the works.

In 2012, the government concluded that the system was too inefficient to effectively combat on-site fraud. The withholding principle was therefore enlarged to a “waterfall principle”. Should one sub-contractor fail to pay his tax and/or social debt, the tax and/or social authorities would be able to claim the unpaid amount from its direct contractor. Should the latter fail to pay, then the tax/social security authorities should be allowed to follow the contractual chain until full payment of the outstanding debt. Until now, however, the original principal has not been replaced by the joint liability or the waterfall principle.

New regulation

By a 10 August 2015 Program Law, published on 18 August 2015, the waterfall principle has been extended to the principal. Under this Program Law, a principal in the contractual chain can be jointly liable for the tax and/or social debts of one of his (sub-)contractors. The principal must now, therefore, verify whether its contractor (and sub-contractor) is liable for any tax or social security debt before signing the construction contract and during the time of the construction.


This new rule puts a heavy burden of liability on principals, who must check that the other contracting party, as well as all other sub-contractors working on the site1, do not owe money to the tax or social security authorities. When receiving an invoice for works performed by the contractor2 , the principal must request him to provide an attestation from social and tax authorities. The attestation (valid for 20 days) confirms the amount of the contractor’s debt (if any).

If the (sub-)contractor owes money to the tax and/or social security authority, the principal must withhold 15% (tax debt) or 35% (social debt) from its direct contractor’s invoice (VAT excluded), up to the amount owed by the subcontractor, and transfer it to the relevant authority. Failure to do so will render the principal jointly liable towards the authorities for the subcontractor’s or other contractor’s tax and/or social debt. The penalty incurred will be equal to the amount the principle should have withheld. If the contractor owes money to both the social security and tax authorities, the principal’s joint liability for the social security debt will be capped at 65% of the total invoice, whilst the cap for the joint liability for tax debt will be of 35% of the invoice.

Please note that withholding avoids the principal’s joint liability with his direct contractor(s) only, and, therefore, not the joint liability with its sub-contractor(s). The amount that the principal has withheld on his direct contractor’s invoice, will, however be credited against the amount owing under the joint liability with its sub-contractor(s) (and is always capped at the abovementioned amounts). In practice, this scenario should be infrequent considering (i) the direct contractor will first be jointly liable, according to the waterfall principle, and (ii) the direct contractor will flagged as indebted as well in the official database after 30 days of joint liability with its sub-contractor3.

The joint liability is applicable to:

  • All construction works;
  • Any works, even if they are not construction works, related to :
    • Supply and installation into a building of :
      – Heating or HVAC ;
      – Sanitary equipment ;
      – electrical equipment ;
      – alarm systems ;
      – storage equipment, sinks, ventilators (kitchen/bathroom), extrator fans/hoods, etc. – shutters, blinds, awnings.
    • supply and installation into a building of wall or floor coverings, even if the installation just requires simple cutting to shape;
  • Any fixing, installation, repair, maintenance or cleaning of the goods described above.


The principal can now be jointly liable for nearly all works executed in his building, and his obligation of verification is considerably extended since it now includes the sub-contractors (sometimes unknown to the principal on major construction works). As before, the joint liability for social debt does not apply to individual principals.

In order to mitigate this legal obligation, the drafting of contractor’s agreements should be upgraded and further negotiated in order to strengthen the (main) contractor’s obligation to verify the absence of tax and social security debts in respect of its own contractors.