The Omnibus Act of 23 December 2009 (the "Act"), published in the Belgian State Gazette on 30 December 2009, recently introduced a number of measures intended to combat undeclared employment (zwartwerk/travail en noir). Undeclared work is usually defined as any work carried out in violation of the labour or tax laws.
Please find below a summary of the most important measures introduced by the Act to discourage and fight undeclared employment.
Fraud or undeclared work in the framework of a self-employed activity
Every self-employed person, i.e. any natural person - excluding civil servants - who carries out a professional activity in Belgium outside the context of an employment contract, must be affiliated with a social insurance fund for self-employed persons (unless the self-employed activity is unremunerated and exercised as a secondary occupation by a Belgian national).
Prior to 1 April 2010, a self-employed person had to join a social insurance fund of his or her choosing within 90 days from the start of his or her self-employed activity. Effective 1 April 2010, however, self-employed persons are obliged join a social insurance fund no later than the start date of their self-employed activity.
Furthermore, the Act provides for the possibility to impose an administrative fine ranging from EUR 500 to EUR 2,000 on any self-employed person:
- found to be exercising a self-employed professional activity, or having done so, without first joining a social insurance fund;
- found to be exercising a self-employed professional activity other than that for which s/he is registered with the Crossroads Enterprise Bank;
- whose income has been increased pursuant to a determination by a tax inspector in the event of tax fraud.
Finally, the Act expressly stipulates that legal persons may be held severally liable for the administrative fines owed by their shareholders or representatives.
Undeclared work within the framework of an employment contract
The Act also provides that an administrative fine can be imposed on any person considered to be an employee, a self-employed person or a civil servant who, in addition to his or her main activity, exercises an ancillary activity for which the employer has not made a Dimona declaration (onmiddellijke aangifte/déclaration immédiate). Belgian employers are obliged to declare immediately to the Belgian Social Security Administration certain employment-related information, such as the engagement or departure of an employee.
The new administrative fine can be imposed as from 1 April 2010 and can range from EUR 500 to EUR 2,000. It is important to note that the fine can be imposed on both the employee and the employer.
In order to impose a fine, two conditions must be met. Firstly, the employee must have knowingly engaged in undeclared work. This means that the employee must have known that the employer did not make a declaration for his or her secondary activity. Furthermore, the undeclared work must be documented in an official report prepared by the Social Inspectorate or a police officer. Secondly, an official report must have been prepared against the employer.
Burden of proof with respect to the reimbursement of business expenses
Prior to the Act, it was generally accepted that the Belgian Social Security Administration bore the burden proving that reimbursed business expenses were in fact disguised salary. As from 1 January 2010, the burden of proof has shifted. It is now up to the employer to prove the professional nature of reimbursed expenses.