The Belgian government has just taken two new measures aiming at fighting against fiscal and social fraud in the construction industry.
Strengthening of Existing Measures regarding the Joint Liability to Fiscal and Social Debts of the Subcontractor – Successive liability
Joint liability for fiscal and/or social debts is a system according to which the contracting authority is jointly liable to the debts contracted by the main contractor. The same system is applied in the relationship between the latter and the subcontractor he has called on and so forth.
The contracting authority’s responsibility is now more important as liability will become successive. In other words, if the principal contractor does not pay for the fiscal and/or social debts of his subcontractor, the contracting authority will become automatically jointly liable for them.
From now on, the contracting authority who concludes a contract with [Belgian or Foreign] contractors that call on [Belgian or Foreign] subcontractors must be twice as vigilant. When concluding the business contract and before paying any invoice, he will systematically have to verify if the principal contractor and/ or the subcontractor of the latter has/ have incurred any fiscal and/or social debts.
If the principal contractor [or his subcontractor] has contracted fiscal and/ or social debts, liability amounts to 100% of the value of construction works at the very most, excluding VAT. This liability can be avoided by complying with the legal requirement to withhold and pay 35 % for social debts and 15 % for fiscal ones.
A Belgian company calls on a German main contractor to perform construction works in Belgium. This main contractor in turn calls on a Polish subcontractor to carry out part of the mission.
The German company [the main contractor] has to make sure that the latter has no fiscal and/ or social debts in Belgium, when concluding the subcontract and before paying any invoice issued by the Polish company. It has to provide the information to the Belgian company [contracting authority].
In case of debts incurred by the Polish subcontractor, the German company becomes jointly liable, unless it complies with its legal requirements to withhold and pay at the very most 50 % of the amount due to the Belgian fiscal and social authorities. Moreover, it will be bound to pay the salary of Polish workers if the Belgian social authorities summons it to do so.
If the German company does not fulfil its obligations, the liability is transferred to the contracting authority. Therefore, it is the latter who will withhold all these sums from the amount it has to pay to the German company.