Both the Walloon and Flemish governments have recently published general policy statements that address several tax measures.
On 9 June 2024, legislative and regional elections were held in Belgium that led to the creation of the parliaments and governments of the federal and federated entities of Belgium.
Belgium is a federal state with two main regions -- Flanders and Wallonia -- each with fiscal powers in certain areas such as registration fees and inheritance taxes.
Although discussions are still ongoing regarding the setting up of the federal government, both Flanders and Wallonia have reached an agreement on the formation of a government.
Each region recently communicated the guidelines that should be the basis for their next legislature (2024-2029). An overview by region of the main tax measures announced follows. To date, no legislative text has been published, so the measures announced may still evolve.
The “housing voucher” tax incentive (in French, “chèque habitat”) would be abolished, as well as the reduced 6% rate for modest houses (houses with a cadastral income of less than EUR 745).
The rates of gift tax on real estate would also be reduced from 27% to 14% in direct line gifts and from 40% to 20% for gifts between all other persons.
Registration Fees
The registration duty rate for the purchase of the sole and primary (first) home would be reduced from 3% to 2%. This tax reduction would take effect from 1 January 2025. The applicable date for this reduced rate will be determined by the day the purchase deed is officiated at the notary's office.
The registration duty rate for properties purchased by professional sellers will increase from 4% to 6%.
The exact details of these reforms are still unclear, and specific percentages and tax brackets have not been announced. As a compensatory measure, the Flemish government also plans to close several loopholes. The specific "loopholes" targeted are not yet clear; however, the favourable regimes for family-owned businesses and Belgian private foundations might be under consideration.
Additionally, the suspect period of three years for unregistered gifts is being extended to five years. Currently, it is not mandatory to register bank and hand gifts, so that there is no obligatory gift tax imposed. However, if the donor dies within three years of an unregistered gift, the amount of the gift reverts to the estate and the heirs are liable for inheritance tax, which can be higher than the gift tax. Exact details on the effective date of this provision are not yet known, but it is likely to apply to gifts made on or after 1 January 2025.
Given the large-scale adoption of zero-emission vehicles, the Flemish government has decided that these exemptions are no longer justified. The new policy reflects an understanding that electric vehicles, like all others, utilise public roads and should thus contribute to maintenance costs. Consequently, new registrations of zero-emission vehicles will be subject to traffic taxation, requiring owners to pay both road and car registration taxes. With regards to leased vehicles, further consultations will occur with other Belgian regions.
The new arrangement abolishes this tax benefit, requiring users to pay the full EUR 10 per voucher. This represents an increase in the effective price by nearly 39%.
These measures are currently waiting to be implemented in Belgian legislation.
For more information on this topic, please consult your regular BDO contact or the authors of this article.
Peter Wuyts
Françoise Verreux
Aaron Mazzier
BDO in Belgium
Background
On 9 June 2024, legislative and regional elections were held in Belgium that led to the creation of the parliaments and governments of the federal and federated entities of Belgium.Belgium is a federal state with two main regions -- Flanders and Wallonia -- each with fiscal powers in certain areas such as registration fees and inheritance taxes.
Although discussions are still ongoing regarding the setting up of the federal government, both Flanders and Wallonia have reached an agreement on the formation of a government.
Each region recently communicated the guidelines that should be the basis for their next legislature (2024-2029). An overview by region of the main tax measures announced follows. To date, no legislative text has been published, so the measures announced may still evolve.
Walloon Government Tax Measures
On 11 July 2024, the Walloon government published a general policy statement. From a tax perspective, the following measures were proposed.
Registration Fees
For authentic deeds of sale that are signed as of 1 January 2025, the registration fees for the acquisition of a single family home would be reduced to 3% instead of the current 12.5% rate. This 3% rate would also be applicable if a taxpayer who already owns a home sells it within three years of acquiring a new one.The “housing voucher” tax incentive (in French, “chèque habitat”) would be abolished, as well as the reduced 6% rate for modest houses (houses with a cadastral income of less than EUR 745).
Inheritance and Gift Taxes
The rates of gift tax on real estate would also be reduced from 27% to 14% in direct line gifts and from 40% to 20% for gifts between all other persons.
Traffic Taxes
Others
- The government is considering introducing or strengthening tax incentives to promote energy savings in private homes.
- An advance ruling service for taxes collected by the Walloon region is being planned.
Flemish Government Tax Measures
On September 30, 2024, the new Flemish government unveiled its coalition agreement, outlining the policy directions for the upcoming legislative period until 2029. Over the next five years, the new Flemish government aims to enhance the quality of living, working, and overall well-being in Flanders. The proposed changes concerning taxation and the labor market/employment are discussed below. At the moment this article was draftedthe topics included in the coalition agreement have not yet been incorporated into legislation. However, they are expected to be voted before the end of the calendar year 2024.Registration Fees
The registration duty rate for the purchase of the sole and primary (first) home would be reduced from 3% to 2%. This tax reduction would take effect from 1 January 2025. The applicable date for this reduced rate will be determined by the day the purchase deed is officiated at the notary's office.
The registration duty rate for properties purchased by professional sellers will increase from 4% to 6%.
Inheritance and Gift Taxes
The exact details of these reforms are still unclear, and specific percentages and tax brackets have not been announced. As a compensatory measure, the Flemish government also plans to close several loopholes. The specific "loopholes" targeted are not yet clear; however, the favourable regimes for family-owned businesses and Belgian private foundations might be under consideration.
Additionally, the suspect period of three years for unregistered gifts is being extended to five years. Currently, it is not mandatory to register bank and hand gifts, so that there is no obligatory gift tax imposed. However, if the donor dies within three years of an unregistered gift, the amount of the gift reverts to the estate and the heirs are liable for inheritance tax, which can be higher than the gift tax. Exact details on the effective date of this provision are not yet known, but it is likely to apply to gifts made on or after 1 January 2025.
Traffic Taxes
Given the large-scale adoption of zero-emission vehicles, the Flemish government has decided that these exemptions are no longer justified. The new policy reflects an understanding that electric vehicles, like all others, utilise public roads and should thus contribute to maintenance costs. Consequently, new registrations of zero-emission vehicles will be subject to traffic taxation, requiring owners to pay both road and car registration taxes. With regards to leased vehicles, further consultations will occur with other Belgian regions.
Service Vouchers
The new arrangement abolishes this tax benefit, requiring users to pay the full EUR 10 per voucher. This represents an increase in the effective price by nearly 39%.
Next Steps
These measures are currently waiting to be implemented in Belgian legislation.For more information on this topic, please consult your regular BDO contact or the authors of this article.
Françoise Verreux
Aaron Mazzier
BDO in Belgium