Wallonia reduces gift tax rates for real estate
Since 1 September 2018, the different gift tax rates depending on the competent Region belong to the past, at least as far as real estate is concerned. All Belgians will pay the same gift tax rates on real estate gifts regardless their region of residence.
A significant reduction
Depending on the one hand on the value of the donated property and on the other hand on the relationship between the donor and the donee, the rates now vary from 3 to 27% for so-called "direct line" gifts, i.e. between (grand) parents and (grand) children and between spouses and partners, and from 10 to 40% for any other donee. The former maximum rates of 30% in direct line and 50% for any other donee have thus been considerably reduced.
|Direct line / spouse and partners||Rate|
|until 150.000 €||3%|
|from 150.000 € to 250.000 €||9%|
|from 250.000 € to 450.000 €||18%|
|more than 450.000 €||27%|
|until 150.000 €||10%|
|from 150.000 € to 250.000 €||20%|
|from 250.000 € to 450.000 €||30%|
|more than 450.000 €||40%|
Same rates for all Belgians
Although their collection remained federal until 1 January 2015, the gift tax has been a regional matter since 1 January 2002. In 2015, Flanders paved the way by significantly reducing its gift tax rates for real estate resulting in different rates depending on the Region in which the donor resided. The Brussels Region followed quickly in 2016. Since 1 September Wallonia also adjusted its rates thus putting an end to these differences.
The key element: the donor’s residence
Contrary to what one might think, what determines the applicable rate is not the location of the donated property but the donor's residence. A donor residing in the Brussels Region, for example, who wishes to donate an apartment located in Antwerp to his son, residing in Wallonia, will thus be subject to Brussels gift tax.
A limited match
Although since 1 September 2018 the tax rates and scales are identical in all three Regions, the above distinction depending on the donor's residence will remain crucial because of some remaining differences.
Thus only in Flanders de facto cohabitants can also benefit from the lower direct line rates. In Wallonia and Brussels this is only the case for spouses and legal cohabitants.
The fixed rates for gifts of movable property such as cash or shares also remain different: 3% in direct line and between partners and spouses and 7% for all other donees in Flanders and Brussels, respectively 3.3% and 5.5% in Wallonia.
Regarding special tax concessions differences also remain.
In the Flemish Region, a reduction applies until the end of 2019 for gifts of building land. A partial restitution of gift tax is possible when the donee carries out an energy-saving renovation or, under certain conditions, if the property is rented out for 9 years.
Since 1 September, Wallonia also introduced the partial restitution of gift tax in the event of an energy-saving renovation.
Brussels does not apply similar tax concessions.
Belgian property only
Finally, it is important to underline that the abovementioned gift tax is only applicable on gifts of Belgian real estate. Thus a gift of a holiday home at the Côte d'Azur by a Belgian resident will be subject to French gift tax, despite the Belgian residence of the donor.
Eléonorevan der LoosAttorney at law Associate
Eléonore van der Loos is a member of the Family Owned Business & Private Wealth Practice Group in Belgium. She is an associate in our Brussels office.T: +32 2 773 23 15 E: firstname.lastname@example.org
SaskiaLustAttorney at law Partner
Saskia Lust is a partner in our Brussels office. She co-heads the Family Owned Business & Private Wealth Team in Belgium. She focuses on international asset structuring.T: +32 2 700 10 27 E: email@example.com