BELGIUM Law and Practice Contributed by: Alain Van Geel and Emilie Van Goidsenhoven, Tiberghien
While such agreements cannot derogate from manda- tory forced heirship rules, they may determine which assets form part of the deceased spouse’s estate and which belong to the surviving spouse outside the estate. Belgium will recognise foreign prenuptial and post- nuptial agreements provided they have been validly established in accordance with the EU Matrimo- nial Property Regimes Regulation (Regulation (EU) 2016/1103). 5. Tax Treatment of Lifetime Transfers and Testamentary Dispositions 5.1 Lifetime Transfers In Belgium, lifetime transfers of property are primarily subject to gift tax, which is a regional tax (Flanders, Wallonia and the Brussels-Capital Region all apply their own rates and rules). The tax treatment depends on the nature of the asset transferred, the form of the gift and whether the gift is registered. Gifts of moveable property are subject to gift tax if the gift is completed before a Belgian or foreign notary. Manual and indirect gifts (bank transfers, remission of debts, etc) are not subject to gift tax as long as they are not registered, but inheritance tax is due if the donor passes away as a Belgian resident within five years of the gift. Gift tax rates depend on the appli- cable regional legislation (invoking the same factors as for inheritance tax). In the Flemish and Brussels- Capital Regions, movables are taxed at a reduced flat registration rate of 3% for gifts in direct line and between partners (eg, spouses). Gifts to other private individuals are taxed at 7%. In Wallonia, the rates are: • 3.3% for gifts in direct line and between spouses or legal cohabitants; and • 5.5% for gifts to other private individuals. Gifts of Belgian real estate, in all three regions, are subject to progressive tax rates ranging from 3% to 27% in direct line and between partners (eg, spouses). Gifts of foreign real property are tax-exempt, and no surviving period of five years apply.
A favourable tax regime applies to the transfer (by gift or death) of a qualifying family business/(shares of a family) company in all three regions. For family businesses, a reduced gift tax rate of 0%/exemption (direct line and between partners) may be claimed (subject to conditions) in all three regions. A gift does not trigger capital gains tax. 5.2 Testamentary Dispositions In Belgium, transfers of property on death are sub- ject to inheritance tax, which is levied at the regional level (Flanders, Wallonia, and the Brussels-Capital Region). The applicable regime is determined by the deceased’s tax residence during the last five years of life, as rates and exemptions differ between regions. Inheritance tax is due by the heirs/legatees on the net amount inherited by each of them (in direct line or between siblings in the Flemish region and in the Brussels-Capital Region, and in all circumstances in the Walloon region) or on the net amount of the total assets acquired by all the beneficiaries (for transfers between any other persons in the Flemish region and the Brussels-Capital Region) from the estate of any deceased person who was a resident of Belgium at the time of death. Inheritance tax is calculated on the market value of the assets at the date of death, after the deduc- tion of eligible debts. The applicable inheritance tax rate depends on the relationship of the heirs/lega- tees with the deceased. In the Flemish region, the maximum inheritance tax rate in the direct line, and between partners (eg, spouses), is 27% (in excess of EUR250,000). In the Brussels-Capital Region and the Walloon regions, the maximum tax rate is 30% (in excess of EUR500,000). From an income tax perspective, Belgian law does not impose a general capital gains tax on unrealised gains upon death for private individuals. Likewise, Belgium does not apply a step-up in basis comparable to US Internal Revenue Code (IRC) Section 104. As a result, assets generally retain their historical acquisition value in the hands of the heirs for future capital gains pur- poses.
22 CHAMBERS.COM
Powered by FlippingBook