BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Donald Krols and Astrid Laga, Linklaters
for regions (which are the competent entities for registration fees) if they wish to combat share deals involving real estate companies, which do not result in the collection of registration fees. Regarding asset deals, the transfer tax could either be the applicable VAT rate or registration duties, depending on whether the transaction falls under the VAT regime (see 8.1 VAT and Sales Tax ). When VAT is applied to a real estate sale, registration duties are correspondingly exempted. If a real estate transfer of ownership is not sub - ject to VAT, registration duties apply. Registration duties rates vary by region: • 12.5% in Brussels and Wallonia; and • 12% in Flanders. For long-term leases and rights-to-build, the rate of transfer tax is usually 5% or 12.5% (usufruct). 2.11 Legal Restrictions on Foreign Investors Investors must be mindful of the existing legal frameworks aimed at the prevention of money laundering and the financing of terrorism, as well as the consequences of international sanctions on their activities in Belgium. It is now common to encounter clauses in real estate agreements (including leases) which allow for contract ter - mination if international sanctions are imposed on a party, or clauses that prevent the transfer of contractual rights to a person subject to inter - national sanctions. Furthermore, as of 1 July 2023, a foreign direct investment screening mechanism entered into force in Belgium pursuant to which non-EU investor (including natural persons or entities with their principal residence or registered office
outside the EU and EU-based entities with one of their ultimate beneficial owner having its prin - cipal residence outside the EU) must submit a notification to a screening commission for any direct or indirect acquisition by non-EU inves - tors of: • 25% or more of voting rights in a Belgian company with activities relating to, among others, (physical or virtual) critical infrastruc - ture (including energy and other sectors), critical technologies and energy storage, criti - cal inputs, access to sensitive information, private security, freedom of media or biotech; or • 10% or more of voting rights in a Belgian company (i) active in certain sensitive stra - tegic sectors in Belgium (including energy, defence, cybersecurity), and (ii) which realised a global turnover exceeding EUR100 million in the financial year preceding the investment. The commission’s prior authorisation is required for the completion of the investment. Non-com - pliance with the notification requirement can lead to administrative penalties amounting to up to 30% of the total investment value.
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
The financing of commercial real estate acquisi - tions usually involves a combination of equity, potentially including intra-group debt, and debt in the form of a loan or occasionally bonds. In case of share deals, the existing debts of the entity holding real estate are often refinanced at closing.
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