BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Donald Krols and Astrid Laga, Linklaters
creditor status on the increase in value of the employer’s property resulting from their services. Furthermore, contractors may also retain owner - ship of certain installations or materials, despite incorporation into the works, through retention of title registered in the national pledge register. 7.7 Requirements Before Use or Inhabitation Depending on the specific use of the real estate asset and the region in which the real estate asset is located, several authorisations or cer - tificates may be required, including with respect to the operation of certain classified activities or installations (eg, operation of parking, heat - ing and cooling installations), the operation of socio-economic activities (eg, retail activities), the energy performance of the building(s) and the presence of asbestos-containing materials. VAT (at a standard rate of 21%) may be appli - cable to sales of real estate assets classified as “new” for VAT purposes (ie, until 31 December of the second year after its initial use or occupa - tion). This classification applies to newly con - structed buildings as well as those that have been substantially renovated. With respect to renovations, the VAT regime is largely deter - mined by administrative practices. Tax authorities have clarified in their commen - tary of the VAT Code that significant renovations that fundamentally alter the key components of a building, namely its nature, structure or intended use will qualify it as “new” for VAT purposes. A property can also be qualified as “new” if reno- vation costs, excluding VAT, amount to at least 8. Tax 8.1 VAT and Sales Tax
60% of the building’s market value, excluding land, upon completion of the works. The imposition of VAT on the sale or acquisi - tion of property is influenced by the nature of the seller. For new properties sold by: • professional developers – they are legally bound to sell such properties with VAT included – however, in cases of renovations meeting the “60%” threshold, developers might choose not to consider the real estate asset as new (with application of registration duties instead of VAT); and • non-professional developers – they have the option to apply VAT, requiring amongst others a prior declaration to VAT authorities – the exercise of this option must be reflected in the sales agreement and in the notarial deed that records the sale. Under certain conditions, a reduced rate of 6% may apply to residential properties, eg, the demolition and subsequent reconstruction of the only and own residence of a natural person (giv - en that the residence built meets certain criteria). 8.2 Mitigation of Tax Liability When transferring shares of a company that owns real estate, such transactions do not, in principle, incur transfer taxes or any other real estate-related taxes (except in case of dispute by the tax administration over tax abuse, see 2.10 Taxes Applicable to a Transaction ). How - ever, a legal entity shareholder may be subject to capital gains tax if its participation in the com - pany (that owns real estate) does not meet the criteria to be eligible for the “dividend received deduction” (DRD). To be eligible for the DRD, the participation must in general, among other criteria:
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