Real Estate Update - APRIL 2021 - Loyens & Loeff
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1
APRIL 2021
Real Estate
Update
The information provided in this publication does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only. Information in the publication may not constitute the most up-to-date legal or other information. Readers should contact their attorney to obtain advice with respect to any particular legal matter. No reader should act or refrain from acting on the basis of information on this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
In this edition
Reform of property law
– Introduction
– Mortgage in case of split ownership
–
In the spotlight
– Rent waiver: tax benefit finally put into law
– Mandatory professional civil liability insurance: the reform passes
the test
– Brussels Capital Region: the quest for parking lots
– Foreign real estate: now also taxed on the basis of cadastral
income
Last month in short
On the website
Reform of property law
Real Estate Newsletter 5
Introduction
The law of 4 February 2020 containing Book 3 “Goods” of the new Civil Code has been
approved and shall enter into force on 1 September 2021 (with exceptions). It undoubtedly
introduces the most far-reaching reform of Belgian property law since the Code Napoleon
of 1804. The new Book 3 repeals, inter alia, the acts of 10 January 1824 on long-term lease
right and right to build.
With the new Book 3, the legislator wishes to better structure, modernize and integrate
(the rules of) property law into a single code. In addition, the legislator wants to create a
functional, useful and flexible set of rules with a new - sometimes delicate - balance between
contractual freedom and legal certainty.
This reform will surely be on top of your agenda. On our side, sharing knowledge is a top
priority and, on this topic, we are organizing the following sharing moments:
– A monthly update on a specific topic via this newsletter
– A series of breakfast webinar given in French and in Dutch
– A half-day seminar to go deeper into the new regulations on usufruct right (droit
d’usufruit/vruchtgebruikrecht), right to build (droit de superficie/opstalrecht) and long-
term lease right (droit d’emphytéose/erfpachtrecht), to analyse the tax aspects of these
new regulations and to comment on bankability of property rights structure. This seminar
shall be given in English.
Any questions or suggestions? Do not hesitate to contact us!
Ariane Brohez
Lien Bellinck
6
Mortgage in case of split
ownership
In our second webinar dedicated to the reform of the property law (new Book 3 in the
Civil Code), we discussed the question whether a mortgage can be granted to a financing
provider in case the ownership is split between different parties. Below the main take-aways.
Can the holder of a property right 2. The holder of the property right cannot act beyond
establish a mortgage on his right? the limits of his powers. The holder of a property right
may only grant rights in so far as he does not exceed
Short recap to start: the property rights concerned are the the limits of his rights. Consequently, he may not allow
long-term lease right (erfpachtrecht / droit d’emphytéose), rights which exceed the duration of his own right.
the building right (opstalrecht / droit de superficie), the For example, a long-term lessee who benefits from
usufruct right (vruchtgebruikrecht / droit d’usufruit) and the a 30-year right cannot grant a building right for more
easements (erfdienstbaarheden / servitudes). than 30 years.
The definitions given to these property rights by the law are
mandatory, and the parties cannot create other In addition, the capacity of the holder of the property
property rights. right may also be subject to certain restrictions agreed
in the underlying title. For example, parties to a usufruct
“Each holder of a property right can in principle agreement can agree that the usufructuary may not
transfer or mortgage his usufruct right without the prior
mortgage his right”
written consent of the bare owner. Therefore, it is very
important to verify the provisions in the title and to verify
From a legal point of view, mortgaging a property right
whether and under what conditions a transfer or mortgage
is an act of disposal since the mortgaging includes a
is possible. The “second step” must also carefully be
potential sale. The new Book 3 explicitly confirms that
verified, i.e. under which conditions a mortgaged asset can
each holder of a property right can dispose of his right.
be sold in case of enforcement.
Consequently, each holder of a property right can in
principle mortgage that right.
What is encumbered by the
There are two exceptions to this principle:
mortgage?
1. If the nature of the asset prevents this. Some assets
The principles are straight-forward and logical:
cannot be disposed of due to their nature.
For example, the inherent components of a property
– The usufructuary may transfer or mortgage his
(e.g. the roof of a building), the share in the common
usufruct right. With regard to the constructions built
parts (including the land) attached to an apartment
by the usufructuary and of which he is the temporary
in an apartment building, accessory building rights
owner based on the accessory building right
(accessoire opstalrecht / superficie-conséquence),
embodied in his usufruct right, the usufructuary can
etc. These assets cannot be disposed of without
transfer or mortgage these constructions together
simultaneously disposing of the main asset. So, if you
with the usufruct right. The reason for this is logical:
want to sell the common parts in a co-ownership,
the temporary ownership of the usufructuary derives
you must sell the private parts as well. The same
from the accessory building right, which in turn is
applies to security rights within the meaning of Book
accessory to the usufruct right.
3 (e.g. mortgages): these rights cannot be transferred
separately from the secured claim.
Consequently, the usufructuary cannot transfer or
mortgage the constructions without simultaneously
transferring or mortgaging the usufruct right.
– The same applies to a long-term lease right and
a building right. These rights can be transferred
and mortgaged. With regard to the constructions
built, either by the long-term lessee by virtue of the
accessory building right embodied in his long-term
lease right or by the holder of a building right, these
constructions can be transferred or mortgaged
simultaneously with the underlying property right.
“A usufruct, long-term lease right, a building right, …
they can all be mortgaged “
Note that it is not possible to encumber easements, nor
the constructions built in execution of easements. This is
because easements are accessory rights (as opposed to
a usufruct right, long-term lease right and building right
which are ‘independent’ rights). Indeed, easements are
accessory to the dominant estate (heersend erf / fonds
dominant). Consequently, they cannot be transferred or
mortgaged without the dominant estate.
The question whether constructions built on the basis of
a concession right can be transferred or mortgaged is a
difficult one. On the one hand, the Mortgage Law provides
that only (i) real estate in trade (in de handel / dans le
commerce) and (ii) property rights over this real estate
can be mortgaged. On the other hand, the new Book
3 provides that ancillary rights cannot be independently
disposed of because of their nature and must be disposed
of (or mortgaged) together with the main asset.
In case of a construction built on the basis of a concession
right, the concessionaire is temporary owner of this
construction because of the accessory building right.
Such accessory building right cannot be independently
transferred or mortgaged, meaning that a transfer or
mortgage can only be envisaged together with the
transfer or mortgage of the concession right. But on the
basis of the Mortgage Law, a concession right is not
a mortgageable asset. In our view, it follows that the
concessionaire cannot mortgage the constructions he built
and of which he is the temporary owner. Note however
that there is much debate on this point.
8
What are the consequences for It is therefore strongly recommended to discuss and agree
the mortgagee if the property right on principles in an agreement between the land owner, the
terminates? property right holder and the financing provider.
The new Book 3 makes a distinction between the What are the consequences for the
“ordinary” and “abnormal” grounds for termination. mortgagee if the asset to which the
The “ordinary” grounds for termination are those on property right relates, disappears?
which third parties in good faith with a conflicting right can
anticipate: they know or should know that the property In principle, a property right ends when the asset to
right will terminate. The most straight-forward example is which it relates is completely destroyed. It follows that if a
the contractually agreed term: the right terminates by law mortgage is established on a property right and this right
on its end date. At the moment the mortgage is granted, ends because of the total destruction of the asset, the
the bank knows or can know that the long-term lease right mortgage right will also end. The Mortgage Law protects,
will end upon the agreed expiry date. At that moment, to a certain extent, the mortgagee is such circumstances
both the property right and the mortgage will end. This is by providing that the insurance indemnity is applied to the
logical since the holder of a property right cannot grant repayment of the mortgage-backed receivable if not used
more rights than he has himself (nemo plus iuris). for the reconstruction. Credit agreements usually provides
Since the bank knew or could have known on which date for a mandatory repayment clause in such circumstances.
that property right would end, the bank bears the risk: it
is not protected against the termination and his mortgage The new Book 3 however provides for an exception:
right will end. in rem subrogation (zakelijke subrogatie / subrogation
réelle). Generally speaking, in rem subrogation occurs
The “abnormal” grounds for termination are those when the property right, in case of total destruction of
grounds for termination on which third parties in good the asset to which it relates, continues to exist in respect
faith with a conflicting right cannot anticipate: at the of the asset which has replaced the original asset. The
moment they acquire rights, they cannot know that the concept of subrogation refers to the continuation of a
property right will prematurely terminate. Since they legal relationship despite the replacement of an essential
cannot anticipate on these grounds for termination, they element of it.
are protected if the underlying property right prematurely
terminates on such basis. This protection consists of the From the above it follows that in case the original asset
fact that the extinction of the underlying property right is replaced by another asset and there is therefore in rem
has only relative effect: the termination only has effect subrogation, both the property right and the mortgage
between the parties and cannot prejudice the interests of right will continue to exist. One can however question
third parties. According to the new Book 3, the “abnormal” whether the property right on an insurance indemnity (that
grounds for termination are: waiver (afstand - renonciation), will “replace” the asset destroyed) can still be relevant. In
revocation (herroeping - révocation), dissolution for non- any case, it is still recommended to discuss and agree on
performance (ontbinding wegens niet obligations and/or rights in case of destruction.
nakoming – resolution pour inexécution), termination
by amicable agreement (opzegging in minnelijke Conclusion
overeenstemming – résiliation de commun accord),
confusion (vermenging - confusion) and dilapidation The new Book 3 follows largely positions taken by the legal
(vervallenverklaring - déchéance). doctrine and clarifies many situations. However, the case
of (abnormal) termination of a property right or destruction
In those circumstance, the mortgage still exists and of the underlying asset still rise many questions, and the
benefits to the mortgagee. This can have far-reaching reliance on the legal provisions might be detrimental to
negative consequences for the owner. The mortgagee, if the land owner and/or the mortgagee. It remains therefore
not repaid by its debtor, can enforce and proceed with the recommended to deal with these specific cases in the
sale, meaning an impoverishment of the owner while he is contract.
not the debtor. The mortgagee and the owner will still have
a recourse against the debtor, but it is fair to say that in Ariane Brohez
insolvency situation this right does not bring any solution. Lien Bellinck
In the spotlight
10
Rent waiver: tax benefit finally
put into law
In our previous update, we informed you that the Belgian Government was preparing new
support measures in the context of the COVID-19 crisis, in particular, the introduction of
a tax benefit in the event of a rent waiver for tenants that have been obliged to close their
business due to the COVID-19 pandemic.
The law has meanwhile been voted and published. family ties up to the second degree or they may not
According to the law, the landlord can benefit from either a be part of the same household. Should the tenant be
tax reduction if the landlord is an individual, or a tax credit a company, the landlord cannot, among others things,
if the landlord is a company. This benefit amounts to 30% hold directly or indirectly a position in the company
of the rent and the rental charges that were waived. (director, manager, etc.) or hold a participation of more
than 30% in the company.
What are the conditions for this tax incentive?
Thirdly, the rent and rental charges waiver:
Firstly, the immovable property subject to the lease: – is based on the exemption to pay (part of) the rent
– must be located in Belgium; and the rental charges (but at least 40%) for the
– must be leased. The measure is not limited in the months of March and/or April and/or May 2021.
context of commercial leases but is also applicable, – is granted voluntarily and definitively by the landlord;
for example, in case of a long-term lease. – needs to be established in a written agreement
– is affected to the professional activity of the tenant. concluded between the tenant and the landlord and
If part of the leased premises is not used for the transmitted to the tax authorities by 15 July 2021 at
professional activity of the tenant or is supplied to a the latest.
third party, this part shall not qualify for the benefit of
the measure. Calculation
Secondly, the tenant: As said above, the tax reduction/tax credit is equal to
– is either an individual self-employed, a small company 30% of the amount waived. But the benefit is subject to
according to article 1:24 paragraphs 1-6 of the a double limitation. Firstly, the maximum amount related
Belgian Company and Association Code, or a small to the rent and the rental charges per lease agreement
association according to article 1:28 paragraphs 1-5 cannot exceed 5,000 EUR per month. Secondly, the
of the same Code; overall maximum of waived rent is 45,000 EUR per
– must be “active” as a business at the address of the landlord (i.e. all leases agreement concluded by the
leased premises according to the Crossroads Bank of landlord).
Enterprises;
– has been obliged to close totally or partially its One can say that the outlines of this incentive still need
business as a result of the COVID-19 measures; to be further detailed. In this view, the bill provides for the
– may not have had rent arrears as at 12 March 2020 possibility to determine the modalities of application by
with respect to the relevant agreement; Royal Decree.
– is not considered as a “company in difficulty”
according to the article 2, paragraph 1 4°/2 of the We will continue to follow the development of this measure
Income Tax Code at the time of the rent waiver. for you.
– is not affiliated to the landlord. For instance, should
the parties be both individuals, they may not have Caroline OrbanReal Estate Newsletter 11
Mandatory professional civil
liability insurance: the reform
passes the test
The liability insurance in the construction sector was reformed in two steps. Firstly, the law
of 31 May 2017 on mandatory ten-year civil liability insurance in the construction sector
entered into force on 1 July 2018 (the Law of 2017). Secondly, the law of 9 May 2019 on
mandatory professional civil liability insurance for architects, land surveyors, health and
safety coordinators and other service providers in the construction sector and amending
various legal provisions on indemnity insurance in the construction sector entered into force
on 1 July 2019 (the Law of 2019).
Arrest of the Constitutional Court of 25
February 2021 In an arrest n°100/2007 dated 12 July 2007, the
Constitutional Court already ruled on a similar request
On 19 December 2019, the Order of Architects filed filed by the Order of Architects. In that decision the Court
a request for partial annulment of the Law of 2019. considered that the difference in treatment based on the
According to the Order or Architects, the Law of 2019 fact “that architects are the only professional group in the
would entail a discrimination between the architects and construction sector to be legally obliged to insure their
the contractors, since only the providers of intellectual professional liability, this liability risks, in the event of a
services, such as the architects, were obliged to insure judgment in solidum, being enforced more than that of
their professional civil liability. In case of construction other professional groups without there being any objective
dispute, the claimant might be tempted to sue the justification for doing so”, was a legal loophole which the
architect (given the insurance) rather than the contractor, legislator had to remedy.
with as a result that the insurance premiums for architects
will increase. “Contractors now also have a mandatory liability
insurance”
The Constitutional Court rejects the request for partial
annulment. The Court now argues that the difference in treatment
recognised in the Constitutional Court’s arrest of 12 July
The Court does not consider the difference in treatment 2007 no longer exists, since the Law of 2017 obliges
as discriminatory. According to the Court, such difference contractors to insure their decennial liability. Such
is based on an “objective and relevant criterion of motivation is surprising because of the limited scope of
distinction”, differentiating intellectual services providers the Law of 2017 (only the ten-year civil liability has to be
and contractors, the services provided by a contractor insured by the contractor).
not qualifying as intellectual. Furthermore, the Court
emphasises that “the fact that the works done by the However, by not recognising any discrimination the Court
contractor do not fall within the scope of the [Law of 2019] validates the mandatory construction insurance reform
does not mean that [the contractor] does not have to implemented by both Law of 2017 and Law of 2019.
insure his professional liability”.
If the result does not seem surprising, the Court’s
motivation is.Real Estate Update
Scope of the mandatory construction
insurance
Law of 2017
– Who should be insured? Architects, contractors
and service providers in the construction sector, as
well as their employees and subcontractors, with the
exception of property developers.
– Which projects? Only individual housing
construction projects where the intervention of an
architect is required.
– What type of work? All works referred to in articles
1792 and 2270 of the Civil Code, limited to the
solidity, stability and watertightness of the closed
structure of the dwelling.
– Coverage exclusions? Several damages can be
excluded, such as (i) bodily injury, (ii) purely aesthetic
damage, (iii) immaterial damage and (iv) material
damage of less than 2,500 EUR.
– For how long? The insurance must be in place for
a period of 10 years following the completion of the
works (provisional or final acceptance).
– Minimum coverage? The minimum liability coverage
per claim may not be less than (i) 500,000 EUR,
when the reconstruction value of the building exceeds
500,000 EUR or (ii) the reconstruction value of
the dwelling, when the reconstruction value of the
building is less than 500,000 EUR.
Law of 2019
– Who should be insured? All architects, land
surveyors, health and safety coordinators, with the
exception of property developers and, more generally,
all intellectual services providers in the construction
sector.
– Which projects? All real estate projects, regardless
of their purpose and even when the intervention of an
architect is not legally required.
– What type of work? All intellectual services.
– Coverage exclusions? Several damages can
be excluded such as (i) bodily injury as a result of
exposure to legally prohibited products, (ii) non-
fulfilment of contractual commitments, (iii) fines and
(iv) claims relating to overruns of budgets.
– For how long? The insurance must be in place for 3
years after the career-end of the insured.Real Estate Newsletter 13
– Minimum coverage? The minimum liability coverage
per claim is (i) 1,500,000 EUR for personal injury;
(ii) 500,000 EUR for total property damage and non-
material damage and (iii) 10,000 EUR for objects
entrusted to the insured by the client with an annual
limit of 5,000,000 EUR, for all claims.
Which insurances are mandatory?
Professional Insurance Mandatory?
Architects 10-year insurance Yes
Professional liability Yes
Contractors 10-year insurance Yes for housing projects
Professional liability Yes
Design and engineering office 10-year insurance Yes for housing projects
(stability included) Professional liability Yes
Land surveyors and safety and 10-year insurance No
health coordinators Professional liability Yes
Property developers 10-year insurance No
Professional liability No
Eugénie Mennig14
Brussels Capital Region: the
quest for parking lots
Before the reform of the Brussels Town Planning Act (Code Bruxellois de l’Aménagement du
Territoire / Brussels Wetboek van Ruimtelijke Ordening, in short CoBAT – BWRO), a parking
of more than 200 covered spaces and a parking of more than 200 open-air spaces were
separately subject to an environmental impact assessment. At that time, real estate projects
with 199 covered and 199 open-air parking spaces were not subject to this obligation.
The reform of the Brussels Town Planning Decision of the Constitutional Court
Act
In an arrest of 21 January 2021, the Constitutional
The Brussels Town Planning Act has been substantially Court annulled the modification decided by the Brussels
reformed by the Ordinance of 30 November 2017. parliament.
This Ordinance has been published in the Belgian Official
Gazette on 20 April 2018 and most of its provisions The Court notes that there is an important difference
entered into force on 20 April 2019. between an environmental impact report and an
environmental impact study for what concerns the
On this occasion, the Brussels parliament decided to assessor requirements.
withdraw the distinction between covered and
open-air parking spaces. However, instead of imposing an The environmental impact study must be performed by
environmental impact assessment for parking with more a certified assessor under the supervision of a steering
than 200 parking spaces, whether covered or open-air, committee. The environmental impact report is performed
the parliament decided to double the number of authorized by a so-called “competent expert”. The expected
spaces. competences of this expert are not defined. Besides, his
work is not monitored by the steering committee.
Therefore, an environmental impact report was required
for the construction of a parking with 50 to 400 parking Since no provisions were dealing with the independency
spaces. An environmental impact assessment was of the expert in charge of an environmental impact report,
required for the construction of a parking of more than 400 the Court considers that the latter does not give enough
parking spaces. guarantees.
By doing so, the Brussels parliament intended to The Court decides that the modification implemented by
accelerate the construction of parking spaces and reduce the Ordinance of 30 November 2017 entails a significative
the costs thereof. decrease of the right to protection of a sound environment
and is contrary to the standstill principle.Consequences Permits granted based on the modification of the regime
and for which the appeal deadline is still running will likely
As a result of the arrest of the Constitutional Court, the be annulled by the Counsel of State.
construction of parking is again covered by the former
rules. Finally, based on article 159 of the Constitution, a
Court is entitled to disregard an illegal permit, such as
Real estate projects with 199 covered and 199 open-air a permit granted based on legal regime annulled by the
parking spaces remain not subject to an environmental Constitutional Court.
impact assessment.
Clara Mestdagh
Ongoing permit applications shall be analyzed based on Julien Lecler
the former rules and shall have to be restarted to have an
impact study carried out, and no longer an impact report.
/ Environmental impact Environmental impact
report study
Covered parking spaces From 1 to 24 From 25 to 199 200 and above
Outside parking spaces From 1 to 49 From 50 to 199 200 and above16
Foreign real estate: now also
taxed on the basis of cadastral
income
Following several convictions by the European Court of Justice, Belgium recently changed
its legislation on the taxation of foreign real estate.
The aim is to tax foreign real estate owned by Belgian residents in the same way as Belgian
real estate, with the cadastral income (i.e. the deemed rental income) as taxable basis
(“kadastraal inkomen” / “revenue cadastral”).
For the implementation, the competent authority within the – the gross rental value, i.e., the fictitious rental income
Federal Public Service Finance will determine a cadastral that could be received in case of rental, for non-rented
income for foreign real estate owned by Belgian residents real estate;
by March 2022. The relevant taxpayers will be contacted – the gross rent paid for real estate rented out to
to collect the necessary information. individuals who use it for non-professional purposes;
and
By taxing foreign real estate on the basis of the cadastral – the gross rent paid for real estate rented out to
income, the overall tax burden for the Belgian taxpayer will individuals who use it for professional purposes or to
in principle decrease. legal persons (companies).
We provide you with an overview of the changes made Examples: A Belgian couple owns a secondary residence
and a report on the current situation! in Belgium that is not rented out. The immovable income is
determined on the basis of the cadastral income.
Current situation – different taxation regimes
for Belgian and foreign real estate A Belgian couple owns a secondary residence in
France that is not rented out. The immovable income is
Belgian real estate owned by Belgian residents is in determined on the basis of the gross rental value.
principle taxed on the basis of: A Belgian resident owns an apartment in Brussels that
is rented out to an individual who uses it as a residence.
– the cadastral income, indexed and increased with The immovable income is determined on the basis of the
40% for non-rented real estate; cadastral income.
– the cadastral income, indexed and increased with
40% for real estate rented out to individuals who use it A Belgian resident owns an apartment in Amsterdam that
for non-professional purposes; and is rented out to an individual who uses it as a residence.
– the gross rent paid for real estate rented out to The immovable income is determined on the basis of the
individuals who use it for professional purposes or to gross rent paid.
legal persons (companies).
According to European law, the difference in taxable basis
On the basis of the previous legislation, foreign real estate cannot be upheld.
owned by Belgian residents was in principle taxed on the
basis of:Real Estate Newsletter 17
New legislation – equal taxation regime Belgium has concluded such double tax treaties with e.g.
based on cadastral income the Netherlands, France, Spain, Portugal and Italy.
The new legislation provides for equal treatment. The Although the income is exempt, the progression does
basis for determining income from Belgian real estate, have an effect on the tax rates applicable to other taxable
i.e. cadastral income, will also become the basis for income of Belgian residents (e.g. salary or pension).
determining income from foreign real estate. When real Consequently, a reduction of the taxable basis of
estate is not rented out or is rented out to an individual immovable income, based on cadastral income, will in
who does not use it professionally, the taxable basis will be principle have a positive effect on the overall tax due.
determined on the basis of the cadastral income.
Determination of cadastral income for
Generally, the cadastral income (even after indexation and foreign real estate
40% increase) will be lower than the gross rental value or
the gross rent paid. Therefore, in principle, the change of For the implementation of the new legislation, a cadastral
legislation will be advantageous for the taxpayer. income must be determined for foreign real estate
owned by Belgian residents, as is the case for Belgian
Double tax treaty real estate. The competent administration (“Administratie
Opmetingen en Waarderingen” / “l’Administration Mesures
If Belgium concluded a double tax treaty with the country et Evaluations”) will determine the cadastral income.
in which the real estate is located, the immovable income
is exempt from income tax in Belgium, but subject to The cadastral income is a fictitious income equal to the
progression. average annual normal net rental value of an immovable
property at the reference time, i.e., (still) 1 January 1975.
In absence of the rental value or normal market value in18
1975, the cadastral income of foreign real estate will be Objection to cadastral income
determined on the basis of the current normal market
value. To obtain the market value in 1975, a correction If a Belgian resident buys or sells foreign real estate or
factor will be applied to the current normal market value acquires property rights in another way (e.g. an inheritance)
(for 2020: 15.036), to be multiplied by a fictitious return of as from 1 January 2021, the information must be
5.3%. submitted spontaneously via a form on the website or via
the MyMinFin platform, in principle within four months.
Example: A Belgian resident purchased a house in France
in 2020 for € 250,000. The cadastral income will be € 881 For foreign real estate acquired or sold between 1 January
(i.e. € 250,000 / 15.036 x 5.3%). 2021 and 25 February 2021, this deadline is extended to
30 June 2021. This term is shorter than for foreign real
Owner of foreign real estate before estate held prior to 1 January 2021.
1 January 2021 - action?!
Modifications to real estate - reassessment
A taxpayer who already owned foreign real estate prior to
1 January 2021 must in principle spontaneously provide As for Belgian real estate, a reassessment of the cadastral
the necessary information to the competent administration income is required in case of extension, reconstruction
by 31 December 2021 at the latest, via a form on the and/or “substantial changes” to the foreign real estate.
website or via the MyMinFin platform.
The taxpayer must spontaneously notify the authorities of
The competent administration will in principle contact the modifications within thirty days after the completion of
taxpayers who included foreign immovable income in the works.
previous years’ personal income tax returns.
Holders of foreign real estate
A taxpayer who purchased foreign real estate in 2020
(which was therefore not included in the personal income This article is limited to foreign real estate of which the
tax return of previous years), will have to submit a form holders are Belgian residents-individuals.
spontaneously.
The holder of an immovable property is (a.o.) the owner,
At least the following information must be provided: possessor or usufructuary.
– Short description of the foreign real estate; Cayman tax
– Location (country and address); and
– Normal market value. If the normal market value is not The obligation to provide information also applies to foreign
known, the purchase price and the year of acquisition real estate held by foreign legal structures targeted by the
must be indicated and, if applicable, the renovation Cayman tax of which a Belgian resident is a “founder”
costs and the year of renovation. (as defined in the Cayman tax legislation). In this case,
the Belgian resident must declare the immovable income
Acquisition or sale of foreign real estate as in his personal income tax return and comply with the
from 1 January 2021 - action! information requirements to determine a cadastral income
of the immovable property.
If a Belgian resident buys or sells foreign real estate or
acquires property rights in another way (e.g. an inheritance) Example: A Belgian resident is a shareholder of a BVI
as from 1 January 2021, the information must be company that holds real estate on the BVI. The company
submitted spontaneously via a form on the website or via is a foreign legal structure based on the Cayman tax
the MyMinFin platform, in principle within four months. legislation. The income of the real estate must be included
in the personal income tax return of the Belgian resident.
For foreign real estate acquired or sold between 1 January The Belgian resident must comply with the information
2021 and 25 February 2021, this deadline is extended to requirements.
30 June 2021. This term is shorter than for foreign real
estate held prior to 1 January 2021.Automatic exchange of information - Mutual Assistance Directive On the basis of the automatic exchange of information pursuant to the European Mutual Assistance Directive, Belgium obtains information about (the value of) European real estate owned by Belgian residents. Sanctions In case of non-compliance with the information obligations, an administrative fine ranging from € 250 to € 3,000 may be imposed. The scale of fines and modalities of application will be determined by a Royal Decree. Entry into force The new legislation entered into force on 1 January 2021. The changes in the personal income tax are in principle applicable as from assessment year 2022 (income year 2021). The competent administration expects to have an established cadastral income for all foreign real estate owned by Belgian residents by March 2022. Finally, equal treatment of income from foreign real estate! Generally, the equal treatment of the immovable income of Belgian and foreign real estate through the taxation of a (lower) cadastral income will provide a tax benefit to Belgian residents owning foreign real estate. It is estimated that Belgian residents hold around 150,000 real estate properties abroad. Determining the cadastral income for each of these properties will undoubtedly be a gargantuan task for the competent administration. The owners of foreign real estate can already start collecting the necessary information. Family Owned Business & Private Wealth Team Saskia Lust Barbara Albrecht Stephanie van Gils Eléonore van der Loos
Last month in short
Real Estate Newsletter 21
Rent waiver in the context of – The tenant may neither have had any rent arrears
nor being a company in financial difficulty on 31
the Covid-19 crisis: what about December 2019.
the VAT consequences? We will inform you as we receive more information on this
incentive.
In the light of the tax benefit related to the rent waiver put
into law as a new support measure in the context of the
Covid-19 crisis, what are the VAT consequences of such UBO-register: additional
waiver when the letting is subject to VAT according to the
article 44, §3, 2°, d) of the Belgian VAT Code?
requirements postponed to
31 August 2021
A parliamentary question was raised in this respect. In
its response, the Ministry of Finances recalls that the In September 2020 additional obligations were introduced
temporary supply of a building without any consideration regarding the registration of the Ultimate Beneficial Owner
granted in the context of the execution of a lease of companies or legal entities in general. Amongst others,
agreement is considered as a commercial discount and the reporting officer was required to add supporting
not as a supply without consideration. Therefore, the documents into the register by 30 April 2021.
landlord does not have to perform a VAT revision in case a
rent waiver would be granted to the tenant in the context The competent service within the Tax Department has
of this specific supporting measure related to the Covid-19 recently communicated that the deadline is postponed
crisis. to 31 August 2021. On one hand the FAQ was updated
to clarify some obligations and on the other, the service
Walloon commercial lease announced an update of the tool allowing the reporting
party to upload more easily documents that are already
loan available in other databases. To cope with these novelties,
you now get 4 additional months to comply with your legal
Mid-March, the Walloon Government announced a specific obligations.
“rent” measure, through a regional loan system in order to
support tenants impacted by the pandemic. The measure
has not yet been enacted but via official websites some
modalities of the (future) measure are known.
The measure is only open for SMEs and self-employed
people who have had to close down.
As is the case with the Flemish and the Brussels
commercial lease loan, the tenant will be granted a loan by
a competent authority. The conditions for this loan are
– In order for the tenant to benefit from a loan, the
landlord must grant a waiver of rent of at least 1
month. This waiver can be retroactive to April 2020;
– The loan can cover maximum 4-month rent. Maximum
amounts are not yet known at this stage;
– The loan is granted at a rate of 2%;
– Its duration is 2 years, with the repayment of the
principal starting 6 months after the granting of the
loan;22
On our websiteReal Estate Newsletter 23 Discover more: Loyens & Loeff Belgium ranked in The Legal 500 EMEA Acquisition self-storage company taxed with RETT? (Netherlands) Replay of our Real Estate webinar : Mortgage in case of split ownership in French Replay of our Real Estate webinar : Mortgage in case of split ownership in Dutch Participate to our next Real Estate webinar: Register here!
24
About Loyens & Loeff Authors of this edition
We are an international law and tax firm with cross-border Ariane Brohez: ariane.brohez@loyensloeff.com
expertise in a wide range of sectors. Our specialists in Lien Bellinck: lien.bellinck@loyensloeff.com
Belgium, Luxembourg, The Netherlands and Switzerland Caroline Orban: caroline.orban@loyensloeff.com
are recognised for their in-depth knowledge and unique Eugénie Mennig: eugenie.mennig@loyensloeff.com
approach, integrating tax and legal advice.
Clara Mestdagh: clara.mestdagh@loyensloeff.com
Julien Lecler: julien.lecler@loyensloeff.com
A unique approach
Saskia Lust: saskia.lust@loyensloeff.com
Tax and law are heavily intertwined. That is why we
Barbara Albrecht: barbara.albrecht@loyensloeff.com
integrate these fields of expertise as much as needed. It
Stephanie van Gils: stephanie.van.gils@loyensloeff.com
results into high-end, extremely efficient solutions for our
clients. As an independent full service law firm we assist Eléonore van der Loos: eleonore.van.der.loos@loyensloeff.
multinationals, SME’s, entrepreneurs and private clients com
internationally and locally. We offer our clients integrated
tax and legal solutions. Our clients inspire us. And that
makes the difference.
Responsible publisher
Independent cross-border expertise
Our international focus results into cross-border expertise. Christophe Laurent, Avenue de Tervueren 2 /
We advise our clients in implementing their business Tervurenlaan 2, B-1040 Brussels.
objectives in order to create tax and legal efficiencies.
Consequently it empowers them to grow their business. Don’t hestitate to get in touch with your usual contact
Additionally we maintain excellent relationships with the person for more information on the topics covered.
most prominent law practices worldwide, and we are
highly regarded for being able to work seamlessly together
with them on cross-border matters.
In-depth knowledge of business sectors
We have long-lasting and in-depth knowledge of practically
all business sectors. As soon as we believe we have
developed a thorough and an exhaustive expertise related
to a specific industry sector, we build a dedicated team to
further expand those specific competencies and know-
how. By combining this knowledge with our international
focus and tax and legal expertise, we provide our clients
the best advice on a local and a global level.LOYENSLOEFF.BE As a leading firm, Loyens & Loeff is the logical choice as a legal and tax partner if you do business in or from the Netherlands, Belgium, Luxembourg or Switzerland, our home markets. You can count on personal advice from any of our 900 advisers based in one of our offices in the Benelux and Switzerland or in key financial centres around the world. Thanks to our full-service practice, specific sector experience and thorough understanding of the market, our advisers comprehend exactly what you need. Amsterdam, Brussels, Hong Kong, London, Luxembourg, New York, Paris, Rotterdam, Singapore, Tokyo, Zurich
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