DIRECT SALE OF REAL ESTATE
Resident individual
Capital gains
As a general rule, capital gains on real estate that is not used for a professional activity are in principle not subject to personal income tax.
However, exceptions exist such as capital gains derived from speculative activities, capital gains derived from the sale of real estate that was acquired by purchase if the sale takes place within a certain time period.
VAT / transfer tax
As a rule, the sale of real estate is exempt from VAT and subject to registration duties depending on the regions in which the real estate is located (Walloon, Brussels, Flemish). If the real estate is sold after having paid registration duties within 2 years following the date of the acquisition deed, 60% of the tax originally paid by the seller can be recovered.
However, if the real estate qualifies as new for VAT purposes (i.e until 31 December of the second year following the first use of the building), the transfer of ownership of the building (and the adjoining land) can be subject to 21% VAT (unless specific rates apply). In this case no registration duties apply.
As a result of this transfer, subject to VAT, the seller will be able to deduct the input VAT paid for the construction or acquisition of the real estate, as long as the seller uses the building for its VAT-subject activities.
Note that any seller, other than a professional re-seller, must inform the tax authorities upfront about his intention to sell real estate with application of VAT (option subject to specific formalities) and account for the VAT due via a special VAT return.
Deferral of tax
Provided that certain conditions are met, individuals may benefit from the tax deferral regime (if the real estate was held by individuals for purposes of business activity).
Losses
Losses realised on privately used real estate are ignored. However, if the real estate is held by individuals for purposes of business activity, the losses may be offset against other taxable income.
Non-resident individual
Taxation and benefits linked to real estate can vary depending on the status of the individual.
Resident company
Capital gains
Capital gains on Belgian real estate are subject to corporate income tax at a rate of 25%. A rate of 20% may apply when certain conditions are met.
VAT / transfer tax
As a rule, the sale of real estate is exempt from VAT and subject to registrations duties depending on the region in which the real estate is located (Walloon, Brussels, Flemish). If the real estate is sold after having paid registration duties within 2 years following the date of the acquisition deed, tax originally paid by the seller may be recovered depending on the regions in which the real estate is located.
However, if the real estate qualifies as new for VAT purposes (i.e until 31 December of the second year following the first use of the building), the transfer of ownership of the building (and the adjoining land) can be subject to 21% VAT (unless specific rates apply), in which case, no registration duties apply.
As a result of this transfer, subject to VAT, the seller will be able to deduct the input VAT paid upon the construction or acquisition of the real estate.
Note that any seller other than a professional re-seller must inform the tax authorities upfront about his intention to sell real estate with application of VAT (option subject to specific formalities) and account for the VAT due in a special VAT return.
Deferral of tax
Provided that certain conditions are met, companies may benefit from the tax deferral regime.
Losses
The losses realised on the sale of real estate may be offset against tax losses carried forward.
Non-resident company
Non-resident companies are treated in the same manner as resident companies. Income derived from the lease of Belgian real estate is subject to non-resident corporate income tax regardless of the presence of a permanent establishment of that company in Belgium.
INDIRECT SALE
Resident individuals
Capital gains
In general, capital gains on shares which are not used for a professional activity are not taxable unless speculation can be invoked by the Belgian tax authorities.
Under Belgian tax law, speculative capital gains are subject to a specific tax rate of 33%.
When a private individual (and possibly their family) owns shares in a Belgian company representing more than 25% of the capital, the realized capital gain is taxable if the buyer is a legal person established outside the European Economic Area (EEA). The capital gain is then subject to the so-called "capital gains tax for the sale of a substantial interest". The tax rate is 16.5%, to be increased with the municipal tax.
VAT / transfer tax
No VAT is due on the sale of shares.
Under certain circumstances, the sale of shares could be challenged by the Belgian tax authorities especially if the sole or main asset of the company whose shares are sold consists of real estate. As a result, the sale of shares could be subject to registration duties for instance if the Belgian tax authorities can prove that the actual intention of the parties was obviously to sell the real estate itself rather than the company holding the targeted asset.
Non-resident individual
Taxation and benefits linked to real estate can vary depending on the status of the individual.
Resident company
Capital gains
For the seller of the shares, capital gains on shares are fully tax exempt provided that the following conditions are cumulatively met:
- taxation condition: the income derived from the shares (or that would have been attributed to them) can benefit from the dividend received deduction regime (Belgian participation exemption regime);
- holding condition: the shares have been held in full ownership during an uninterrupted period of at least one year;
- participation condition: a minimum holding of 10% in the subsidiary’s capital or an acquisition value of €2,500,000.
Losses
In principle, capital losses on shares are not deductible for tax purposes, except where the company is wound up but only up to the amount of the paid-up capital of the liquidated company.
Deferral of tax
In contrast to the direct sale of real estate, it is not possible to benefit from a deferred taxation.
VAT / transfer tax
No VAT is due on the sale of shares.
Under certain circumstances, the sale of shares could be challenged by the Belgian tax authorities especially if the sole or main asset of the company whose shares are sold consists of real estate. As a result, the sale of shares could be subject to registration duties for instance if the Belgian tax authorities can sustain that the actual intention of the parties was “obviously” to sell the real estate itself rather than the company holding the targeted asset.
Non-resident company
Non-resident companies are treated in the same manner as resident companies.
DIRECT TRANSFER INTRA CONCERN (BELGIAN REAL ESTATE TO BELGIAN COMPANY)
Resident company
Capital gains
Capital gains on Belgian real estate are subject to corporate income tax at a rate of 25%. A rate of 20% may apply to the extent that certain conditions are met.
VAT / transfer taxes
There are various exemptions available in case of (de)merger, internal reorganisation or contribution to a company. However, various detailed conditions apply.
Transfer taxes apply to the acquisition of the legal/economic ownership of Belgian real estate. Real estate transfer tax may be mitigated if the merger/acquisition provisions apply.
Deferral tax
Provided that certain conditions are met, companies may benefit from the tax deferral regime.l
Losses
The losses realised on the sale of real estate may be offset against tax losses carried forward.
Non-resident company
Same rules as for resident companies apply.
INDIRECT TRANSFER INTRA CONCERN (BELGIAN REAL ESTATE TO BELGIAN COMPANY)
Resident Company
Capital gains
For the seller of the shares, capital gains on shares are fully tax exempt provided that the following conditions are cumulatively met:
- taxation condition - the income derived from the shares (or that would have been attributed to them) can benefit from the dividend received deduction regime (Belgian participation exemption regime);
- holding condition - the shares have been held in full ownership during an uninterrupted period of at least one year;
- participation condition - a minimum holding of 10% in the subsidiary’s capital or an acquisition value of €2,500,000.
Vat/transfer taxes
There are various exemptions available in case of (de)merger, internal reorganisation or contribution to a company. However, various detailed conditions apply.
Transfer taxes applies by the acquisition of the legal/economic ownership of Belgian real estate. Real estate transfer tax may be avoidable if merger/acquisition provisions apply.
Deferral of tax
In contrast to the direct sale of real estate, it is not possible to benefit from a deferred taxation.
Losses
In principle, capital losses on shares are not deductible for tax purposes, except where the company is wound up but only up to the amount of the paid-up capital of the liquidated company.
Non-resident company
Same rules as for resident companies apply.
DIRECT TRANSFER INTRA CONCERN (BELGIAN REAL ESTATE TO FOREIGN COMPANY)
Resident company
Capital gains
Capital gains on Belgian real estate are subject to corporate income tax at a rate of 25%. A rate of 20% may apply to the extent that certain conditions are met.
VAT / Transfer taxes
There are various exemptions available in case of (de)merger, internal reorganisation or contribution to a company. However, various detailed conditions apply.
Transfer taxes apply to the acquisition of the legal/economic ownership of Belgian real estate. Real estate transfer tax may be mitigated if the merger/acquisition provisions apply.
Deferral of tax
Provided that certain conditions are met, companies may benefit from the tax deferral regime.
Losses
The losses realised on the sale of real estate may be offset against tax losses carried-forward.
Non-resident company
Same rules as for resident companies apply.
INDIRECT TRANSFER INTRA CONCERN (BELGIAN REAL ESTATE TO FOREIGN COMPANY)
Resident company
Capital gains
For the seller of the shares, capital gains on shares are fully tax exempt provided that the following conditions are cumulatively met:
- taxation condition - the income derived from the shares (or that would have been attributed to them) can benefit from the dividend received deduction regime (Belgian participation exemption regime);
- holding condition - the shares have been held in full ownership during an uninterrupted period of at least one year;
- participation condition - a minimum holding of 10% in the subsidiary’s capital or an acquisition value of €2,500,000.
VAT / Transfer tax
There are various exemptions available in case of (de)merger, internal reorganisation or contribution to a company. However, various detailed conditions apply.
Transfer taxes apply to the acquisition of the legal/economic ownership of Belgian real estate. Real estate transfer tax may be mitigated if the merger/acquisition provisions apply.
Losses
In principle, capital losses on shares are not deductible for tax purposes, except where the company is wound up but only up to the amount of the paid-up capital of the liquidated company.
Deferral of tax
In contrast to the direct sale of real estate, it is not possible to benefit from a deferred taxation.
Non-resident company
Same rules as for resident companies apply.
TRANSFER BELGIAN REAL ESTATE TO AN EU-COMPANY
If the transferor’s home jurisdiction is in the European Union, the liability to tax on the capital gains may be avoidable if the merger and acquisition provisions apply. Several detailed conditions apply which can be found in the Council Directive of 19 October 2009.