Taxation of business assets
In all three regions, a reduced tax rate exists in case of a family-owned business which would be inherited upon the death of the owner.
Both Brussels-Capital and Flemish regions provide a reduced tax rate of 3% for the surviving spouse, the surviving legal cohabitant, direct ancestor, or descendant of the deceased. In all other cases, a reduced tax rate of 7% will be applicable.
Some specific conditions should be met in order to benefit from the reduced tax rate: at least 50% full ownership of shares must be held by the testator and his family; the company must carry on a commercial, industrial or artisanal activity (specifics rules apply for holding) and the company’s registered office must be located in a Member State of the European Union.
For the Walloon Region, transfers of a family-owned business by inheritance are fully tax exempted (0%). Conditions must also be met.
Assessment and valuation
As a rule, succession tax is levied on the worldwide property belonging to the deceased at the time of death. Property includes movable assets, real estate, tangible and intangible assets, wherever located, in Belgium or abroad.
The taxable amount is equal to the net value of the property which is the difference between the assets and the liabilities.
All assets should be reported at their fair market value at the time of death.
For transfer tax purpose, liabilities specifically contracted by the testator for their Belgian immovable shall be deducted from the value of the Belgian real estate of the deceased.
Trusts, Foundations, etc.
The concept of trust doesn’t exist under Belgian law. In this respect, a trust cannot be established in Belgium, even though foreign trusts validly constituted are recognised under Belgian international private law. Belgian case law differs considerably in the analysis of these trusts.
Foundations do exist under Belgian law. From an inheritance tax perspective, legacies to certain kinds of foundations are subject to a favorable inheritance tax rate if certain conditions are met.
Double tax treaties have been concluded with France and Sweden regarding succession tax.
Negotiations regarding succession tax treaties for the avoidance of double taxation have been commenced with the USA.
Who is liable under Belgian Inheritance Tax?
Succession tax and transfer tax are paid by heirs and legatees. An heir can decide to accept an inheritance purely and simply, to accept it under benefit of inventory (i.e., confirmation that assets exceed liabilities) or to renounce it. In the latter case, renouncing heirs or legatees are released from all filing obligations.
For the three regions, an inheritance tax return (“Déclaration de succession” or “Aangifte van nalatenschap”) has to be filed by the heirs. In principle, only heirs and universal legatees must fill the inheritance tax return. If the deceased is a non-resident, the inheritance tax return must be filed by the heirs and universal legatees of the real estate located in Belgium and transfer tax shall be calculated based on the situation of his real property in Belgium.
The competent region depends on the last place of residency of the deceased. If the deceased moved their place of residency within Belgium in the period of five years before their death, the competent region for filing the tax return (and the applicable inheritance tax rules), is the region where the deceased resided the longest within this five-year period.
The inheritance tax return must be filed within four months following the day of the death if the deceased passed away in Belgium. The period is extended to five or six months depending on whether the deceased passed away in another Member State or outside Europe.
There are no filing obligations under Belgium Gift Law but a copy of notarial deed will be kept if made in front of a Belgian notary.