Belgian residents soon also required to pay gift tax through a Dutch notary

Belgian residents soon also required to pay gift tax through a Dutch notary

10 November, 2020

People living in Belgium are currently still able to register a gift by a notarial deed through a foreign notary without having to pay gift tax in Belgium. According to a legislative proposal recently approved by the Parliamentary Committee of Finance in Belgium, this will no longer be allowed as of 1 December 2020. But this doesn’t mean that tax-free gifts are a thing of the past as a resident of Belgium!

Gifts in Belgium

In Belgium, a distinction is made between gifting movable and immovable assets. The main difference is that to give immovable assets away one needs a notarial deed, and in the case of a gift concerning movable property, such as money and paintings, no notarial deed is required. This is a very relevant point, because gifts that are recorded in a Belgian notarial deed must be registered and are therefore subject to gift tax.

There are three different ways to gift movable assets in Belgium:

  • A hand gift or ‘handsel’. This is a person-to-person gift. A hand gift is not subject to registration and no gift tax needs to be paid.
  • A bank transfer. There is no obligation to register this type of gift either, meaning that no gift tax is due.
  • A notarial gift. With the notarial gift, the deed must, in principle, be registered and gift tax is therefore due. If the deed was previously executed by a foreign (Dutch) civil-law notary, there is currently no obligation to register and gift tax can thus be avoided.

 

The gift tax for movable assets varies between 3% and 7%, depending on the region in Belgium and the recipient of the gift. Gifts that are not subject to mandatory registration may be voluntarily submitted for registration. Once registered, gift tax applies.

Untaxed gifts

Tax-free gifting is therefore still possible by means of a hand gift, a bank transfer or through a foreign notarial deed. If the gift is not voluntarily registered, inheritance tax is due if the person who gave the gift passes away within three years after the transaction, if at the time of death he or she is a Belgian resident. It is probable that this period of three years will be extended to four years in the Flemish Region. The inheritance tax rates in Belgium are generally higher than the gift tax rates.

To ensure a gift remains untaxed, it is therefore important that you can prove when the gift transaction took place in order to prevent it from being included in the taxable inheritance. If the gift is registered in a notarial deed, there can be no cause for discussion in that area. It’s no wonder why so many people choose to have the gift notarised with a foreign notary.

Legislation proposal

A recent legislation proposal has now been approved by the Parliamentary Commission of Finance, stipulating that all foreign notarial gift deeds of movable assets also need to be registered in Belgium from 1 December 2020. The consequence of this change is that it will no longer be possible to gift money or movable assets tax-free through a foreign notarial deed of gift.

There is still the option, however, to gift tax-free by means of a hand gift or a bank transfer, provided that the giver of the gift remains alive long enough after the transaction. In connection with the aforesaid survival period, it is important to properly record when the gift transfer took place and to keep documentary evidence, so that in the event of a future death this cannot be disputed and inheritance tax will still be due.

In conclusion

Are you a so-called NederBelg or a foreign resident in Belgium and would you like to know more about the possibilities to gift your assets (tax-free)? Please don’t hesitate to contact us.



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