Update: Flanders adjusts tax concession regime: residential property excluded from 2026 onwards

On December 18, 2025, the text of the long-awaited program decree accompanying the 2026 budget was adopted in the plenary session of the Flemish Parliament. This decree includes a series of important fiscal reforms. One of these changes concerns a tightening of the conditions for the favorable regime for gifts and inheritances of family enterprises and companies.

This article is an update to our earlier publication from mid-October, in which we covered the planned changes to the tax favor system. In the meantime, the decree maker has made a few more changes to the final text.

What does the tax favor system entail?

The tax favor system provides a reduced inheritance tax rate and a gift tax exemption for the transfer of family businesses and companies within the family. This makes it possible to transfer a business to the next generation in a tax-friendly way. But that regime will be stricter from now on.

The thrust of the planned reform

Residential property and building lots are excluded, with one important exception. From January 1, 2026, only the ‘real business assets’ eligible for the favorability regime. Residential real estate and construction land are explicitly excluded. This applies to family businesses as well as shares in family companies:

• Family enterprises (such as an agricultural business, liberal profession, craft, trade or industry): residential property is already excluded based on the existing criterion ‘mainly’. Only immovable property used or intended primarily for residential purposes is excluded from the favored regime. In addition, building land explicitly added to the term residential property.

• Shares of family partnerships: the favored regime will henceforth only be applied On the portion of the equity value not corresponding to residential real estate (in the company itself or in subsidiaries from 10% participation). In order not to exclude companies that have made private real estate their business activity - the Explanatory Memorandum refers to family companies whose professional activity consists primarily of building, renting and selling homes and land - from the favorable tax regime, the decree provides for a significant exception. Companies that derive at least 75% of their sales from residential real estate and Employ at least one full-time employee during the three years before AND after the transfer, can still benefit from the favorable regime for that residential property.Note: residential real estate is basically excluded, regardless of whether it is used privately or business-related. Only for companies operating in the construction, rental or sale of homes and land and meet the employment condition, an exception applies. Purely patrimonial companies, which only manage real estate with no real economic activity, are not eligible. In this way, the legislator wants to avoid applying the favored regime to private assets, reserving it for companies with real activity in residential real estate.

Mandatory valuation report

For gifts and inheritances of shares in family companies, a valuation report mandatory. A independent auditor or certified accountant should clearly break down residential real estate in it.

• Donations: the report must be prepared before the deed of gift and submitted to VLABEL within seven days of registration.
• Inheritances: the report must be prepared before the filing of the estate declaration and then attached to the declaration.

Certificates: advance certainty, binding valuation at inheritance tax time

At donations you can request an attestation in advance from VLABEL that confirms whether the terms is met and which valuation valid. This attestation is binding for VLABEL as long as the facts do not change between application and deed of gift (principle of reliance) and the application is made within thirty days from the date of the valuation of the shares.

At inheritance tax you can request a binding certificate on the valuation at date of death, based on the report of the auditor or certified accountant. This attestation must be requested within thirty days from the date of the valuation report and before the expiration of the declaration deadline. The attestation is definitively binding on VLABEL.

In either case, VLABEL provides within 60 days after the application, issue the attestation.

Transitional

For gifts of shares in family companies notarized between January 1 and March 31, 2026 an additional period of 60 days To submit the mandatory valuation report.

Other changes to the program decree

Furthermore, the program decree also makes adjustments within the inheritance and registration tax. The partnerabattement in inheritance tax is increased and a single reduction introduced. In addition, the conditions for the concessionary rate of 2% when purchasing the only own home stricter.

More information will follow soon.