After Belgium was ruled against by the European Court of Justice, the Federal Parliament with its recently published law ensures that foreign real estate will henceforth be treated the same as real estate located in Belgium for tax purposes. For both types, the property income will be calculated on the basis of cadastral income. Whether this will effectively provide an advantage for owners of foreign real estate remains to be seen but from now on everyone can rest easy: all real estate is now equal before the law.
Belgium has been ruled against several times in the past by the European Court of Justice for its discriminatory treatment of real estate located abroad. To this end, a fine of 2 million euros and a penalty of 7,500 euros per day that the legislation is not amended were imposed.
The least obvious solution suddenly became the solution, which was to grant a KI to all real estate located abroad.
In order to determine the KI of the real estate located abroad, the "normal net rental values" on January 1, 1975 must be used. Since this is not available in most cases, a calculation was included in the law to determine the KI, namely:
- Cadastral income = (Actual sales value / 15.015 correction factor) x 5.3% capitalization rate
For the year 2021, the correction factor is 15.015 %. This correction factor will be updated annually and published through a notice in the Official Gazette.
Real estate located in the Netherlands with a current sales value of €1,000,000.
- (1,000,0000 / 15.015) x 5.3% = 3,529.80 euros KI
Each acquisition or alienation of a right in rem on a property located abroad must be declared to the General Administration of the Patrimony Documentation within four months of the acquisition or alienation. The declaration will be possible as of June at the earliest via MyMinfin.
Those who already owned a foreign property on December 31, 2020, will be granted a grace period until December 31, 2021 to file the return.
In addition, there is also a penalty attached to failure to comply with the aforementioned declaration obligations. This penalty amounts to at least 250 and a maximum of 3,000 euros.
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