Many entrepreneurs use a usufruct construction when purchasing real estate. The company then acquires the (temporary) usufruct, while you, as the company manager, have bare ownership. At the end of the usufruct period, you then receive full ownership of the property.
But what if you want the usufruct renew before the expiration of the initial term? Until recently, the Flemish Tax Office found that you had 12% sales law had to pay up, but that has recently changed thanks to a Supreme Court ruling.
What exactly is an extension of usufruct?
An extension occurs when:
- The duration of usufruct is extended before the expiration of the initial term (total term max. 99 years);
- The extension of usufruct occurs between same parties;
- Only the duration modifies, not the other modalities of usufruct.
Are not all these conditions met? Then it is not an extension, but an renewal Of usufruct or an establishment of a new usufruct. In that case, sales duty is due anyway.
What does the case law say?
- In a specific case, the Flemish Tax Administration had levied sales tax on the extension of an existing usufruct. The taxpayer went dissenting and went to court.
- The Ghent Court of Appeals ruled on Nov. 30, 2021, that such an extension is no 'transferring agreement' constitutes, which is a legal condition for levying sales tax. According to the court, the extension involves only a change in the duration, not the right itself.
- The Flemish Tax Administration then appealed in cassation, but in the meantime maintained its position and continued to levy sales charge on such extensions.
- It was not until Jan. 24, 2025, that the Supreme Court brought final clarity: an extension is not a transfer and therefore not a cause for sale right.
Good news for entrepreneurs
It is now well established that on the extension of usufruct no more sales duty will be levied by the Flemish Tax Administration. Only the fixed fee of €50 remains due. Also in Brussels and Wallonia, no sale duty is due when usufruct is extended.
So good news for business owners who want to extend an existing usufruct structure.
Questions about your specific situation?
Our experts will be happy to review your case. Feel free to contact with us.
