We previously reported on the new tax regime for foreign real estate. Under the Act of February 25, 2021, foreign real estate will now be taxed pursuant to a "cadastral income" and thus ends the unequal tax treatment between the real estate located abroad and the real estate located in Belgium. To determine this KI, the tax authorities have now sent each owner of a foreign property a form with a number of questions. This information must be submitted to the tax authorities by the end of this year at the latest.
1. Why was this new regulation introduced?
As mentioned above, the income from a foreign property must be declared in the personal income tax return according to the actual rental income obtained or, to the extent there is no rental, according to the actual rental value that can be obtained. Belgium was first taken to task for this in 2014 but thus only amended its legislation at the beginning of this year. In the meantime, it had determined a flat-rate method for a number of countries (the Netherlands, France, Spain and Italy) but for all other foreign real estate this discrimination therefore continued to apply.
2. What does the new arrangement entail?
The tax authorities will now also assign a KI to all foreign real estate, which corresponds to the average normal rental value on January 1, 1975, but indexed to today. In order to determine this, the form asks for various information about the property, such as the market value or rental value on January 1, 1975. If this is not known, the current normal sales value is asked. The KI is then calculated by dividing this value by a correction factor (15.015 for AJ2022) and multiplying by 5.3%. To illustrate, a property with a normal sales value on today of 450,000 euros, will be assigned a KI of 1,588 euros.
3. What timings must be respected?
The forms were sent to all owners of foreign real estate already owned before January 1, 2021 and already declared in the personal income tax return. Those who have activated their eBox will have received the form via this platform. Those who have not activated their eBox will receive the form on paper. Those who have not received a form must spontaneously submit a tax return. The declaration must be submitted to the tax authorities by 31 December 2021 at the latest. This can be done via MyMinfin or via normal or registered mail.
Anyone who has bought a property in 2021 or will do so in the future must in any case spontaneously submit a declaration within four months of the purchase. The same principle applies if a property is transferred (sale, inheritance, etc.). In short, any change of ownership of foreign real estate must be spontaneously declared.
Anyone who does not agree with the assigned KI can always lodge an objection. This must be done within two months of the notification. A proposal must be made for a more 'correct' valuation of the KI.
4. Additional points of interest with the form.
Regarding the completion of the form, there are a few more points to consider:
- Each undivided owner must complete the form. Spouses who own property together should thus each file a return.
- The declaration should only be made by the owner or usufructuary. Those who are mere bare owners should not fill out the form.
- If (major) works are carried out on the property, the declaration must initially be made on the basis of the situation before the renovations. As soon as the works have been completed, a new declaration must be made spontaneously.
- If, in addition to the property, there are pieces of land around the property in possession, they should not be declared separately but together with the declaration of the built-up property.
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