In a previous article, we talked about upcoming changes regarding the taxation of property abroad as from tax year 2022. In this article, we would like to further explain this new taxation system. When these changes were announced, there was still some uncertainty as to how these properties abroad will be taxed.
Reporting obligation
Taxpayers who have declared real estate abroad in their personal income tax return for previous years will probably have received a form from the tax authorities. Taxpayers who own property abroad but have not received this form, are required to make a spontaneous declaration.
This reporting obligation applies to any taxpayer who possesses property rights on property abroad (e.g. right of ownership, emphyteusis, surface right or usufruct), regardless of which country it is located in. This obligation does not apply to bare owners.
The form is available on the FPS Finance website and can be completed online or by mail. If you own several properties abroad, a separate declaration must be made for each property located abroad.
| Purchase of property before 31 December 2020 | (Spontaneous) declaration to be made before 31 December 2021 |
| Purchase between 1 January 2021 and 24 February 2021 | Spontaneous declaration to be made before 30 June 2021 |
| Purchase after 25 February 2021 | Spontaneous declaration to be made within 4 months of purchase |
| Taxpayers subject to the non-resident tax who become subject to the personal income tax | Spontaneous declaration within 30 days |
| Legal entity subject to corporate tax that now becomes subject to income tax on legal entities | Spontaneous declaration within 30 days |
The following deadlines apply.
If you do not declare your property abroad or not within the deadline, an administrative fine ranging from EUR 250 to EUR 3,000 may be imposed.
Determination of the cadastral income
As for real estate located in Belgium, properties abroad that are not rented or rented to private persons have to be declared on the basis of a cadastral income. Real estate rented for professional purposes, however, will be taxed on the basis of the actual rental income.
Therefore, as from tax year 2022, it will no longer be necessary to declare a gross rental income. In fact, the cadastral income on real estate abroad will be determined in the same way as the cadastral income on real estate located in Belgium. Based on the data filled in on the form, the authorities will be able to determine a cadastral income.
For built property, the cadastral income will be determined by default on the basis of the current market value reduced to its value in 1975 by applying a correction factor. This cadastral income (after applying the correction factor) will then be multiplied by a rate of 5.3%. In this respect, the following should be noted:
- The current market value is the sale value that can be obtained under normal market conditions. If the current market value is not known, the purchase value can be used (excluding changes to the property and assuming that the purchase took place under normal conditions). Furthermore, if information concerning the rental value or market value of the property in 1975 is available, it is possible to ask the authorities to use these values instead of the current value adjusted by the correction factor.
- Since the cadastral income corresponds to the average annual net income, foreign taxes will no longer be deducted.
- These correction factors can be found in the table mentioned in the circular. For the year 2021, the correction factor has been estimated at 15.018.
- Normally, the cadastral income will be available on the website by 1 March 2022. The taxpayer will then have a period of 2 months to submit a complaint.
For non-built property, the cadastral income will be 2 EUR per hectare.
Double taxation convention
If the property is located in a country with which Belgium has signed a double taxation convention, the property income may be exempt in Belgium (subject to progressivity). This means that there will be no tax due on the exempt income, but it will be taken into account when determining the tax rate applicable to other incomes.
If the property is located in a country with which Belgium did not sign a double taxation convention, the foreign property income will be taken into account when determining the tax rate in Belgium. In this case, the tax on these property incomes can be reduced by half (50% tax reduction for foreign incomes).
Discuss your situation with our experts
Do you have any specific questions about these new changes? Do not hesitate to contact us. Our team of experts will be happy to help you.