The new Flemish government has announced a number of tax changes. One change that is important is that it wants to increase the so-called suspect period from 3 to 5 years.
What is this about?
If you wish to donate a sum of money to your partner, your children or someone else close to you, you do not necessarily need to go to a notary. This sort of donation can also be made privately, via a so-called ‘bank gift’. The donation is made via bank transfer and documents are exchanged between the donor and the donee, in which the terms and conditions of the donation are set out and the donee declares that they accept the donation.
A donation like this is not required to be registered, so no donation tax (3% in direct line and between partners) is due. If, however, as the donor, you happen to die within 3 years of the donation, the donee would still have to pay inheritance tax (up to 27% in direct line and between partners). This is what is referred to as the suspect period. It was introduced to prevent people from giving away all their assets just before their death, without the taxman being able to take a cut.
This term or suspect period is now being increased to 5 years, which means that it will take longer for an unregistered donation to become definitively free from taxation. This term already applies in the Walloon Region.
It is not yet clear when this measure will take effect, but reportedly only ‘new’ donations would be subject to this measure as of 1 January 2025. The three-year period would continue to apply to ‘old’ donations.
Are you considering making a bank gift soon that you do not wish to register? If so, it is best to speed it up in order to be ahead of the extension of the waiting period.
Our PKF BOFIDI experts are here to help you
If you have further questions about this and/or would like assistance with drawing up the documents, please do not hesitate to contact us. We will be delighted to help you.
This article was written by Kristof Van Hecke.