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property tax advantage and reclassification of rental income from now on calculated on a daily basis

31 January 2017

by Eline Delerue

Property tax advantage and reclassification of rental income from now on calculated on a daily basis

Property tax advantage and reclassification of rental income from now on calculated on a daily basis

In a circular of 19 December 2016, the Tax Office changed the way in which the property tax advantage is calculated and reclassified rental income relating to the advantage gained from having property at one's free disposal. With effect from 1 January 2017, these calculations are no longer carried out on a monthly basis but on a daily basis.

Property tax advantage from having property at one's free disposal


Until now, the taxable advantage for having a property at one's free disposal was calculated according to the number of months that the manager or employee had the property at his/her disposal. In order to decide whether or not a month counted in full, it was necessary to determine whether or not the property was in use on the 16th day of the month.

The circular now changes this calculation on a monthly basis. If a property is only made available for part of the year, the taxable amount is calculated according to the number of days of use.

Rental income reclassified in the managing director remuneration


If a manager lets a property to his/her company, then part of the rental income can be reclassified as remuneration. More specifically, rental income will be assessed against the threshold of 5/3rds of the revalued cadastral income (called 'KI' in Belgium).

The circular deals with the situation in which the property is not made available to the company for the full year. Until now, the cadastral income up to the aforementioned threshold had to be proportionately reduced according to the number of months of use. It is here that the circular makes a change. From now on, the cadastral income must be converted pro rata according to the period of use and expressed in days.

Entry into force


The above changes apply to paid or allocated income as from 1 January 2017. For rental income earned in the preceding period, from the 2015 tax year, the taxpayer can choose between calculation on a monthly basis or on a daily basis.

For more information about this new regulation, please do not hesitate to contact one of our specialists via contact@vdl.be.

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Eline Delerue

Team Manager Tax
eline.delerue@vdl.be

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In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.