by Dries Torreele
Mandatory closure of many enterprises is having serious financial impacts. Entrepreneurs who rent premises are having to dig into their reserves to bridge this period. Some landlords have responded to this situation by waiving part of their rent.
The Minister of Finance was recently asked the following question: If commercial property rent usually recorded as income is waived due to mandatory closure as a result of the COVID-19 pandemic, can the property owner deduct this loss as a business expense?
The Minister confirmed that this is the case, providing it is possible to prove that the rent was waived in order to secure future taxable income. In fact, this is obvious in many cases, since the rent reduction is indeed granted in order to keep the current tenant. This means that in principle no tax is paid on waived rental income.
At the Federal Council of Ministers on 12 February 2021, it was announced that a federal tax reduction of 30% would also be granted to landlords who let to self-employed persons or SMEs who have been obliged to close, if they waive (part of) their rental income for the months of March, April and May 2021.
For example, waiving 6,000 euros (3 x 2,000) would qualify the landlord for a tax benefit of 1,800 euros.
This means that, firstly, you (the landlord) are not paying tax for rental income that you have not received (indeed, this would appear self-evident), and secondly, you can qualify for an additional tax benefit of 30%.
The announcement indicated that the tax benefit would be capped at 5,000 euros per month per tenancy agreement and 45,000 euros per month per landlord.
To date, this measure has only been announced by the Federal Council of Ministers; no legal text has yet been published.
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.