Belgian tax authorities tighten focus on foreign real estate
by Maxim De Smet and Stephanie Vanmarcke
More and more Belgians own property abroad. This may include a second home in Spain, an apartment in France or an investment property in Portugal. As cross-border real estate ownership increases, so does the need for greater transparency between tax authorities. International initiatives are therefore placing a stronger focus on the automatic exchange of information relating to foreign real estate. One of these initiatives is the IPI-MCAA. In this article, you’ll discover what this international agreement involves and how it may impact your tax situation.
International exchange of real estate information
According to an OECD report, tax authorities do not always have full visibility of foreign real estate holdings. As a result, governments may miss out on tax revenues.
To improve transparency, Belgium aims to join the Multilateral Competent Authority Agreement on the Exchange of Readily Available Information on Immovable Property (IPI-MCAA) by 2030.
This OECD-developed agreement enables the automatic exchange of available information on immovable property between participating countries. So far, 26 countries have expressed their intention to participate, including Belgium, France, Spain, Germany and the United Kingdom.
In practice, this means that the Belgian tax authorities are more likely to receive information about your foreign property. If your foreign real estate income has not been declared correctly, the risk of additional questions, tax audits or penalties increases.
Declaring foreign real estate correctly
If you purchase property abroad, you must declare it to the Belgian tax authorities within four months of the purchase. The administration will then automatically assign a cadastral income value. This must be included in your personal income tax return.
In many cases, an exemption applies in Belgium, but you must explicitly request this exemption in your tax return.
Please note that this exemption is subject to progression reserve. This means the cadastral income is taken into account to determine the applicable tax rate, after which it is removed from the taxable base.
In practice, this may still result in higher taxes, as you could end up in a higher tax bracket.
Do you own foreign property or are you planning to invest abroad?
Then it is important to verify in time whether your tax returns are complete and accurate.
Our specialists are happy to assist you with:
declaring your foreign real estate,
assessing the impact on your Belgian personal income tax,
identifying tax considerations related to foreign investments,
and handling possible tax regularisations.
Do you have any questions or would you like to discuss your situation? Feel free to contact us via contact@vdl.be or through the form below.
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Maxim De Smet
Advisor International maxim.desmet@vdl.be
Stephanie Vanmarcke
Team Manager International | Certified Tax Advisor stephanie.vanmarcke@vdl.be
Disclaimer
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.
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