03 January 2024

Reform of the patrimony tax

by Dries Torreele and Seppe Van Looy

On 28 December, the Chamber of Deputies approved a bill containing various tax provisions. The most important of these are the broadening of the tax base and the modernisation of the patrimonial tax rate.

Old patrimony tax

Patrimony tax is a tax to reimburse inheritance tax, which cannot be levied on legal persons. In addition to non-profit organisations, the tax also applies to private foundations and international non-profit organisations.

The tax is payable annually on all the assets (movable, immovable, tangible and intangible) which they own on 1 January of the year of assessment, both in Belgium and abroad, with the exception of certain goods and rights (e.g. immovable property situated abroad), without deduction of debts or charges, with the exception of certain items.

NPOs, private foundations and international NPOs whose total assets do not exceed EUR 25,000 are not subject to the tax.

The tax rate is set at 0.17%.

Changes from 2024

1. Tax rate

A progressive rate will be introduced, similar to the existing inheritance tax, with the following fixed rates:

  • for the bracket between EUR 50,000.01 and EUR 250,000: 0.15%;

  • for the bracket from EUR 250,000.01 to EUR 500,000: 0.30%;

  • over EUR 500,000: 0.45%.

The exemption if the taxable assets of the legal entity concerned do not exceed EUR 25,000 is replaced by a basic exemption of EUR 50,000. In other words, the tax is not levied on the first EUR 50,000.

2. Neutralisation for some sectors

The impact of the new rate will be neutralised for a number of sectors. For example, the assets of institutions that carry out more than half of their turnover in the care sector will not be included in the tax base up to 62.3% of their value. As their assets are therefore only included in the tax base for 37.7% of their value, their tax burden remains the same at 0.17% (0.45% of 37.7% = 0.17%). The same neutralisation applies to:

  • Operators of sports facilities

  • Educational establishments

  • Organisations organising theatre, ballet or cinema shows, concerts or conferences (culture)

  • Social work places

  • Medical institutions

  • Animal shelters

  • Recognised private archive centres.

In addition, these extensions also apply to certain non-profit heritage organisations: "a taxpayer of whose patrimony is for at least 75 per cent used for the operation of qualifying institutions".

3. Foreign real estate

The provision that explicitly excludes real estate located abroad from the patrimony tax will be abolished.

In addition, a credit mechanism is introduced to avoid possible double taxation of foreign real estate if it is subject to a tax abroad that is similar to the patrimony tax.

4. Anti-abuse provision

The wording of the reference provision is adapted in order to remove any possible doubt as to the applicability of the general anti-abuse provision in the context of the patrimony tax.

According to the explanatory memorandum, the anti-abuse provision can thus be invoked without discussion by the tax administration, for example, in the case of the demerger of a non-profit organisation, a private foundation or an international non-profit organisation, unless it can be demonstrated that there is a substantial non-tax reason for doing so.

5. Discharge for three years

The possibility of paying the tax due for three consecutive years in a lump sum, where the annual tax does not exceed EUR 500 in the case of a non-profit organisation, private foundation or international non-profit organisation, is abolished.

Read more below.

Patrimony tax

6. Entry into force

The amendments will enter into force on 1 January 2024. The tax will be calculated on the basis of assets held on 1 January of the tax year. In concrete terms, this means that the above-mentioned changes will already apply to returns to be filed by 31 March 2024. The invitation to file a tax return is usually sent out in February.

Expected increase in the number of controls

Considering that the explanatory memorandum expressly states that the federal government intends to encourage the General Administration of Patrimony Documentation ("AAPD") to significantly increase the number of inspections related to patrimony tax, it is even more important than in the past to comply with the necessary obligations in order to avoid administrative fines and interest.

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