- Residence by engaging in self-employed activities
- Residence by employment
- Residence by pursuing studies
- Belgian citizenship
- Taxation of individuals
- Corporate tax
- Estate planning
Regardless of the reasons for relocating to Belgium, it is always crucial to review the implications of such a move on your worldwide assets.
When a foreign national takes up residency in Belgium, he most likely qualifies as a Belgian tax resident. Should this be the case, one will be subject to the payment of Belgian inheritance tax on his worldwide estate. Even though inheritance tax in the direct line or between spouses (and sometimes cohabitants) can be as high as 27% (Flanders) or even 30% (Brussels or Walloon Region), there are possible means of estate planning to minimise such liability.
First of all, trusts and private foundations are recognised in Belgium. Belgium has its own private foundation law which prescribes lower tax rates than that under the general inheritance law. Trusts are, however, not advisable in Belgium in light of the position taken by the tax administration that distributions from a trust may subject to income tax if the settlor was regarded as a Belgian resident.
Private foundations, on the other hand, are commonly devised for estate planning purposes. The transfer of property or assets to a private foundation through a last will is subject to 8.5% of inheritance tax in Flanders, 7% in the Walloon Region and 25% in the Brussels. The deceased’s place of residence shall determine the applicable rate.
As Belgium levies inheritance tax on your worldwide estate, the consequences of tax residency can be far-reaching. That being said, most risks could be avoided or minimised by way of careful estate planning.
Gifts of movable assets (e.g. shares, stocks, artworks, etc.) are not subject to Belgian gift tax unless the gift is registered in Belgium. If a gift has not been subject to Belgian gift tax and the donor dies within 3 years of making the donation, the gift shall nonetheless be subject to inheritance tax. This is applicable in all 3 regions. The tax on gifts of movable assets to children and between spouses (under certain conditions also cohabitants) is 3% (Flanders and Brussels) or 3.3% (Walloon Region). Once gift tax has been paid, the donation will not be subject to inheritance tax. This strategy is often used in extremis estate planning.
Gifts of real estate are obliged to be registered in Belgium and therefore automatically subject to gift tax.
In light of the lower tax rates when compared to inheritance tax, gifts of both movable and immovable assets are tools commonly used in estate planning in Belgium.
Notably, receipt of donations of foreign goods from donors who live abroad does not lead to Belgian gift tax.
European Succession Regulation
Your relocation to Belgium will also have implication on the inheritance law that is applicable to the distribution of your estate upon death. The Belgian authorities apply the European Succession Regulation, which stipulates that the courts of the state in which the deceased had his habitual residence at the time of death will be competent to rule on the succession. The applicable law determines how the estate shall be divided upon death, taking into account general rules on forced heirship etc. As a consequence, it is important to make declarations in your last will should you wish to avoid application of the Belgian inheritance law. It is possible to choose the law of your state of nationality as the law to govern the succession of your estate.