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Corporate income tax
The standard corporate income tax rate in Belgium is 33.99%. Property holding companies are taxed on any rental income received after allowable expenses, including certain interest and depreciation. Straight-line depreciation rates of 3% and 5% per annum are generally accepted by the tax administration for commercial and industrial buildings respectively. Accelerated depreciation may be available to companies in respect of property they occupy.
Capital gains
Capital gains realised on the sale of Belgian property are taxed at the standard corporate tax rate of 33.99%. However, capital gains on the sale of shares in property owning companies are exempt from corporate income tax.
Property tax
All Belgian real estate is assigned a notional rental income, known as ‘cadastral’ income, which is determined by estimating the potential annual rental income of the property at a given date. A property tax of 30% to 50% (depending on the location of the property) of the cadastral income is payable on annually by all property owners.
Property transfer tax
Transfer tax of 10% is payable in the Flemish Region (12.5% in the Walloon and Brussels Regions) on the higher of sales price or market value of the property being transferred. If the property is sold within two years, 60% of the transfer tax is repaid in the Flemish and Walloon Regions (36% is repaid in the Brussels Region). In certain circumstances, a reduced rate of 5% may be applicable if the property is purchased with the intention of resale. The sale of shares in a property holding company is generally not subject to transfer tax. However, the sale of land is always subject to transfer tax.
VAT
The transfer of a ‘new’ building may be subject to VAT at the standard rate of 21% instead of transfer tax. A building is new if it is sold before the end of its third of year of being occupied. VAT is applicable to the sales price, and the seller may be able to recover VAT on development costs and similar expense if their activities are VATable in Belgium. The seller will therefore usually prefer to apply VAT to the sale, rather than property transfer tax. No VAT is payable on rental income.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.
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