Belgian tax residents who wish to donate personal movable assets, can do so in a number of different manners and each manner bears its specific tax consequences.
A first way to perform a donation is by manual delivery of the asset, eg cash or a work of art, or as an indirect gift (eg transfer of securities from one account to another). In that case, although optional (see further), no deed is required. This means that there is no deed to be registered and hence no gift tax will be due. Note that gifts made by the deceased less than three years (the Flemish Region considers extending this so-called period of risk to four years) before his or her death are subject to inheritance tax – at rates that are higher than the gift tax rates – unless the gift was registered and gift tax was paid in Belgium.
The second way is to donate before a Belgian notary in which case the gift is automatically registered in Belgium. This can be the case for the donation of assets that cannot be given by means of manual delivery or as indirect gifts. Upon registration of the notarized deed, Belgian gift tax will be levied. Rates vary depending on the Region where the grantor has his/her tax residence (e.g., 3% in Flanders and Brussels, or 3.3% in Wallonia, for gifts from parents or grandparents to children or grandchildren or 0% on the gift of shares of family companies in Flanders).
Finally the donation can also be executed before a foreign (eg Dutch) notary. In that case the donation can be formalised in a deed, but there is currently no requirement to register that deed in Belgium and therefore no basis to apply the gift tax. If the grantor passes away (more than) three years (or four years) following the date of the gift, his or her descendants will owe inheritance tax, but not on the value of the assets that were donated three years (or four years) or more prior to his or her death.
A legislative proposal dated June 17, 2020 aims to extend the registration obligation to non-Belgian notarized gift deeds. Last Tuesday, the Parliamentary Committee for Finance approved the legislative proposal. Consequently, this thus means that the so-called Dutch route will be closed. If the plenary session of the Parliament gives her approval, the law should enter into force for deeds as from 1 December 2020. As of that moment in time all donations executed before a foreign notary will have to be registered in Belgium.
For now, gifts notarized outside of Belgium prior to the effective date of the new law would remain untaxed. Also manual and indirects gifts are not covered by this legislative proposal and can still be done without gift tax being due but taking into account the three years (or four years) period.
Philippe Vyncke
