If you own one or more Belgian real properties, the income you generate from renting it out is generally taxed as personal real estate income. This is the case for long-term lease, as well as short-term, for example, via Airbnb. However, there are also situations in which it can be taxed as business income instead.
If you rent out a building and the tenant is a private individual who does not use the building for business purposes, the taxable income is equal to the indexed cadastral income (CI) multiplied by 1.4. If the tenant uses the building professionally, the taxable amount is the total gross rent received minus 40% for expenses, up to a maximum of 2/3rd of the so-called ‘Revalorized CI’. This Revalorized CI is the non-indexed CI multiplied by 5.46 (tax year 2025). A building is considered to be used professionally when the tenant is a company or a private individual who deducts (part of) the rent as a business expense.
The real estate income is taxed at the standard progressive tax rates (25% up to 50%), similar to salary or other business income. No social contributions are due on rental income. In general, property income in Belgium is taxed less compared to other categories of professional income. This is because the taxable amount in case of residential use of the building is fixed on a flat-rate basis (the CI), irrespective of the total rent amount you collect every year.
Rental income can only be taxed as business income if renting out property is indeed your profession. In this case, the total rent received minus the related expenses to acquire or maintain the property, is taxable as profit and subject to social contributions.
Every business activity involves a set of operations beyond the normal management of your privately held assets that are sufficiently numerous and interconnected to create a regular and ongoing activity. Whether this applies is a matter of fact that must be assessed case by case. It would have been easier if the law would stipulate precise criteria, like the number of properties rented out. This is currently not the case, which may give rise to disputes.
Facts that typically indicate a business activity include (i) a connection between the rental activity and your regular profession or the use of a company held by you that owns the properties; (ii) financing the property purchase and renovations with a bank loan; (iii) the time and organization you devote to renting; and (iv) renting out multiple properties. If only one or two of these criteria apply, there is a good chance that tax court will rule there is no business activity. However, if at least three of the above facts are present, it is very likely that they will consider the rental a business activity.
TAXPATRIA® can advise you on the tax and social security implications of renting out real estate and make sure you are fully compliant when doing so.