The Federal Tax Administration in Belgium holds information about properties you own both in Belgium and abroad. However, not all this information is actively followed-up on and not all information is currently shared with the (regional) tax services.
For example, if you buy a family home in Flanders, you currently pay a 3% transfer tax, which will further decrease to 2% starting on January 1, 2025. A key condition for this reduced rate is that the buyer must not own any other residential property or building land. A similar requirement applies in Brussels, where it is not always clear whether this also extends to foreign property.
The Flemish Tax Administration already monitors ownership of additional properties within Belgium and plans to extend this to foreign real estate holdings as well. This raises the question: What do the tax authorities currently know about the real estate you own?
Belgian Real Estate
The tax authorities obviously know who owns which real estate in Belgium. If you buy or sell a Belgian property, the official purchase deed is signed with your notary and is registered at the so-called Legal Security Office, which is part of the Federal Public Service for Finance.
Another department, the Administration of Surveys and Valuations (commonly known as the Cadastral Office), determines the Cadastral Income (CI). This information is then forwarded to the Flemish Tax Administration, which uses it to calculate and collect the annual property taxes. A similar procedure applies in Brussels and Wallonia.
Foreign Real Estate
If you purchase, sell, or inherit property abroad, you are required to report it voluntarily to the Federal Tax Authorities within 4 monthsafter becoming owner. This mandatory reporting requirement is separate from declaring it in your annual tax filing.
This reporting can be done through the online platform MyMinfin or, alternatively, via a paper form. You must provide all relevant details such as the property’s location, type, size, value, and intended use. Based on this information, the Administration of Surveys and Valuations then calculates a ‘Belgian’ CI for your foreign property. Whether you are liable in that case for Belgian Income Tax on your foreign real estate, will depend whether there is a tax treaty (DTA) in place or not. In most cases, you will not have to pay any additional tax on it in Belgium.
The Belgian tax authorities often know about your foreign property through international data exchange agreements. Attempting to avoid declaring such foreign property could lead to discovery through these mechanisms. However, for the regions (and in this case Flanders) to verify ownership of your foreign real estate, data sharing from the federal to the regional level is obviously required, which is currently not in place.
Annual Tax Declaration
In your annual tax return, you are required to report both your Belgian and foreign real estate. How you need to declare your properties depends on their use (residential or business) and whether you generate rental income from it or not. The rules are the same for Belgian and foreign properties. The only property you are not required to report in your annual tax filing, is your family home in Belgium.
Primary Belgian Residence
In other words, you are not required to declare the home or apartment where you live yourself (your principal residence). This exemption also applies if you temporarily rent out your own home for social or professional reasons (e.g. and instead renting a flat closer to work to avoid long commutes or due to health or aging). An exception is made if part of your primary residence is used for professional purposes, such as a home office. In that case, you must declare a portion of the (Non-Indexed) CI income in your annual tax return, but only that part that is related to the professional use.
Second Homes & Privately Rented Properties
If you own a second home in Belgium for personal use or rent out a property exclusively for residential use, you must also declare the full (Non-Indexed) CI in your tax return. Consequently, you are taxed on the Indexed CI (e.g. the index for 2024 is currently 2.1763), increased by an additional 40%. Interest paid on loans to finance the property may be deductible to some extent, but property taxes paid abroad are not.
Properties Rented for Business Use
If a tenant uses your property for business purposes, or you rent it out to a company, you must declare both the Non-Indexed CI and the actual rental income you received. Rental income includes not only the rent but also any benefits in kind, such as maintenance or repair costs typically borne by the landlord but contractually passed on to the tenant. Maintenance and repair costs cannot be deducted from gross rent because the tax authority automatically applies a (capped) flat-rate deduction of 40%. Interest paid on loans for the property can be deducted from taxable rental income.
Important Changes Coming in 2025
From January 1, 2025, Flanders will further tighten its control over your foreign real estate.
Flemish residents who own property abroad will be required to pay 12% transfer tax, instead of the reduced rate of 2%, when buying a new family home in Flanders. On paper, this rule has existed for some time but has not been enforced until now. That is about to change.
The new Flemish government is lowering registration taxes for those purchasing a so-called ‘sole and primary residence’. After the previous government reduced the preferential rate from 6% to 3%, it will further drop to 2% starting January 1, 2025. The goal is to provide (young) prospective buyers with a boost in the housing market.
To qualify for the reduced rate, the buyer must not own any other residential property or building land. If they do own other properties, they are subject to the 12% rate (unless they sell that other property within two years). The difference is significant, for example, for a home valued at €400,000, this amounts to a €40,000 difference in tax due. Anyone caught in violation will be required to pay the standard rate of 12% along with a 20% penalty.
Owners of foreign properties should prepare for increased scrutiny and ensure compliance with reporting requirements.