The Walloon Government definitively adopts the draft decree on the reform of Walloon taxation and the introduction of a reduced rate of registration duties for the purchase of a sole owner-occupied home, as well as a general reduction in inheritance duties. The texts of the tax measures will be discussed in early December in the Walloon Parliament. As announced in September by the Walloon Government, registration duties will be reduced to 3% from January 2025.
Context
The Regional Policy Statement provides for an unprecedented and highly ambitious tax reform, a genuine fiscal revolution, in order to “give the middle class some breathing space through administrative simplification and tax relief”. The Government has indeed decided to thoroughly reform taxes that have not been reformed for years, to significantly simplify them and to make taxation genuinely more transparent and fairer: tax must “help finance solidarity but can under no circumstances be an obstacle to the emancipation of the middle and working classes”.
The Government's aim is to return more than €700 million cumulatively to citizens during this legislature and, where possible, to simplify the applicable legal rules for greater effectiveness and efficiency of Walloon taxation.
Several measures
- 3% registration duties for the purchase of a sole owner-occupied home
It is becoming increasingly difficult, particularly for young adults who wish to do so, to acquire property. Yet, as we know, Belgians in general and Walloons in particular have always had “a brick in their belly”. A particularly positive tradition that has always been a genuine safeguard against the emergence and increase of poverty risks throughout life, and especially at retirement age.
The Government has decided to direct substantial resources towards an ambitious policy to support the purchase of a sole and main residence. Thus, from 1st January 2025, the registration duty rate applicable to property intended to become a sole and main residence will be significantly reduced to 3%, instead of the current standard rate of 12.5%.
And to take account of life changes (household, children, career, etc.), it will even be possible to benefit from the 3% rate as a current homeowner, provided the property is resold within three years of acquiring the new one.
At the same time, the various schemes that had coexisted until now will be abolished:
- The first-time buyer allowance: a reduction in duties of up to €5,000, which was not sufficiently impactful;
- The “chèque-habitat” housing cheque: a scheme mobilising substantial resources as support for ownership, at the expense of support focused on acquisition, whereas access to home ownership is today the major problem for a very large number of households wishing to buy their home;
- The reduced rate for modest homes: a reduction based on cadastral income, a criterion that has become a source of great inequity between taxpayers (lack of a general revaluation, lack of federal control over cadastral value when a property is improved, etc.).
- Sharp reduction in inheritance and gift duties on real estate
The other major tax measure that the Government intends to implement during this legislature aims to radically reduce inheritance duties through decisive action on current rates.
As stated in the Regional Policy Statement: “inheritance duties are based on historical family concepts that do not always reflect the richness and diversity of emotional ties. They are also based on tariff scales that are difficult to read and on rates that now appear confiscatory”. Indeed, the current rate structure appears unfair, with high rates reaching up to 80%.
The Government is taking decisive action and halving all applicable rates, both between spouses and legal cohabitants and in direct line (parents, children, grandchildren, etc.), in collateral line (brother, sister, uncle, aunt, nephew, niece), and between all other persons (cousins, friends, de facto cohabitants, etc.).
Thus, for example, the maximum rates will change as follows from 1st January 2028:
- from 30% to 15% in direct line, between spouses and between legal cohabitants;
- from 65% to 33% in the collateral line “brothers and sisters”;
- from 70% to 35% in the collateral line “uncles or aunts and nephews or nieces”;
- from 80% to 40% between all other persons.
In addition to this reduction in inheritance duties, gift duty rates on real estate will also be lowered in parallel, in order to maintain the appeal of this early transfer of assets, which often enables partial reinvestment in the economy.
Thus, for example, the maximum rates will change as follows from 1st January 2028:
- from 27% to 14% in direct line, between spouses and between legal cohabitants;
- from 40% to 20% between all other persons (from brothers and sisters to other persons).
The taxable minimums for inheritance duties are also being modernised for the benefit of all taxpayers, for greater transparency and simplicity.
Finally, the effective transfer of this competence to the Region will make it possible to improve control and recovery procedures for both registration duties and inheritance duties. As stated in the Regional Policy Statement, it will be necessary to “strengthen the fight against tax fraud and evasion, while respecting citizens' fundamental rights”. This will involve implementing effective verification and control strategies within SPW Finances to prevent both potential tax abuse and the various tax fraud mechanisms that may be used.
- Improving tax fairness
To take account of changes in family composition (blended families), the assimilation of the children of the deceased's (or donor's) spouse/legal cohabitant will be extended to all descendants, allowing grandchildren or great-grandchildren of the spouse or legal cohabitant to benefit from the preferential direct-line rates for inheritance duties (or gift duties on real estate).
In the same spirit, without prejudice to civil law rules, children taken into foster families will be treated the same as the biological children of the deceased and the donor. Even though this does not concern a large number of children, it seems entirely unfair to consider them strangers to the family household after several years of living within their foster family.
Furthermore, various other measures are being taken regarding inheritance duties, such as the creation of an optional flat-rate arrangement for funeral costs and “small” debts of the deceased, in order to simplify the obligations of heirs who already face all the difficulties naturally caused by the death of a loved one.
It is also planned to abolish the requirement that the property used as the deceased's and their spouse's main residence during the five years preceding death must have been actually occupied, in order to benefit from the tax advantages for the surviving spouse (exemption) or the rest of the direct line (favourable rate), since this condition could have serious, inappropriate and unjustified consequences.
Finally, a significant modernisation of the reduction for unproductivity in respect of property tax is planned, notably following the dramatic experience of the July 2021 floods and the great difficulty taxpayers encountered in obtaining this exemption. On the one hand, in the case of recognised public disasters, the requirement of 180 days of vacancy during the year is being revised to be significantly reduced (this condition could not, for example, be met in July 2021, since fewer than 180 days remained in the calendar year). On the other hand, the requirement that the property concerned must be unfurnished is being abolished, as it is no longer considered relevant.
Adrien DOLIMONT, Minister-President of Wallonia: “The reduction of registration duties to 3% will be fully applied from 1 January 2025, in line with the commitments made. This measure aims to support access to home ownership, while fostering a dynamic and attractive economic environment for families and investors. Meeting these deadlines and implementing this reform demonstrate the Walloon Government's determination to meet citizens' expectations and strengthen tax fairness in Wallonia.”