Context
The Regional Policy Statement provides for an unprecedented and highly ambitious tax reform, a true fiscal revolution, aimed at “giving the middle class some breathing room through administrative simplification and tax relief”. The Government has indeed planned to thoroughly reform taxes that have not been changed for years, to greatly simplify them and to make taxation genuinely more transparent and fairer: tax must “help fund solidarity but must under no circumstances hinder the emancipation of the middle and working classes”.With the provisions presented in first reading, the Government intends to put into practice its aim of returning more than €700 million cumulatively to citizens over the course of this legislature.
Several measures
- 3% registration duties for the purchase of a primary and only 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 stomach”. A particularly positive tradition that has always constituted a genuine safeguard against the emergence and increase of poverty risks over the course of a lifetime, and especially at retirement age.
The Government has decided to direct substantial resources towards a strong policy to help people acquire their sole and main residence. Thus, from 1st January 2025, the rate of registration duties applicable to a property intended to become the 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's changes (household, children, career, mobility, environmental impact, etc.), it will even be possible to benefit from the 3% rate as a current homeowner, provided the previous property is resold within three years of acquiring the new one.
At the same time, the various schemes that previously coexisted will be abolished:
- The first-time buyer allowance: a reduction of duties up to €5,000 that was not sufficiently impactful;
- The housing cheque: a scheme that allocates substantial resources to support ownership rather than acquisition, even though access to ownership is today the main problem for a very large number of households wishing to buy their home;
- The reduced rate for modest housing: a reduction based on cadastral income, a criterion that has become a source of major inequities between taxpayers (no general revaluation, lack of federal control over cadastral value when property is improved, etc.)
- Sharp reduction in inheritance and property gift duties
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 notions that do not always reflect the richness and variety of emotional bonds. They are also based on tariff scales that are hard to understand and on rates that today appear confiscatory”. Indeed, the current tariff structure appears unfair, with high rates reaching up to 80%.
The Government is taking decisive action and halving all applicable rates, whether between spouses and legal cohabitants and in the direct line (parents, children, grandchildren, etc.), in the collateral line (brother, sister, uncle, aunt, nephew, niece), or between all other persons (cousins, friends, de facto cohabitants, etc.).
For example, the maximum rates will change as follows from 1st January 2028:
- from 30% to 15% in the 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, property gift duty rates will also be lowered in parallel, in order to preserve the appeal of this early transfer of assets, which often allows for partial reinvestment in the economy.
For example, the maximum rates will change as follows from 1st January 2028:
- from 27% to 14% in the direct line, between spouses and between legal cohabitants;
- from 40% to 20% between all other persons (from siblings 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 on 1st January 2028 will make it possible to improve control and recovery procedures for both registration duties and inheritance tax. As stated in the DPR, 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 at the SPW Finances to prevent both potential tax abuse and various tax fraud mechanisms. The Government will also consider the best way to shape current and future tax provisions in order to limit undesirable and unintended cases of tax optimisation.
- Improving tax fairness
To reflect 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 property gift duties).
In the same vein, without prejudice to the rules of civil law, children taken in by foster families will be treated in the same way as the biological children of the deceased and the donor. Although this does not concern a large number of children, it seems entirely unfair to regard them as strangers to the family household after several years living within their foster family.
In addition, various other measures are being taken regarding inheritance tax, such as the introduction of an optional flat-rate scheme for funeral costs and “small” debts of the deceased, in order to simplify the obligations of heirs who already have to deal with all the difficulties that naturally arise from the death of a loved one.
It is also planned to remove the requirement that the property used as the main residence of the deceased and their spouse during the five years preceding death must have been actually occupied, in order to qualify for the tax benefits available to the surviving spouse (exemption) or the rest of the direct line (favourable rate), since this condition can lead to serious, inappropriate and unjustified consequences.
Finally, a major modernisation is planned for the reduction for non-productivity in property tax, particularly following the dramatic experience of the July 2021 floods and the great difficulty taxpayers faced in obtaining this exemption. On the one hand, in cases of recognised public disasters, the requirement of 180 days of vacancy during the year is being revised and significantly reduced (for example, this condition could not 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 removed, as it is no longer considered relevant.