eu officials and belgian taxes

1.7323 1.5271 1.50544.23 0.75 2015

EU officials and Belgian taxes

Summary

&

FAQs

Marc Quaghebeur

© Marc Quaghebeur [email protected]

De Broeck Van Laere & Partners www.dvp-law.com

Rue Jules Besme 126 Tel : 02.423.00.42

B-1081 Brussels Fax : 02.423.00.32

mailto:[email protected]

http://www.dvp-law.com/

Introduction

This document is a summary introduction to the tax rules governing

EU officials in accordance with Articles 12 and 13 of the Protocol on

Privileges and Immunities of the European Union as well as the tax

rules in Belgium and in a number of other EU Member States.

These insights have been gained by giving presentations to EU

officials in Brussels, answering their questions and trying to

anticipate misunderstandings. The first part is a summary of the

rules, and the tax implications for EU officials who are either

domiciled outside Belgium or for whom Belgium is their tax

domicile. The second part covers some of the frequently asked

questions at the lectures I gave for the Union Syndicale.

This text does not have the ambition to be comprehensive, and to

cover all issues and situations. However, it can be read as a guide to

understand the rules and to ask your adviser the correct questions.

Marc Quaghebeur

Brussels, 17 February 2015

CONTENTS THE PROTOCOL EXPLAINED......................................................... 9

Why a Special Tax Regime for EU Officials? .................................. 9 Article 12 - Exemption ................................................................. 13

Article 12 – What does “exempt” mean? ................................ 14 Article 12 – What does “exempt” not mean? ......................... 15

Article 13 – Domicile ................................................................... 17 Article 13 – Can an EU Official change his domicile? .............. 19 Article 13 – Domicile of the Spouse ........................................ 20 Article 13 - Gainful occupation ................................................ 24 Article 13 – Domicile of the Children ...................................... 25 Article 13 – Consequences of domicile ................................... 25 Article 13 – Domicile – For which taxes? ................................ 26

MY DOMICILE IS OUTSIDE BELGIUM ........................................... 29

I am not domiciled in Belgium, do I pay tax? .............................. 29

You have earnings ................................................................... 29 You own real property in Belgium ........................................... 29 You have a Belgian bank account ............................................ 31 You hold shares or bonds issued by a Belgian company ......... 32 You sell and make a capital gain ............................................. 32

Do I need to file a tax return if I am not domiciled? ................... 33 Do I declare my Income at home as well? .................................. 34 If I pay tax in Belgium and at home, do I pay tax twice? ............. 35 What is the EU Savings Directive? ............................................... 38

A common misunderstanding about the EU Withholding Tax 39 What information does Belgium give to EUMmbria? ............. 39 What does this mean for you? ................................................ 40 What can EU officials do to prevent reporting? ...................... 40

If I am not domiciled, which taxes do I pay in Belgium? ............. 42 Inheritance tax when a non-domiciled EU official dies ............... 43 Inheritance Tax - Double Taxation?............................................. 44 A non-domiciled EU official makes a donation ........................... 45

BELGIUM IS MY DOMICILE ......................................................... 47

I am domiciled in Belgium, do I pay tax? ..................................... 47

Earnings ................................................................................... 47 Income from Real Property ..................................................... 48 Dividends ................................................................................. 49 Interest .................................................................................... 49 Capital gains ............................................................................. 50

Inheritance tax when a domiciled EU official dies....................... 51 Inheritance Tax - Double taxation ............................................... 53 Gift Tax and other Estate Planning .............................................. 54

FAQS AT THE UNION SYNDICALE LECTURES ................................ 55

Exemption of income................................................................... 55 Pensions ................................................................................... 55 What does exemption mean? ................................................. 56 Taking account of the EU income ............................................ 56

Domicile ....................................................................................... 59 Where is my domicile? ............................................................ 59 Spouses and partners .............................................................. 63 How does it work? ................................................................... 64

Belgian Income Tax ...................................................................... 65 Dividends and interest ............................................................. 65 Rental income .......................................................................... 68 Titres service ............................................................................ 70 Capital gains tax ....................................................................... 71

Inheriting and Inheritance Tax .................................................... 73 What is the applicable law? ..................................................... 73 Making a will ............................................................................ 74 The European Regulation on Successions ............................... 76

Gift tax ......................................................................................... 81 Questions of Estate Planning ....................................................... 83

ANNEXES .................................................................................. 86

Model of a Handwritten will ........................................................ 86 Gift and Inheritance Tax Rates .................................................... 88

EU OFFICIALS AND BELGIAN TAXES

8

THE PROTOCOL EXPLAINED

9


Belgium is the host country for many international institutions.

Before establishing their seat in Belgium, most of these institutions

sign a convention with Belgium in which their privileges and

immunities are secured. These conventions usually have one or two

provisions that deal with the tax situation of the officers of the

international institution.

Usually, these provisions grant a tax exemption for income received

from the institution, while any other income is liable to tax in

Belgium. For officials of the European Institutions, the situation is

completely different.

Why a Special Tax Regime for EU Officials?

1. It is a principle of diplomacy that when an international

organisation sets up its seat in a country, that state will not tax the

institution or its officials. By granting fiscal immunity in a bilateral

agreement, it secures the institution’s independence.

When the founding fathers of the European Union worked out the

status of the Institutions, they had to take measures to avoid

double or triple taxation. And they had to combine that with

immunity for the Institutions and the EU officials.

Of course, the Institutions would levy their own taxes on the

remuneration they pay to their officials, but not on any other

income. Theoretically, income tax could be claimed by the country

where they are working for the institution, in the country where

they are living and by their country of origin. And that could be the

state that has given them their citizenship or the state where they

were living before joining the institution.

2. They had to come up with a solution that would guarantee a sort of

‘free movement of EU officials’. If an official decided to go and


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work in another country, he should not be worse off … and the

Court of Justice of the European Union will later add that he should

also not be better off.

The rules were laid down in Article 12 and Article 13 of the Protocol

on Privileges and Immunities of the European Union.

http://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX:12012E/TXT

http://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX:12012E/TXT


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12

Article 12

Officials and other servants of the Union shall be

liable to a tax for the benefit of the Union on salaries,

wages and emoluments paid to them by the Union, in

accordance with the conditions and procedure laid down

by the European Parliament and the Council, acting by

means of regulations in accordance with the ordinary

legislative procedure and after consultation of the

institutions concerned.

They shall be exempt from national taxes on salaries,

wages and emoluments paid by the Union.


13

Article 12 - Exemption

3. Article 12 lays down the principle that 'Income from the Union' paid

to EU officials is liable to the Union Tax and that it is exempt in any

of the Member States. That is the case for his earnings (salaries,

wages and emoluments), but also for :

– allowances;

– child benefit;

– an invalidity pension;

– his retirement pension;

– the survivor’s pension paid to his spouse or children;

These types of income are exempt from income tax in the country

where the EU official works, where he lives, where he was recruited

... in short in every Member State.

Of course, a State that is not an EU Member State is not held by the

Protocol, and the Union Income may well be liable to income tax

there. This would not be a problem for EU officials who are working

in a diplomatic mission outside the EU. However, this is something

that EU officials who are considering retiring outside the EU should

keep in mind that if they retire in e.g. Australia or in the U.S., they

will be liable to income tax there. There is one exception:

Switzerland1.

EU officials who have a double nationality, the nationality of an EU

Member State and that of a non EU Member State risk paying tax

on their EU remuneration if the other state taxes its citizens based

on their citizenship, even if they are living abroad. That is in

particular the case for U.S. citizens.

1 Agreement of 26 October 2014 between the Swiss Federal Council and

the Commission of the European Communities with a view to avoiding the double taxation of retired officials of the institutions and agencies of the European Communities resident in Switzerland.


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Article 12 – What does “exempt” mean?

4. Exempt under Article 12 of the Protocol means in the first place

that the official does not have an obligation to declare the Union

Income in an income tax return or to pay income tax on that Union

income in any Member State.

5. That also means that a Member State cannot indirectly charge

income tax on that income. The Court of Justice of the European

Union has confirmed that:

– the tax authorities of a Member State cannot charge more

tax to the official's spouse by calculating the tax on her

income and on that of the official (Case 6/60, Humblet,

[1960] ECR, 1125) ;

– the tax authorities of a Member State cannot refuse to grant

a tax reduction of the annual real estate (précompte

immobilier) to a landlord when an EU official is renting his

property and has two or more dependent children (Case

260/86 Commission v Belgium, [1988] ECR 955);

– the tax authorities of a Member State cannot discriminate EU

officials by refusing them certain tax advantages (Case C-

229/98, Vander Zwalmen and Massart v. Belgian State,

[1999] ECR, p. I-7113).

– the tax authorities of a Member State cannot take account of

the income paid by the European Union to its officials and

other staff (or pensions and allowances paid to former

officials), in calculating the cap on a tax such as the wealth

tax (impôt sur la fortune) (Case C-558/10, Bourgès-Maunoury

and Heintz v Direction des services fiscaux d’Eure-et-Loir,

[2012] ECR, p. I-418).

http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&lg=fr&numdoc=61960J0006



http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1405326722424&uri=CELEX:62010CA0558



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Article 12 – What does “exempt” not mean?

On the other hand the state where the EU official works or lives

does not have to give him any preferential treatment. The Court of

Justice has confirmed this in a couple of cases:

– The public authorities may calculate a charge or due (a

school levy for a child that attends a public school) on the

basis of the salary paid by the Union to the EU official. That

charge is not a tax in the sense of article 12 paragraph 2 of

the Protocol (Case 32-67, I.G.F. Van Leeuwen v. City of

Rotterdam, [1968] ECR, p. 63).

– EU officials must not be treated as low income taxpayers;

they must not be given the same advantages as low income

tax-payers to subsidise the purchase of property (Case C-

333/88, Tither v. Commissioners of Inland Revenue, [1990]

ECR, p. I-01133)

– the taxman must not give a tax deduction to the spouses of

EU officials as if they were married to someone who was not

working or who had low earnings (Case C-229/98, Vander

Zwalmen and Massart v. Belgian State, [1999] ECR, p. I-7113).

6. Furthermore, that state must not give exemptions for other taxes

than the income tax: inheritance tax, VAT, real estate tax, stamp

duty (or registration tax on the purchase of property), water tax,

garbage collection tax, etc … may be due.

The taxman in the country of domicile may:

– charge income tax on the rental value of a property in

anothepr Member State (Case C-263/91, Kristoffersen v.

Skatteministeriet, [1993] ECR, p. I-02755) ;

– charge inheritance tax on a survivor’s pension paid by the

European Institutions (Brouerius van Nidek v. Inspecteur der

Registratie en Successie, Case 7/74 [1974] ECR 757).

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61967CJ0032









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Article 13

In the application of income tax, wealth tax and

death duties and in the application of conventions on the

avoidance of double taxation concluded between Member

States of the Union, officials and other servants of the

Union who, solely by reason of the performance of their

duties in the service of the Union, establish their residence

in the territory of a Member State other than their country

of domicile for tax purposes at the time of entering the

service of the Union, shall be considered, both in the

country of their actual residence and in the country of

domicile for tax purposes, as having maintained their

domicile in the latter country provided that it is a member

of the Union. This provision shall also apply to a spouse, to

the extent that the latter is not separately engaged in a

gainful occupation, and to children dependent on and in

the care of the persons referred to in this Article.

Movable property belonging to persons referred to

in the preceding paragraph and situated in the territory of

the country where they are staying shall be exempt from

death duties in that country; such property shall, for the

assessment of such duty, be considered as being in the

country of domicile for tax purposes, subject to the rights

of third countries and to the possible application of

provisions of international conventions on double taxation.

Any domicile acquired solely by reason of the

performance of duties in the service of other international

organisations shall not be taken into consideration in

applying the provisions of this Article.


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Article 13 – Domicile

7. Article 13 of the Protocol puts forward the principle that EU

officials, their spouses (as long as they are not working) and their

dependent children keep their domicile for tax purposes in the

Member State where they had their domicile at the time they were

recruited, if they move their residence only to enter the service of

the Union.

8. Article 13 states that for the application of income tax, wealth tax,

death duties, and in the application of the double tax treaties

between Member States, officials and other servants of the Union

shall be considered to have maintained their domicile in the latter

country. There are a few conditions.

– at the time of entering the service of the Union, they must

have moved to another Member State, i.e. have established

their residence in the territory of another Member State than

the country where they have their domicile for tax purposes,

– they must have moved their residence solely by reason of the

performance of their duties in the service of the Union, and

– the country of domicile must be a Member State.

Usually that will be the Member State where the official was

recruited.

9. Moreover, Article 13 clearly disregards the domicile an EU official

may have solely by reason of the performance of duties in the

service of another international organization. That domicile shall be

ignored. The Protocol does not say what domicile shall be taken

into account, but it stands to reason that that would be the

previous domicile.


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10. A few examples will help explain this:

– a Greek national living in Athens recruited in Greece keeps

his domicile in Greece when he comes to work for the

European Parliament in Luxembourg ;

– an Italian national who was living in Belgium where she

worked for a consultancy group before joining the Council

has her domicile in Belgium ;

– a Bulgarian national who was raised in the UK, studied in

Germany and got his first job with a bank in Luxembourg,

married a French lady and lived with her in Metz, while

commuting to Luxembourg, has his domicile in France ;

– a Lithuanian national married an Italian while living and

working in London before joining the European

Parliament keeps her domicile in the U.K.

– An Irish national who joined the Commission in 1974 coming

from Ireland but who retires in Belgium was domiciled in

Ireland as long as he was working for the Commission but

took up domicile in Belgium when he decided to spend

his retirement in Belgium.


19

Article 13 – Can an EU Official change his domicile?

11. The question is not without relevance.

12. Article 13 states that the official maintains his domicile if he has

moved his residence solely by reason of the performance of his

duties in the service of the Union. What if an official was already

planning to go and live in that country?

13. The question was submitted to the Court of Justice of the European

Union that decided that Articles 12 and 13 establish a division of

powers between the European Union, the Member State where an

official works and the Member State where he has maintained his

domicile. (Case C-88/92, Jansen van Rosendaal v Staatssecretaris

van Financiën, [1993] ECR, p. I-03315).

The official does not have the free choice to move his tax domicile

to another State. However, the Court does not exclude that the

official was already planning to move to the other state, but in that

case his intentions alone are not sufficient. He must also prove that

he had already taken steps to transfer his domicile irrespective of

entering the service of the Union.

14. Of course, one can change domicile after leaving the service of the

Union. An EU official who stays in Belgium upon retirement will

become a Belgian resident.




20

Article 13 – Domicile of the Spouse

15. Article 13 of the Protocol extends the benefit of the deemed

domicile to the spouse and the children.

16. For the spouse, the provision (that the EU official maintains his

domicile in the state of recruitment) also applies "to the extent that

the latter is not separately engaged in a gainful occupation".

In the minds of the authors of the Protocol, the situation was quite

clear. The EU official came to work in Brussels, and his wife

followed. As long as she was staying at home, she was also deemed

to have maintained her domicile in the state from where the

husband was recruited, and if she decided to take up a job, she

would then take up residence in the country where she was living.

17. Since then, things have changed a lot. EU officials meet their

spouses at work or after hours, their spouse can be another EU

official or a local resident. Or they come with their partners, they

marry in Belgium (or they don’t), they separate or divorce and their

wife of partner continues to live here. Alternatively, the spouse

starts a job and then he decides that he prefers to be a stay-at-

home dad.

18. How do we have to read article 13 in those circumstances?

First of all, it is important to note that article 13 does not say that

the spouse has the same domicile as the EU official. It states that

“this provision shall also apply to a spouse, to the extent that the

latter is not separately engaged in a gainful occupation”. “This

provision” must then be translated as “the spouse who, solely by

reason of the performance of their [spouse’s] duties in the service of

the Union, establish[es] their residence in the territory of a Member

State other than their country of domicile for tax purposes at the

time of entering the service of the Union, shall be considered, both

in the country of their actual residence and in the country of


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domicile for tax purposes, as having maintained their domicile in

the latter country provided that it is a member of the Union.”

Therefore, the spouse keeps the domicile he or she had when the

EU official came to Belgium. That will usually (but not necessarily)

be the same as the EU official, but that is not always the case. It is

possible that the spouse had kept his/her domicile in another

country and if that is an EU Member State, the spouse keeps

his/her domicile there.

In any event, a spouse who marries an EU official (i.e. after he

joined the institutions) does not take his domicile. Saying that the

spouse takes up the domicile of the EU official is, therefore, clearly

not correct. The spouse has a domicile of his/her own.

19. A few examples:

– An EU official comes to live in Belgium from Milan with her

Italian husband. As long as the spouse does not work, he is

deemed to live in Italy, but when he takes up a “gainful

occupation” (see p. 24 ) in Belgium he will become a Belgian

resident.

– An EU official whose domicile is in the UK works in Belgium

meets a Belgian girl who lives in Waterloo. They marry and

she gives up her job to look after the children. She was a

Belgian resident and she remains a Belgian resident.

– If an EU official marries a Croatian girl he met on holiday, and

she comes to live with him, then she takes up Belgian

residence. They met when he was already an EU official, she

takes up domicile in Belgium when she comes to live in

Belgium.

– An EU official meets another EU official in Brussels and they

marry. Both keep their domicile of recruitment, even if he


22

was recruited in Sweden and she came from Greece. See on

p. 23 to see for what happens upon retirement.

– An EU official with domicile in the Netherlands married a

Belgian resident man (Belgium accepts same sex marriages).

Because they met in Belgium, the Belgian husband keeps his

domicile in Belgium. The official is posted in the EU

representation in Finland. The Belgian husband stops

working to follow his husband to Finland. Will he keep his

Belgian residence? The EU official maintains his Dutch. The

husband will take up Finnish residence.

He does not acquire his husband’s Dutch domicile. He will

not keep his Belgian domicile because he does not “establish

his residence in another Member State at the time of (his

husband) entering the service of the Union” and he cannot

be considered “having maintained his domicile in the latter

country” if he has never had his domicile there. He will take

up residence in Finland.

– If the EU official and his spouse separate, i.e. take up

separate residences, she continues to be his spouse (until

they end the marriage by divorce) and she will continue to

keep her domicile where her husband has his domicile.

– If they divorce, she will become resident where she is living

at that time.

20. The rule only applies to spouses. Partners, even partners who have

registered their partnership (in Belgium “cohabitation légale”, in

the U.K. “civil partners” or in France “pacsés”, cannot claim to have

maintained domicile when their registered partner EU official

comes to work in Belgium.

21. What happens when the spouse stops working? Does the spouse

of an EU official who came to Belgium (or Luxembourg, …) who had


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lost his Italian domicile when he started working, become an Italian

resident again? Or does he remain a Belgian resident?

In my opinion, the wording of the text "to the extent that the latter

is not separately engaged in a gainful occupation" can be read in

one way only. Domicile can vary with the occupation of the spouse,

and that appears to be the way the EU Institutions read this text as

well.

I do not think that this means that the husband becomes a Belgian

resident when he starts to work in Belgium and remains a Belgian

resident until he leaves Belgium. A close reading of Article 13

shows that when he stops working, he takes up the old residence

again: he has the domicile he had before coming to Belgium "to the

extent that he is not separately engaged in a gainful occupation".

And it is only "to the extent that he latter is separately engaged in a

gainful occupation" that he has Belgian residence.

This has a curious effect when the spouse is alternatively working

during odd years and unemployed during even years. He/she would

be alternatively a Belgian resident and an Italian resident. That is

likely to complicate matters.

22. When an EU official retires, he takes up domicile in the country

where he takes up residence. If he goes back to his country of

domicile, e.g. Spain, he will just keep his domicile in Spain. If he

retires in Belgium, he will take up domicile in Belgium, and if he

moves to France, France will be his new domicile.

Normally, his spouse will follow the EU official, and move back to

Spain, stay in Belgium or move to France. If for one reason or

another she stays in Belgium (e.g. because the children are still at

school), she takes up residence in Belgium. If it is because she

continues to work in Belgium, she has taken up domicile in Belgium

and is keeping it here.


24

There can be a complication when the spouse stays in Belgium

because she is still working as an EU official and has not retired yet.

What about the retired EU official, does he then take up his wife’s

domicile even if he stays in Belgium?

We have seen above (p. 20) that article 13 does not say that the

spouse (in this case the retired EU official) has the same domicile as

the EU official even if that is often the case. A Danish retired EU

official does not take up Greek domicile because his spouse is an EU

official with a Greek domicile.

My conclusion would be the same when they had the same (e.g.

Swedish) domicile as EU officials. If the husband retires first, his

wife may have maintained a Swedish domicile because she

followed her husband and joined the Institutions later or she may

have joined at the same time. If the husband continues to live here,

he is actually making the choice to take up residence in Belgium,

but he cannot invoke the fiction that he has maintained his

domicile in Sweden because he did not come to live in Belgium

“solely by reason of the performance of his spouse’s duties in the

service of the Union”. He has his actual residence in Belgium

because he took up residence in Belgium for the performance of his

own duties and he stayed here. He can only take up Swedish

residence by moving to Sweden.

Article 13 - Gainful occupation

23. What is a gainful occupation? A gainful occupation is any

employment or profession that the spouse carries out. What when

the spouse works as a volunteer, without remuneration?

In this respect it is important to note that the original text, in

French, says "dans la mesure où celui-ci n'exerce pas d'activité

professionnelle propre". In the French text, a professional activity is

sufficient to lose domicile of origin, even if the spouse does not

earn any income (although that will usually not be the case). The


25

texts in other languages also refer to a "professional activity" rather

than a “gainful occupation”.

However, receiving unemployment benefit would not qualify as a

“gainful occupation”, whereas working for free as a director or

consultant to a charity could be seen as a “professional activity”.

Article 13 – Domicile of the Children

24. Children shall be deemed to have their residence and domicile in

the country where their EU official parent is deemed to have his

domicile, if they are dependent on and in the care of the EU official.

That does not only apply to the EU official's own children and his

adopted children, but also to those of his spouse or partner, if the

children are dependent on him and are in his care.

Article 13 – Consequences of domicile

25. For an EU official, Article 13 means that he is deemed not to have

moved his residence or his domicile, and that he must pay tax in

that country as if he was still living there, on any income other than

his remuneration from the Union (that is exempt under Article 12).

This rule binds the taxman in the country where the officially

actually lives and works and the taxman in the country where he is

deemed to have his domicile for tax purposes.

26. But what about any other countries, the country where he owns

property, the country where a company is paying him a dividend, or

where he teaches? These countries are held by Article 13 of the

Protocol, but indirectly through a reference to the double tax

treaties. In fact, all Member States have signed a double tax treaty

with all or most of the other Member States, in which they

determine in which country income can be taxed: the country of

origin of the income (the source of the income) or the country of

residence.


26

When a British EU Official who is living in Belgium but has

maintained his domicile in the U.K., has income from a third

country, e.g. France, he can invoke the double tax treaty between

the U.K. and France, not the treaty between Belgium and France. If

necessary the country of his deemed domicile will deliver a

certificate of fiscal residence so that he can invoke the treaty

benefits and avoid double taxation.

Article 13 – Domicile – For which taxes?

27. According to Article 13 their original country of domicile will be

their domicile for income tax, wealth tax, inheritance tax, and for

the application of the double tax treaties between Member States.

Income Tax

In the first place, Article 13 applies to income tax: that is the tax on

income from real property, on income from investments (dividends,

interest, royalties, etc ... ) as well as on the earnings from any

professional activity other than that as an EU Official.

Wealth Tax

The EU Official also retains his original domicile for the wealth tax.

Fortunately, that is a limited problem. Sweden has abolished its

wealth tax in 2008 and only France levies a wealth tax (impôt de

solidarité sur la fortune (ISF)) from its residents if their wealth

exceeds € 1,300,000.

In Spain, the government has temporarily reintroduced the

"Impuesto sobre el Patrimonio" ; it was extended for 2015.

Inheritance Tax

Finally, the EU official retains his original domicile for the death

duties or inheritance tax, at least if he dies in office. Article 13

clarifies that movable property belonging to an EU official or other

http://www.lesechos.fr/patrimoine/guide/guid_imp_fortune.htm

http://www.lesechos.fr/patrimoine/guide/guid_imp_fortune.htm


27

servant, their spouse (who is not gainfully employed) or their

children (if dependant and in their care) is exempt of inheritance

tax in the country where they are staying (for work). It will be

taxed in the country of his tax domicile.

28. Article 13 only applies to income tax, wealth tax and inheritance

tax. Other taxes are due in Belgium. That is the case for

– Registration tax or stamp duty on the transfer of real

property. Usually this is charged only in the country where

the property is located. There is little or no chance of double

taxation; in general, this does not cause any difficulties.

– VAT

– Gift tax is not covered by the protocol either and is normally

seen as separate from inheritance tax.

– Capital Gains Tax is not listed in Article 13. Does that mean

that it falls outside the ambit of article 13? There may be a

historic explanation why the capital gains tax is not

mentioned. At the time there were only six member states,

but some of the newer Member States have a separate

Capital Gains Tax code (U.K., Ireland, ...), while others do not

have any capital gains tax or include it in their income tax

code.

Moreover, the double tax treaties that cover income tax

issues usually have a provision dealing with Capital Gains Tax.

It appears that the U.K. tax authorities have taken a literal

reading of the Protocol. Since that does not mention the

Capital Gains Tax, an EU official who has maintained his U.K.

domicile must be treated as 'not resident and not ordinarily

resident' for Capital Gains Tax purposes, while 'resident but

not ordinarily resident' for income tax purposes.


28

– Garbage collection taxes

– Road taxes

MY DOMICILE IS OUTSIDE BELGIUM

29


I am not domiciled in Belgium, do I pay tax?

29. If you are an EU official with a domicile in another EU Member

State (let’s call it EUMmbria), you pay income tax in Belgium on

income from a Belgian source like any non-resident, i.e. like any of

your friends who still live in EUMmbria. The difference, of course is

that you have a higher chance of having income in Belgium because

you live in Belgium and they do not, but you are assimilated to a

resident of EUMmbria like them.

In principle, you pay tax on your worldwide income in your country

of domicile or residence (the “state of residence”, EUMmbria) but

not on the remuneration you receive from the EU Institutions, and

in the country where the income has its source (the “state of

source”). If that is Belgium, you are taxed here on any income that

originates in Belgium.

You have earnings

30. If you earn remuneration other than “EU income” e.g. from a

Belgian employer, as a self-employed in Belgium, etc … that income

has to be declared and will be liable to tax in Belgium

31. However, tax may be due as well in your country of domicile,

EUMMbria, see, p. 34.

You own real property in Belgium

32. If you own property in Belgium, you will receive every year a bill for

the real estate tax (précompte immobilier / onroerende

voorheffing). It is charged automatically by the region. It is

calculated as a percentage of the cadastral revenue, depending on

the commune. There is no uniform tax rate for the whole of


30

Belgium. In some communes the rate can be very low, while in

others, it can go up to 50 % of the indexed “cadastral revenue”.

The cadastral revenue (revenu cadastral / kadastraal inkomen) is

the theoretical rental value for the property in figures dating back

to 1975.2

33. If you own property you must also declare the income in your

annual income tax return. The tax regime depends on the situation:

– you do not have to declare the cadastral revenue of your

main residence, you are not liable to income tax on it.

– If you have a second residence in Belgium, you have to

declare the cadastral revenue. The tax will be calculated on

140% of the cadastral revenue corrected for inflation; that

means you pay tax on 2.43 times the cadastral revenue.

– If you own a property that is let out you (but not to a

company or for a business), you also declare the cadastral

revenue. The tax is calculated on 2.43 times the cadastral

revenue.

As a rule of thumb, the cadastral revenue is about one

month’s rent. As a landlord, you pay income tax on

about two and a half months’ rent.

– If your tenant is a company or an individual who uses the

property for his job (e.g. a ‘liberal profession’), you have to

declare the rent you actually receive (including any expenses

paid by the tenant) but you are entitled to a deduction of

40% of the cadastral revenue. However, this deduction is

limited to 2.82 times the cadastral revenue.

2 If the property is let, the landlord cannot charge back the real estate tax

to a private tenant for whom the property is his main residence.


31

Generally speaking, the landlord pays tax on about ten

months’ rent.

34. If you receive rent, you can deduct the interest paid (during the tax

year) to finance the acquisition or the renovation or refurbishment

of the property. The deduction is limited to the taxable income.

35. When you sell the property, the capital gain realised on your main

residence is exempt. The capital gain on a second residence or

other property in Belgium is tax exempt if you have kept the

property for five years. If you buy and sell before the five years are

over, capital gains tax is due at 16.5 %.

36. However, tax may be due as well in your country of domicile,

EUMmbria, see, p. 34.

You have a Belgian bank account

If you receive interest on a Belgian bank account 25% tax is with-

held at source (précompte mobilier/roerende voorheffing). There is

an exemption for the first €1,880 (per spouse or partner) in interest

received on a savings account.

37. As a non-resident, you can get an exemption of tax on interest. As

an EU official, you can obtain a form “HIS 276” that confirms that

you have maintained your domicile outside Belgium; the bank will

accept that as proof of non-residence. Check p. 38 about the EU

Savings Directive.

38. If you hold shares or bonds on an account with your bank, the bank

will deduct 25% withholding tax.

39. You do not need to declare income on foreign bank accounts.


32

You hold shares or bonds issued by a Belgian company

40. If you hold shares in a Belgian company, or if you have bonds issued

by a Belgian company, that company will deduct tax at source at

25% (15 % for dividends paid on certain shares issued since 2013).

41. However, tax will probably be due as well in your country of

domicile, EUMMbria, see, p. 34. Note that you can get an

exemption or a reduction of the withholding tax under the double

tax treaty between Belgium and EUMmbria.

You sell and make a capital gain

42. When you sell your main residence in Belgium, the capital gain is

exempt. When you sell a second residence or other property in

Belgium, there is no capital gains tax if you have kept the property

for five years. It is only if you buy and sell within five years that

capital gains tax is due at 16.5 %.

43. Please note that capital gains tax may be due as well in your

country of domicile, EUMMbria, see, p. 34.

44.


33

Do I need to file a tax return if I am not domiciled?

45. In principle, an EU official living in Belgium but with a domicile

outside Belgium, in EUMmbria, must file an income tax return as a

non-resident (impôt des non-residents / belasting van niet verblijf-

houders) if they have income that is taxable in Belgium. That will

be the case if they have rental income from a property that is

rented out, if they sell a second residence within five year or if they

have earnings (see above).

It is on the resulting net income that the income tax is calculated in

accordance with the following rates for year of assessment 2016

(income 2015).

On the bracket Rate The tax is between

between € 0 and € 7,090 0% 0

€ 7,090 and € 8,710 25% € 0 € 405

€ 8,710 and € 12,400 30% € 405 and €1,512

€ 12,400 and € 20,660 40% € 1,512 and €4,816

€ 20,660 and € 37,870 45% € 4,816 and €12,561

over € 37,870 50% over € 12,561

Husband and wife or civil partners (cohabitants légaux/wettelijk

samenwonenden) are taxed together. Each has a personal

allowance of € 7,090 that can be increased with other allowances

(e.g. for dependent children). However, as the table indicates, the

tax is calculated starting from € 7,090. If the allowances exceed €

8,710, the tax is calculated at 30%, etc.

The EU official and his spouse are not taxed together if the EU

official has income in excess of €10,230.


34

Do I declare my Income at home as well?

46. If you have your tax residence in another EU Member State, you

will normally have to declare all your income with the exception of

the remuneration from the Institutions, in your country of domicile,

in EUMmbria. Failure to declare you income may expose you to

penalties and possibly criminal prosecution.

47. Please note that it is more than likely that the rules to calculate the

taxable income and the deductions you are allowed to set off

against the taxable income are different at home than they are in

Belgium.

That means that you may have to declare and pay tax on all the

rent you receive for your Belgian property while you pay minimal

tax in Belgium.

It also means that you may have to pay capital gains tax at home,

while you do not pay capital gains in Belgium.

48. Furthermore, if you have any income from your country of

domicile, you may want to check that you are treated as a resident

there because taxation may be lower or you may be entitled to tax

deductions that are not available for non-residents.


35

If I pay tax in Belgium and at home, do I pay tax twice?

49. If you receive income from Belgium or from any other country than

your country of domicile, there is indeed a risk that you pay tax in

both countries.

This is where we need to explain how double taxation arises and

how double tax treaties work.

When you live in one country and work in another, there are two

countries that want to tax you: the country where you live (your

“country of residence”) and the country where you work (the

“country of source” of your income. And that results in double

taxation, both in the country of your residence and in the country

of source of the income.

Each country has some rules of its own to avoid double taxation,

but they also sign double tax treaties, or rather “conventions for the

avoidance of double taxation and the prevention of fiscal evasion

with respect to taxes on income and capital gains”. In such a

convention the two states agree which of them can tax income

from real property, dividends, interest, royalties, salaries, pensions,

etc. More importantly, it also states what the other has to do to

prevent double taxation.

If you live in Belgium and have income from the Netherlands, we

need to look at the double tax treaty between Belgium and the

Netherlands to see which of the two may tax you.

50. The Protocol adds a layer of complication. You live in Belgium and

you may have income from the Netherlands, but in accordance

with article 13 of the Protocol, your country of residence is not

Belgium but EUMmbria, and the country of source of your income

is now not only the Netherlands but also Belgium.


36

51. Most EU Member States have signed double tax treaties with most

other EU Member States to eliminate double taxation and you will

have to check two double tax treaties, the double tax treaty

between EUMmbria and the Netherlands and the double tax treaty

between EUMmbria and Belgium.

Take an Irish EU Official who is living in Belgium but has maintained

her domicile in Ireland, and receives income from Spain. In

accordance with the double tax treaty between her country of

domicile (Ireland) and the country of source (Spain), she can claim

the treaty benefits to avoid or limit double taxation. Spain cannot

refuse to apply that treaty with Ireland. And Ireland will have to

help her get the treaty benefits, e.g. by giving her a certificate of

residence.

If there is no double tax treaty between the country of domicile and

the country of source, an EU official will have to see whether his

country of domicile has any provisions in its domestic tax legislation

to unilaterally eliminate double taxation.

52. There are two ways to eliminate or reduce double taxation.

Taxation with credit

In most countries, you declare your worldwide income; tax is

calculated on your worldwide income in EUMmbria and if the

double tax treaty allows

Belgium to charge tax on

the income, you can,

normally speaking, deduct

the Belgian income tax from

the tax in EUMmbria.

That is called the ‘taxation

with credit’ method. The


37

tax in the country of source is credited against (deducted from) the

tax in the country of residence.

That means that you always pay the local tax at home. In the

example, that is 40 %. If you pay more tax in Belgium than at home,

you cannot get the difference back.

Exemption with progression method

53. Some countries (Austria, Belgium, Bulgaria, Cyprus, France,

Germany, Luxembourg, Portugal and Romania) apply a different

method, the so-called “exemption with progression method”. That

means that they do not tax the Belgian income. However if you

have income tax is taxable at home, they will only tax the local

income at the rate that would (theoretically) apply to your

worldwide income.

When determining the

tax rate, they look all your

income, i.e. you Belgian

income and your

EUMmbrian income, they

calculate the theoretical

tax rate on your

“worldwide income” and apply that to your EUMmbrian income.

The good news is that if you have no income in EUMmbria, you will

not pay any income tax in EUMmbria.

However, if you have some taxable income there, the Belgian

income will push the tax rate up. In this example, the tax rate goes

up from 40 to 43%.


38

What is the EU Savings Directive?

54. Council Directive 2003/48/EC of 3 June 2003 on taxation of savings

income in the form of interest payments is also known as the ‘EU

Savings Directive’ or as the ‘EU Savings Tax Directive’. This is a bit

of a misnomer because the directive does not impose a tax; it

obliges Member States to exchange information about the interest

you receive in another country.

If you are a resident of Denmark you receive interest from a Dutch

bank, the Dutch bank has to report that information to the Dutch

Tax Authorities and they will pass that information on to the Danish

Tax Authorities. The main purpose of the Directive is to make sure

that you do not “forget” to declare the interest income; if you have

not declared it, you may get some questions from the Danish Tax

Authorities.

Most EU Member States are exchanging information with each

other. If you have bank accounts in another EU Member State, the

bank will report information on the interest you received to the tax

authorities of your country of domicile.

55. The following countries exchange banking information : Belgium,

Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland,

France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,

Luxembourg (since 1 January 2015), Malta, the Netherlands,

Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden,

United Kingdom. Some other countries and territories do the same:

the British Virgin Islands, Cayman Islands, Guernsey and Jersey the

Isle of Man, Montserrat and Turks and Caicos.

Until 2009, Belgium and Luxembourg did not report that

information but withheld tax at source. Austria, Switzerland,

Andorra, Aruba, Liechtenstein, Monaco, the Netherlands Antilles,

and San Marino, are still doing that. They withhold an EU

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:157:0038:0048:en:PDF


39

Withholding Tax (withholding tax for the state of residence /

prélèvement pour l’Etat de Résidence (PER) / woonstaatheffing) .

This tax is 35% and three quarters of that tax are paid back to the

state of residence of the tax payer – on a no names basis.

A common misunderstanding about the EU Withholding Tax

56. It is not because Belgium has withheld the EU Withholding Tax at

35 % that you have paid all your taxes. You still have to declare that

interest income in your tax return in your country of residence.

If you have not declared the interest income, you may still be in

time to declare the interest income and you should be able deduct

the EU Withholding Tax at 35 %. Please refer to article 13 of the

Council Directive 2003/48/EC

What information does Belgium give to EUMmbria?

Belgium will give the following information to the state of residence

of the taxpayer:

– the name and address of your bank;

– your identity and residence;

– your tax identification number (TIN) or if you do not have

one or if it is not mentioned on your identification

documents (passport, identity card, etc.), your place and date

of birth.

– your bank account number, or a precise description of the

financial instrument (e.g. bond) on which the interest is paid;

– an explanation of the interest payment : interest credited on

your bank account, interest paid upon redemption of a Sicav,

...).

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:157:0038:0048:en:PDF


40

What does this mean for you?

if you are a EU official with a domicile in EUMmbria, you are

exempt from the Belgian withholding tax (25 %). However, your

Belgian bank will report the interest paid on your accounts or

accrued on your investments to the Belgian tax authorities and they

will inform the tax authorities of EUMmbria. And then you may get

questions from the tax authorities in EUMmbria about why you did

not declare the income.

If you are an EU official with a Belgian domicile the Belgian bank

will not report any information about the interest you received.

However, you are not exempt from the Belgian withholding tax (25

%), although for interest on bank deposit accounts the first €1,880

in interest is tax exempt (see p. 31).

What can EU officials do to prevent reporting?

57. First of all, you could move your investments to a country that does

not exchange information (Austria, Switzerland, etc …) and pay 35%

tax, or to a country that is not covered by the EU Savings Directive

(Bermuda, Hong Kong, …), but that still does not mean that you

have complied with your tax obligations; you still have to declare

that income at home. The EU withholding tax is not an income tax

but a penalty for anonymity.

Moreover, as of 2017, it will be almost impossible to keep anything

hidden as nearly 70 countries will start exchanging information

about interest, dividends, pensions, real property under the OECD’s

common reporting standard.

58. A better alternative is to find a financial product at home, in your

country of domicile, with a favourable tax status (e.g. tax exempt

interest or tax exempt capital gains). Banks in your country of

domicile do not report to the tax authorities of your country of

domicile, at least not under the EU Savings Directive. E.g., Belgian

https://g20.org/wp-content/uploads/2014/12/15%20Common%20Reporting%20Standard%20Implementation%20Plan.pdf

https://g20.org/wp-content/uploads/2014/12/15%20Common%20Reporting%20Standard%20Implementation%20Plan.pdf


41

banks do not report on Belgian residents; they should invest in

savings accounts (that are exempt for the first €1,880) and Sicavs.

Other countries have similar tax efficient products ; e.g. the U.K.

have ISAs with tax free interest and capital gains. Moreover, the

first £11,000 in capital gains is tax exempt every year.

Finally, life insurance products can be interesting, but interest on

life insurance products will be reported under the new EU Savings

Directive.


42

If I am not domiciled, which taxes do I pay in Belgium?

59. You are not exempt from VAT on your purchases and shopping in

Belgium. The VAT is 21%.

60. When you buy property in Belgium, a stamp duty or purchase tax

(droit d’enregistrement/registratierecht) is due plus a percentage

by way of notary’s fees. The rate is 12.5% (10% in Flanders). The

stamp duty is calculated on the sales price or the market value of

the property.

61. If you buy new property or property under construction, usually

VAT at 21% will be due.

62. If you finance the property with a mortgage, a registration tax of

1% of the value of the mortgage is due.

63. You also have to pay local taxes such as the garbage collection

taxes, etc…


43

Inheritance tax when a non-domiciled EU official dies

64. We must make a very important distinction : the Protocol deals

with inheritance tax only, not with the inheritance rules. Even if you

are deemed to be domiciled in your country of origin for

inheritance tax purposes, you have probably taken up domicile in

the country where you live for the application of the inheritance

rules (see www.taxation.be About wills and successions). This may

limit your freedom to make wills and you may have to take account

of the forced heirship rules (e.g you cannot disinherit your children

or your spouse).

The same rules apply to your spouse (who has no gainful

occupation) and your children (if they are dependant and in your

care).

65. When an EU official dies in service, his heirs will have to file two

inheritance tax returns: one in Belgium, for the real property he

owned here and one in his country of domicile (say EUMmbria) for

his worldwide estate.

However, some countries have abolished their inheritance tax. The

heirs of EU Officials who have their domicile in Austria, Cyprus,

Estonia, Latvia, Malta, Portugal, the Slovak Republic, or Sweden will

only have to file a Belgian inheritance tax return for their Belgian

real property.

Other countries do not charge inheritance tax on the children

(Bulgaria, Croatia, Czech Republic, Latvia, Lithuania, Luxembourg,

Malta, Poland, Slovenia and certain regions in Spain), while others

do not charge inheritance tax when the spouse inherits (the same

plus Denmark, France, Ireland and the U.K.). An inheritance tax

return may have to be filed but inheritance tax may not be due.

http://www.taxbites.be/taxation/content/blogcategory/23/77


44

Inheritance Tax - Double Taxation?

66. If the country of domicile charges inheritance tax on the Belgian

property, there is a risk of double taxation and there are very few

treaties for the avoidance of double inheritance tax than for the

avoidance of double income tax.

67. Belgium has only two, with France and with Sweden (that does not

have inheritance tax anymore).

The EU Official (or his spouse) may have to check in their country of

residence if the Belgian property cannot be exempted, or if the

Belgian inheritance tax can be credited against the inheritance tax

at home (for a basic survey of the inheritance tax and gift tax

systems in the EU Member States, see www.successions-

europe.eu).

68. This may actually lead to a difficult situation if Belgium and the

country of domicile have different rules.

69. Most countries charge inheritance tax on the worldwide estate of

the deceased if he was domiciled in the country. However, some

countries (e.g. Spain) charge inheritance tax if the heir lives in the

country. Spain levies inheritance tax if the heirs live in Spain. If a

Spanish EU Official lives in Belgium but is deemed to be domiciled

in Spain, no inheritance tax will be due in Spain if his heirs live in

Belgium (and are not dependant anymore) but inheritance tax is

due if his heirs live in Spain.

http://www.successions-europe.eu/



45

A non-domiciled EU official makes a donation

70. Making donations during your lifetime is a tax efficient way of

estate planning. What is not in your estate is not normally subject

to inheritance tax.

In Belgium, gift tax is due on any donations before a notary or

donations that are presented for registration to the tax office. Gift

tax is not covered by the Protocol, and, therefore, Belgium must

not give an exemption because you are an EU official with a

domicile outside Belguim.

71. If you make a donation of real property in Belgium, you have no

alternative but to pass before a Belgian notary ; you can never pass

before a notary in another country. Therefore, gift tax will always

be due. The gift tax rates for real property are comparable to the

inheritance tax rates. The gift tax can, however, be mitigated by

making donations over a period of time with intervals of at least

three years.

72. Donations of real property outside Belgium are not liable to gift tax

in Belgium.

73. If you want to make a donation of movables, you are not required

to go to a notary. There are valid alternatives (see below). If you are

living in Belgium (even if you are an EU official with a domicile in

EUMmbria) and you pass before a notary or you present the

donation for registration, there is a flat gift tax. The rate is 3% for

(grand)children, (grand)parents, spouse and civil partner, 7% for all

others. Wallonia has rates of 3.3% and 7.7% with an intermediate

rate of 5.5% for donations between brothers and sisters and uncles

and aunts and nephews and nieces.

74. Hand to hand donations are, however, perfectly valid and they are

tax free. Nevertheless, if the donor dies (as a Belgian resident)

within three years after he made a tax exempt donation, the


46

donation is added back into the estate and subject to (Belgian)

inheritance tax. Of course, that is only a problem for EU officials

who have their residence in Belgium when they die.

75. Other alternatives are donations from one bank account to another

or donations before a Swiss of Dutch notary (if you are resident in

Belgium).

76. Please note that there are situations where gift tax is due twice.

Most countries charge gift tax if the donor is a resident. Some

countries (e.g. France, Germany, Poland and Spain) charge gift tax

not only when the donor is domiciled in these countries but also

when the beneficiary is domiciled there. If an EU official with a

French domicile but living in Belgium makes a donation, only

Belgian gift tax will be due if the beneficiary is his daughter who

lives with him in Belgium. However, if he makes a donation to his

son who lives in France, gift tax will also be due in France.

BELGIUM IS MY DOMICILE

47


I am domiciled in Belgium, do I pay tax?

77. You may have your domicile in Belgium because

– you were recruited as an EU official from Belgium ;

– you retired as an EU official and you decided to stay in

Belgium ;

– you are the spouse of an EU official and you have gainful

employment,

– you are the child of an EU official and you are not dependent

of and in the care of the EU official.

Earnings

78. If you retire, you may earn a salary or receive a pension from other

sources than the European Institutions. Earnings are usually taxable

in Belgium.

79. Pensions built up outside Belgium may be taxable in Belgium, but

that depends on the double tax treaty with the country from where

the pension is paid.

Please check out http://www.taxation.be/content/view/83/45/ for

the list of double tax treaties signed by Belgium.

http://www.taxation.be/content/view/83/45/


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Income from Real Property

80. For property in Belgium, we refer to p. 29.

81. If you have property in another country, any income from that

property is (normally) taxable in that country. Even if that property

is not taxed, you may have to declare it in a tax return that country.

If you are resident in Belgium you have to declare the income of

that property as well. If you have a tenant, you must declare the

rent you received and any costs that are paid by the tenant that are

normally paid by the owner of the property. That is not the heating

and electricity but e.g. the cost of double-glazing the windows.

If you have a second residence that you do not rent out, you

declare the rental value of the property.

82. However, in Case C-489/13, Verest and Gerards, the Court of

Justice of the European Union declared that this obligation (to

declare the rental value for an overseas property) was an

infringement of the free movement of capital since a Belgian

taxpayer only has to declare the cadastral revenue for a Belgian

property. Note that the property Mr and Mrs Verest had was in

France where a similar concept of cadastral revenue exists.

The income will be exempted “with progression” (see p. 37).

http://curia.europa.eu/juris/document/document.jsf?text=&docid=157512&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=369897


49

Dividends

83. If you receive dividends from a foreign company, that company will

normally deduct withholding tax abroad. The net dividend after

deduction of the foreign withholding tax will be liable to income tax

in Belgium. E.g. for dividends from a French company, the French

withholding tax will be 15% and Belgian tax will be due at 25% on

85.

84. If the dividend is paid out via a Belgian bank, the bank will withhold

tax at a rate of 25%. That tax is the final tax and you do not you

need to declare the dividend in your Belgian income tax return

anymore. If, on the contrary, you collect the dividend directly, e.g.

on a bank account in another country, you have to declare the

income. The tax will be 25%.

Interest

85. The same rule applies if you receive interest from another country.

Tax may be withheld and the net interest is taxable in Belgium at a

rate of 25 %. If the interest is collected on a foreign bank account, a

Belgian bank has not withheld tax at 25 % and you must declare the

income; the tax will be 25 % (plus local tax at a rate between 6 and

9 %; that makes it 26.5 to 27.25%). If you are a Belgian resident, the

first €1,880 (per spouse or partner) of interest income on a bank

deposit account with a bank approved by law is exempt.

86. In principle, one does not have to declare dividends and interest in

a tax return. However, taxpayers with a low pension and little

interest or dividend income may opt to declare the dividends and

interest and have all their income taxed at the progressive rates. If

the result is less than the tax withheld at source, the taxpayer

recovers the difference. Since 2013, EU officials are excluded ; and

so are other taxpayers who have income that is tax exempt by

treaty and that is not taken into account to determine the tax on

other income.


50

Capital gains

87. Generally speaking, capital gains are tax exempt in Belgium if they

are normal capital gains. That means that the gains are made in the

normal management of your personal property, e.g. on shares.

88. What is not normal management anymore is “day trading” or

speculation. Gains from day trading would normally constitute

earnings and be taxed at full progressive rates.

89. Speculative gains, made by buying and selling property or shares to

make a capital gain with almost professional means, are taxed at

33%.

90. Also taxable are capital gains on the sale of a substantial

participation in a company to a legal entity outside the European

Economic Area. The rate is 16.5%.

91. When you sell your main residence in Belgium, the capital gain is

exempt. When you sell a second residence or other property in

Belgium, there is no capital gains tax if you have kept the property

for five years. It is only if you buy and sell within five years that

capital gains tax is due at 16.5 %.

92. If you sell property in another country, capital gains tax may be due

there, but not in Belgium. In accordance with the double tax treaty,

Belgium would have to exempt such capital gains.

93. Normal capital gains on investments (shares) are not taxable in

Belgium. That has inspired the creation of SICAVs (Société

d’Investissements à Capital Variable). The SICAV is an investment

company that does not distribute but capitalizes its profits. The

investor buys shares of the SICAV and makes a (tax exempt) capital

gain when the SICAV buys back its shares. However, the interest

accrued within the SICAV is taxed as interest income.


51

Inheritance tax when a domiciled EU official dies

95. If you are domiciled in Belgium, Belgian inheritance tax is due on

your entire estate (i.e. all real estate and all movables) including on

real property outside Belgium. Within Belgium, the inheritance tax

rates vary from one region to the other. The applicable rate is the

rate of the region where the deceased was living at the time of his

death. If he moved within the last five years, it is the region where

he lived longest in the last five years.

There are different inheritance tax rates. The following are the

rates for children, grandchildren, parents, grandparents, spouses

and civil partners for the three regions. The inheritance tax is

calculated, for each heir separately, on his share of the estate,

according to the following rates :

Wallonia

There is a tax-free allowance of €12,500 each heir (€25,000 if the

estate is worth less than €125,000). For children under 21, €2,500 is

added to the allowance for each year under 21.

€ 1 – € 12,500

€ 12,500 – 25,000

€ 25,000 – 50,000

€ 50,000 – 100,000

€ 100,000 – 150,000

€ 150,000 – 200,000

€ 200,000 – 250,000

€ 250,000 – 500,000

above € 500,000

3%

4%

5%

7%

10%

14%

18%

24%

30%

If the deceased owned or co-owned his principal residence, there is

a tax exemption for the first €160,000 or a tax reduction.


52

Brussels

Each heir is taxed on his own share with a tax-free allowance of

€12,500 each. For children under 21, €2,500 is added for each year

under 21.

€ 1 – 50,000

€ 50,000 – 100,000

€ 100,000 – 175,000

€ 175,000 – 250,000

€ 250,000 – 500,000

Above € 500,000

3 %

8 %

9 %

18 %

24 %

30 %

If the deceased owned or co-owned his principal residence, there is

a reduction of the inheritance tax.

Widow(er)s and registered partners do not pay inheritance tax on

the family home or the usufruit on the family home.

Flanders

Each heir is taxed on his own share. The inheritance tax due is

calculated separately for real estate and moveable assets. Liabilities

are set off against the moveable assets, unless they have been

specifically incurred to acquire real estate.

€ 1 – 50,000

€ 50,000 – 250,000

Above € 250,000

3%

9%

27%

Widow(er)s and live-in partners do not pay inheritance tax on the

family home or the usufruit on the family home.

There are separate (higher) rates for brothers and sisters, for uncles

and aunts, nephews and nieces of the deceased and for anyone


53

else. These rates can be found at the end of this document. Rates in

that category can go up to 60% or 80 % for larger legacies.

In Flanders and Brussels, the surviving spouse, the registered

partner (or the live-in partner, only in Flanders) does not pay

inheritance tax on the part of the family home he inherits.

Inheritance Tax - Double taxation

96. If inheritance tax is due in Belgium (because the deceased was

domiciled in Belgium) and in another country (because he had real

property there or because he had shares in a local company or

because he has the nationality of that country (think USA), Belgium

does not give full relief for double taxation.

97. It is only the inheritance tax paid abroad in respect of real property

in the other country that can be set off against the inheritance tax

due in Belgium.

98. Any other capital taxes paid abroad can only be set-off against the

net value of the assets as a liability of the estate.

There are no double taxation treaties in respect of inheritance tax

except for one with France and one with Sweden (since Sweden has

no inheritance tax that is ineffective).

In practice, this means that, even if there is no inheritance tax

between spouses in e.g. the United Kingdom, they will still have to

declare the British property in the Belgian inheritance tax return,

and pay Belgian inheritance tax on the British property. They can

offset the British inheritance tax, but since that is nil, there is no

effective relief.


54

Gift Tax and other Estate Planning

For the rules on gift tax, we refer to p. 45.

For further ideas on Estate Planning, we refer to our book:

FAQS DURING THE UNION SYNDICALE LECTURES

55

FAQS AT THE UNION SYNDICALE LECTURES

Exemption of income

Pensions

There was an example mentioned, whereby if you retire in the US, there is no tax agreement, so my [EU] pension would be taxed. I would be grateful if you could inform me about this issue with regard to New Zealand, where we're planning to retire to. Is there a tax agreement in place, i.e. would my pension be taxed? If so, should I keep my tax domicile in Europe?

99. The exemption for your EU pension is to be found in the Protocol

on Privileges and Immunities that is signed by the 28 Member

States of the European Union. As New Zealand is not a Member

State of the European Union, New Zealand does not have an

obligation to exempt you from New Zealand taxes. Switzerland is

the only country that exempts the pensions of EU officials.

The first question is whether New Zealand taxes pensions arising in

other countries. If so, your pension risks being taxed by the

European Institutions and by New Zealand. There is no double tax

treaty that eliminates double taxation. An existing double tax treaty

between New Zealand and an EU Member State (including Belgium)

would normally give the right to tax the pension to your state of

residence.

100. Unless you find a solution under the laws of New Zealand that give

an exemption for your pension, you will need to keep your tax

residence in Europe, and that should be more than a mere

letterbox. You would need to keep a place in Europe where you

actually live most of the time and that should be the centre of your

vital interests.


56

101. That means that your address in New Zealand can be no more than

a second residence, if not, New Zealand may disregard your main

residence in a European country and consider that you are actually

residents of New Zealand and, therefore, that your pension is

taxable in New Zealand.

What does exemption mean?

An EU official lost her husband in 1986, he was a Belgian resident working in Belgium. She applied for a survivor’s pension from the Belgian State, but it was refused because her income from the European Institutions was too high.

102. Article 12 of the Protocol only states that the Member States

cannot directly or indirectly charge income tax on the income from

the European Institutions. Although this benefit has been extended

to the income of the official's spouse (Humblet), and although the

Court of Justice of the European Union has confirmed that the tax

authorities of a Member State cannot discriminate EU officials by

refusing them certain tax advantages (Vander Zwalmen), the court

has also confirmed that article 12 only applies to taxes and not to

e.g. a school levy for attending a public school (I.G.F. Van Leeuwen).

It would not apply to social security benefits or pensions.

Taking account of the EU income

You seem to state two different things re Vanderzwalmen? Has the Court of Justice of the European Union not come back on this decision in 2012?

103. In case C-229/98, Vander Zwalmen and Massart v. Belgian State,

the CJEU has confirmed the principle that the tax authorities of a

Member State cannot discriminate EU officials by refusing them

certain tax advantages.

104. The EU official had complained that his spouse did not get the

“quotient conjugal”, a tax deduction of a maximum of €10,230






57

given to a Belgian tax payer whose spouse is not working or has low

earnings (less than €10,230). An EU official and his spouse file a

joint tax unless the official earns more than €10,230.

105. The conclusion of the Court was: “The reason for exclusion from the

benefit is not the fact of being a Community official in receipt of an

income in excess of the index-linked sum, but stems from the

general condition, which applies without discrimination to spouses,

one of whom is an official, as it does to any other taxpayer,

regarding the amount of income giving entitlement to the benefit at

issue.”

106. In other words, the tax authorities must not give a tax deduction to

the spouse of an EU official as if he or she were married to

someone who was not working or who had low earnings under

€10,230.

107. In 2012, the Court of Justice of the European Union confirmed that

“the tax authorities of a Member State cannot take account of the

income paid by the European Union to its officials and other staff

(or pensions and allowances paid to former officials), in calculating

the cap on a tax such as the wealth tax (impôt sur la fortune)” (Case

C-558/10, Bourgès-Maunoury and Heintz v Direction des services

fiscaux d’Eure-et-Loir, [2012] ECR, p. I-418).

108. The court added that “In the interest of legal certainty “… a person

in receipt of such income is also exempt from any obligation to

declare the amount of such income to the authorities of a Member

State”.

109. The main difference in this case was that the French state required

the EU official to declare the amount of his remuneration or

pension to allow France to determine a cap on the wealth tax. In

Vanderzwalmen, the actual income did not matter, just the fact

that the EU official has income in excess of €10,230. That was all he

was asked to declare in his tax return.




58


59

Domicile

Questions about domicile are always a favourite

Where is my domicile?

When does a retired EU official become a Belgian resident? Immediately on the day after he leaves the service of the European Institutions? After a transitory period? Upon demand?

110. The exception (domicile in the country of recruitment) is based on

the premise that EU officials “establish their residence in the

territory of a Member State” (e.g. Belgium) “solely by reason of the

performance of their duties in the service of the Union”.

On the day he leaves the service of the European Union, it is not

“solely by reason of the performance of his duties in the service of

the Union” anymore that he is in Belgium. He is here out of his own

volition. Therefore, he loses the benefit of his fiscal domicile on

that day. If he stays in Belgium, he becomes resident in Belgium.

And it is only when he takes up residence in another country – with

an actual residence in a house or apartment – that he can claim

residence there. Without a place to live, one cannot have a

residence.

111. There is no transitory period in the Protocol, but in practice the

retired EU official may stay for a couple of months in Belgium

without incurring any income tax here. He may be domiciled and

resident in Belgium but he may not have any taxable income.

112. Moreover, he will not immediately be registered as a resident and

receive an identity card which is prima facie evidence of tax

residence. If he does receive an identity card, he will be deemed to

be resident from the day he retired until the day he hands in his

identity card and files an exit tax return. He will have to declare

any (Belgian and overseas) taxable income, except for interest and


60

dividends received on a Belgian account for which the bank has

withheld tax at source.

A spouse comes to Belgium from Latvia with her husband who is an EU official. She works for a private organisation and subsequently as an agent for the Union. She becomes unemployed and receives unemployment benefit. Her husband takes CCP and starts working for the Permanent Representation of his country as a diplomat. What is her status?

113. When she came to Belgium, she kept her domicile in Latvia (her

country of origin, i.e. the country where she had her domicile when

he joined the Union. When she started working, first for a private

organisation and subsequently for the Union, she took up domicile

in Belgium. When she became unemployed she reverts to her

domicile in Latvia.

Under the terms of the double tax treaty between Belgium and

Latvia, the unemployment benefit is normally taxable only in

Belgium, where the benefit is paid.

When her husband took diplomatic status, Belgium will consider

that she is not resident in Belgium (that does not necessarily mean

that she is resident in the country for which her husband is a

diplomat (see below), the spouse does not take the domicile of her

spouse).


61

The spouse of an EU official is working for a company in France. Because she is working, she takes up domicile where she lives in Belgium. However, because she works from home for her employer in France, she pays tax in Belgium and that is more tax than in France. Is she not being punished for following her husband to work for the EU institutions in Belgium?

114. The Protocol only gives the spouse a fictitious domicile in the

country of origin when he/she is not working. When the spouse

works, the Protocol does not apply to the spouse anymore.

The spouse does actually have three possibilities.

First of all, she can stay in France and work there for her employer.

Because she lives and works in France, she pays tax in France. If the

family wants to stay together, the EU official then has to live in

France and come to work in Belgium.

Alternatively, the spouse can come and live in Belgium, and then

the double tax treaty between Belgium and France will determine

whether she pays tax in the country where she is working or in the

country where she is living. Usually, the double tax treaty says that

an employee who lives in Belgium but works in France is taxed in

Belgium only. However, if the link with France is sufficiently

important, she can be taxed in France for the days she works on

France ; that means she either works in France for at least 183 days

per year or she works in France and is paid by an employer in

France. In any case, for days worked outside France, she cannot be

taxed in France. When France can tax the income, Belgium must

exempt it.

Finally, if the employee lives and works in Belgium from home (as

this spouse seems to do), there is not a sufficient link with France

for her to be taxed in France.


62

I came to Belgium with my husband who came to work for a multinational company. He had a special tax status that assimilated him to a non-resident coming from the U.K. He had a certificate of non-residence that shows he is not a residence. When I joined the European Institutions, it was determined that my status was EUMmbrian domicile. What happens when he leaves the company?

115. This situation is quite unique. Your husband (and yourself while

you were not working) was granted the special tax regime for

expatriates. That tax regime has been introduced to make it

attractive for non-Belgian executives (like your husband) to come

and work in Belgium. The employer must file an application

showing that the employee has maintained the centre of his vital

interests abroad ; in your case, I assume that is the U.K. The expat

tax regime is actually an extra statutory concession whereby

Belgium unilaterally considers that you are (your husband) is a non-

resident and only pays tax on Belgian source income and on

remuneration for work in Belgium.

However, you did not have a residence in another country and your

tax domicile should probably be Belgium. However, the expatriate

tax regime (and the certificate of non-residence) may have puzzled

the Institutions and they may have relied on the certificate of non-

residence to consider that you are not a Belgian resident and

because you originally came from EUMmbria, I think that the

Institutions have labelled you as an EUMmbrian resident.

As far as your husband is concerned, when he leaves the company,

he will become a Belgian resident while you will continue to be

domiciled in EUMmbria.


63

Spouses and partners

Does the partner of an EU official have the same domicile as the EU official?

116. The Protocol only applies to spouses.

117. A partner, even a registered partner, cannot claim to have

maintained his domicile in the country where he has living when his

partner came to work in Belgium as an EU official.

Does a retired EU official take the domicile of his spouse who is still working as an EU official?

In my personal opinion, it is a misunderstanding to read the

Protocol as saying that the spouse of an EU official takes up the EU

official’s domicile (see p. 22). The spouse of an EU official keeps

his/her domicile when his/her spouse, the EU official, comes to

Belgium to work for the Union. He/she keeps his/her own domicile,

which usually happens to be the domicile of the EU official.

When the EU official retires and stays in Belgium, he takes up

domicile in Belgium because he lives or continues to live in Belgium

and not because he has followed his spouse (the other EU official)

when his spouse came to Belgium to work for the European

Institutions. If they have the same nationality that may seem

confusing, but when they have a different domicile, the situation

seems more obvious. E.g. when a Danish EU official is married to a

Greek EU official and retires, he stays in Belgium and takes up

Belgian nationality; he does not take up Greek domicile because his

spouse is an EU official with a Greek domicile. The same rule

applies when they have the same domicile.


64

How does it work?

My tax address is my address during my recruitment, that is to say, my parents address in Greece. I am filing a tax return since 2002 when I bought a holiday home in Greece. Since it is a second home, the electronic reporting system requires me to have a principal residence address. I then use my parent's address. Is that correct? It would be better to use my address in Brussels? Or the address of my holiday home?

In Greece there is a tax department devoted to "people outside the country" (this is mostly Greek living and working in the United States or Australia); Do EU officials belong in the same category?

Am I obliged to declare to the Greek authorities the amount of my annual income?

This is a question of Greek tax law for which I am not qualified. I answer a Belgian perspective.

118. In accordance with the Protocol, you are considered a Greek

resident for the EU, Greece and Belgium.

119. You are required to report to the Greek authorities the amount of

your annual income with the exception of the remuneration you

receive from the European Institutions.

120. The tax department for "people outside the country" is reserved for

real non-residents, people who live in the US and have some

income from Greece. EU officials do not belong to the same

category, since they are considered residents and they have to pay

taxes on their worldwide income in Greece, not just the Greek

income. However, I could not say if there is a tax office just for EU

officials.

121. Your principal residence is indeed in Belgium, but if you report that

on your tax return, I assume that Greece will take the position that

you are a Belgian resident, which would not be correct.


65

Belgian Income Tax

Dividends and interest

Article 313 Income Tax Code has been modified in 2013 to exclude the reimbursement of withholding tax on dividends and interest.

122. In principle, dividends and interest are taxed at a flat rate of 25%.

However, taxpayers with a low taxable income may opt to declare

the dividends and interest and declare all their (taxable) income to

have it all taxed at the progressive rates. If the result is less than

the tax withheld at source, the difference is reimbursed. Taxpayers

who have investment income under the personal allowance of

€ 7,090 are even able to recover all the withholding tax.

That was an opportunity for EU officials who have their domicile in

Belgium and who had investment income under the threshold of

€ 7,090 ; they could recover all the withholding tax.

In 2013, the law was changed and EU officials3 are now excluded. It

was admitted that this measure was indeed aimed at EU officials.

Does an EU official have a chance with the Court of Justice of the EU? It is indirectly taxation of the income of the EU official since Belgium takes account of the income of the EU official to determine whether they have a right to reimbursement.

123. Please note that the rule on exemption with progression (article

155 ITC) refers to double tax treaties (that explicitly give Belgium

the right to calculate the other income by reference to all the

taxpayer’s income) and to other international conventions that

3 As well as other taxpayers who have income that is tax exempt by treaty

and that is not taken into account to determine the tax on other income.


66

have a clause providing exemption with progression. That does not

encompass the Protocol.

However, in Van Leeuwen, Tither and Vander Zwalmen, the Court

gives the Member States some margin of manoeuvre to take

account of the level of income of the EU official to refuse him or his

spouse certain advantages or deductions.

Please note that the codes 1062 and 1020 (where an EU official

declares he earns more than €10,230), are not new. The tax

authorities have been taking account of the level of income of the

EU official for years in respect of the “quotient conjugal”, the tax

deduction for the spouse of a person who is not working or had low

earnings (under €10,230). The Court confirmed in Vander Zwalmen

that this exclusion of the benefit was not a form of indirect tax (see

p. 56).






67

I used to have a plan d’épargne-logement (PEL) in France. This allowed me to save money in order to buy property later. My plan started in 1996 and was terminated by the bank because I was not living in France anymore. The bank has given me a document that shows all the interest accumulated since the start. The bank is passing that information to the Belgian tax authorities. Do I have to pay tax on all the interest?

124. The Belgian tax authorities have issued a practice note “Circulaire

n° Ci.RH.231/601.452 (AFER N° 39/2010)” dated 7 May 2010. This is

an issue that has become more relevant with the introduction of

the EU Savings Directive.

125. The tax authorities confirm that the interest is taxable, but they

makes a distinction between

— interest paid when the PEL is closed before the tenth

anniversary of the plan. In that case, Belgium follows the

French tax system and considers that the interest is taxable

at the time the interest is grant or paid.

The full accumulated interest is taxable in Belgium.

— interest pad if the plan is closed after the tenth anniversary.

In that case, the interest that has accrued in the first ten

years is deemed to have been granted (and taxable) on 31

December of the 10th year.

The full accumulated interest for the first ten years is taxable

in Belgium in the tenth year. The interest for subsequent

years is deemed to be paid and taxable every year.


68

Rental income

I have Slovenian nationality and my partner has Belgian nationality, we own an apartment in Belgium that is rented out. Do we need to pay tax on the rent that we receive?

126. You are an EU official of Slovenian nationality, and I assume that

you have your domicile in Slovenia as well.

127. You do not clarify whether you have registered your partnership

(cohabitation légale) or not. However, that should not make much

difference as you will have to file separate tax returns

128. Indeed, partners who have not formalised their partnership file

separate tax returns in Belgium. In principle, married couples and

registered partners must file a joint tax return, but that does not

mean that their income is added up and taxed together; their

income is taxed separately.

129. However, if the EU official earns income in excess of €10,230, the

EU official and his spouse must file separate tax returns.

130. That means that you and your partner must file separate tax

returns and pay tax separately. Each of you needs to declare half of

the cadastral revenue of your apartment in code 1106-58.

131. The taxable income will be calculated at 2.43 times (x 50% of) the

cadastral revenue. I assume that the tenant is a private tenant, and

not a company or someone who uses it for his business (see p. 30).


69

My husband and I are both British, he is an EU official, I work in Belgium. We have property in the UK. Do we have to declare that in Belgium and do we have to pay tax on it?

132. Assuming that your husband has British domicile he does not have

to declare anything in Belgium; he has to declare the rental income

in the UK, but not in Belgium.

As you have a Belgian domicile, you have to declare the rental

income in the UK and (your half of the rental income) in Belgium.

Tax will be due in the UK but under the double tax treaty between

Belgium and the UK, Belgium must exempt that rental income, but

Belgium may take account of the (exempt) rental income to

determine the tax rate on your remuneration. See p. 37 for the

elimination of double taxation with the “exemption with

progression method”.

In practice, this means that the tax on your remuneration will go up

a bit. Instead of paying on average 40%, you may pay on average

43% tax but only on your Belgian earnings.


70

Titres service

I have bought and used titres service for a household help. I did not file a tax return but I received a tax reimbursement<

133. If you have used “titres services” to pay for home help, you will

receive a tax certificate that confirms how much you paid for the

“titres services” and part of these payments (max €1,400 per

person) gives you a tax credit that is deducted from the taxes you

have to pay. For people with a low income, who do not pay income

tax (e.g. because they are under the annual personal allowance of

€7,090), the tax credit is reimbursed.

Because EU officials do not pay any income tax, they would

normally be entitled to a reimbursement of the tax credit, but they

have to declare that they have income that is exempted by

convention and that is in excess of € 10,230. Therefore, they or

their spouse, do not get a tax reimbursement.

If some EU officials have received a reimbursement without filing a

tax return, I presume this is because the information about their

titres services was filed electronically in their tax file and the tax

authorities calculated the tax reimbursement without taking

account of their status.


71

-

Capital gains tax

Do I pay capital gains tax in Belgium or in my country of domicile?

Generally speaking, Belgium has a favourable tax regime for capital

gains. However, if your country of domicile considers that capital

gains tax is a form of income tax, you may pay capital gains tax at

home.

However, some countries consider that capital gains tax is a

category apart and that it capital gains tax is not due in the country

of domicile because it is not listed in article 13 of the Protocol. The

question of capital gains tax then depends on the country where

you are domiciled (and not the country where you were recruited).

If you are domiciled in Belgium you will not have to pay capital

gains tax. If you are not domiciled in Belgium the tax regime

depends on the place of domicile.

An EU official with a domicile in another Member State intends to sell her principal residence (in Belgium) purchase 20 years ago. Is the amount of tax payables different when she sells (i) before retirement, (ii) upon retirement while temporarily staying in Belgium (see p. 59, or (iii) upon retirement after moving to France or Germany?

134. Let us start with the most simple situation: (ii) : the retired EU

official stays temporarily in Belgium to sell her house. There would

be no capital gains tax because there is only one country involved,

Belgium, and Belgium does not charge capital gains tax. However,

we have to balance this advantage against the possible

disadvantage of having to pay income tax on other income (from

savings), normally at a fixed rate of 25%.


72

135. The situations in (i) and (iii) would be similar: the retired EU official

is resident in another Member State (e.g. France or Germany) and

owns property in Belgium. As mentioned before, Belgium would

not charge capital gains tax on the principal residence.

136. The next question then is whether the other Member State charges

capital gains tax. Many countries have exemptions for the

taxpayer’s principal residence, and some even extend these to the

main residence the taxpayer had in another country before coming

back to the country. E.g. under certain circumstances, the U.K. gives

an exemption of capital gains tax on the main residence (“Private

Residence Relief”) with 18 months’ retroactive effect.

137. France also has an exemption of capital gains tax for the residence

in which the taxpayer lives at the time of the sale (which is difficult

to achieve if the property is in Belgium and the taxpayer lives in

France). Moreover, I understand that Germany has a capital gains

tax but real estate is exempt if it has been held for ten years or

more (please check with a local counsel).

138. In most countries, the capital gain will have to be declared, but

normally, the country of residence will have to give relief for double

taxation. In other words, if the state of residence charges tax, it

must do something to prevent double taxation.

139. Many countries allow you to credit the Belgian tax against the local

tax. E.g. if the U.K. charges capital gains tax on the Belgian property

and does not give Private Residence Relief, tax will be due at the

rates of 18% and 28%, and you can deduct the Belgian capital gains

tax (0). You always pay the U.K. capital gains tax.

140. As for other countries, such as France and Germany, if they tax the

capital gain, they would give exemption with progression (see p.

37). In other words, France would not tax the capital gain, but may

look at the value of the capital gain to determine the income tax

rate of other income that is taxable in France.


73

Inheriting and Inheritance Tax

Useful information can be found on www.successions-europe.eu or

www.couples-europe.eu

What is the applicable law?

Do I pay Belgian inheritance tax if I inherit from my parents in EUMmbria on in another country?

141. No, Belgian inheritance tax is only due on the estate of a person

who was domiciled in Belgium at the time of his death. That is

because inheritance tax is usually due in the country of domicile of

the deceased.

What is the applicable tax law when the deceased is an EU official?

142. As explained before, the Protocol adds a layer of complication t the

tax rules.

143. Indeed, while you actually live in Belgium, it is the Protocol that

determines where you have your domicile. While you are an EU

official that is the country where you were recruited. When you

retire as an EU official that is the country where you take up

domicile upon retirement.

If you have your domicile in Belgium, inheritance tax will be due on

your entire inheritance, both in Belgium and outside Belgium.

However, inheritance tax may also be due in the country where you

own real property. That will result in double taxation but under

Belgian law, that inheritance tax can normally be deducted from

the Belgian inheritance tax (see p. 53).

144. If you have your domicile in EUMmbria, the only inheritance tax

you pay in Belgium is the inheritance tax on your property in

Belgium.


http://www.couples-europe.eu/


74

145. If EUMmbria does not have inheritance tax4 or if EUMmbria has

inheritance tax but exempts the estate when it is inherited by the

children5 or by the spouse6 there will be no further inheritance tax

and no risk of double taxation.

146. If EUMmbria does charge inheritance tax, that will (normally) be

calculated on your worldwide estate, and usually you can set off

the Belgian inheritance tax against the inheritance tax in

EUMmbria. That is something that must be checked in the local tax

legislation.

Making a will

How do I make a valid will?

You can make a valid will by writing out your last will in long hand,

put a date in it and sign it with your normal signature. These are the

only three requirements for a valid handwritten will. It does not

need to be witnessed. We give an example in annex 1, at the end.

147. Alternatively, you can go and see a notary and ask him to prepare a

notarized will in front of two independent witnesses. Alternatively,

you can just type out a will, put it in an envelope and hand it offer

to a notary for safekeeping.

148. You do not need to have Belgian nationality to draft a will in one of

these forms in Belgium.

4 Austria, Cyprus, Estonia, Latvia, Malta, Portugal, the Slovak Republic and

Sweden do not have inheritance tax. 5 Bulgaria, Croatia, Czech Republic, Latvia, Lithuania, Luxembourg, Malta,

Poland, Slovenia and certain regions in Spain 6 Bulgaria, Croatia, Czech Republic, Denmark, France, Ireland, Latvia,

Lithuania, Luxembourg, Malta, Poland, Slovenia, certain regions in Spain and the U.K.


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149. Moreover, the will you made in EUMmbria before you came to live

in Belgium will normally be valid as well, but it may have to be

translated. That is not only translated into one of the official

languages of Belgium (Dutch, French or German); it may also have

to be translated into terms that are compatible with Belgian law

(e.g. if you have disinherited your children in your will or if you gave

everything away during your lifetime, the effect of the will is going

to be limited to what is acceptable under Belgian law).


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The European Regulation on Successions

What is the interaction between the Protocol and the European Regulation on Successions?

150. The short answer is that there is no interaction, but there are a lot

of misunderstandings about the European Regulation on

Successions7. The EU Succession Regulation should simplify and

unify the inheritance rules for cross border successions. The

Regulation does not affect the substantive inheritance laws of the

24 EU Member States 8 nor the tax aspects of international

successions.

The Regulation answers two important conflict-of-law questions:

1. which court is competent to deal with a cross-border

succession ; that will be the court of your habitual residence.

If you live in Belgium, your habitual residence will be

Belgium, even if – in accordance with the Protocol – you have

your domicile (for income tax and inheritance tax).

2. which law governs a cross-border succession? That will be

the law of the country of your habitual residence, but the

Regulation gives you the right to choose the law of your

nationality.

If you live in Belgium and have your tax domicile in

EUMmbria (because that is where you were recruited) you

7 Regulation on Jurisdiction, Applicable Law, Recognition and Enforcement

of Decisions and Acceptance and Enforcement of Authentic Instruments in matters of Succession and on the Creation of an European Certificate of Succession of 4 July 2012, No 650/2012, O.J. L 201/107, 27.7.2012. 8 The Regulation was adopted by all EU Member States, but Denmark, Ireland and the U.K. opted out.


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can still only chose between Belgian law and the law of your

country of nationality, even if that is not EUMmbria.

The law you have chosen will determine

– who can inherit ; under Belgian law that is normally

your children while your spouse has usufruit on your

inheritance ; if you have not children, it is your spouse ;

if you have no spouse or children, your brothers and

sisters inherit with your parents ; etc.

– whether you can disinherit your heirs if you make a

will, and if you cannot disinherit your children or

spouse, how much you have to reserve for them,

– how your heirs accept your inheritance or what they

must do to waive it ;

– whether your heirs are liable for the debts of the

succession,

– whether gifts have to be taken into account when

determining what each heir inherits, and

– what wills are valid.

That law will apply to the transmission of your inheritance,

even if that is real property in another Member State, but

local rules may apply for accepting of waiving succession, for

the administration and liquidation of the succession and the

state where the property is located may make the final

transfer of the inheritance subject to the prior payment of

inheritance taxes.

3. The regulation will introduce a European Certificate of

Succession that will constitute proof that someone is heir or

a legatee or has powers as an administrator of the

succession. The certificate will be recognised throughout the

EU, thereby simplifying and speeding up the procedure.


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Decisions and notarial deeds relating to successions will be

more easily enforceable in the other Member States; the

other Member States cannot impose additional conditions.

The Regulation will enter in force on 17 August 2015 for all

successions of people who died on or after 17 August 2015.

151. The impact of the Regulation is limited since Denmark, Ireland and

the UK have opted out. More importantly, while the Protocol deals

with inheritance tax (where do the heirs pay inheritance tax and

how much inheritance tax they pay), the Regulation just relates to

the inheritance rules (who receives what from an inheritance?).

The big misunderstanding is that you cannot choose a jurisdiction

that has no inheritance tax and avoid inheritance tax in Belgium.

For example, a German national is recruited in the UK and now

works in Belgium. The law applicable to his inheritance can either

be that of Germany (nationality) or that of the Belgium (habitual

residence). Even if the tax law governing his inheritance will be that

of the UK (in accordance with article 13 of the Protocol), he cannot

opt to have his will governed by UK law.

How is the value of the inheritance determined?

152. In principle, the value of the inheritance is determined at the

moment of death on the basis of the market value of the assets in

your inheritance. The heirs must put a value on the assets and if the

tax authorities do not agree, they can object. The tax

administration has a database with the values of properties

resulting from the values declared on the sale of properties.

The rules are a bit different for usufruit or life annuity, where a

value is determined as a percentage of the market value depending

on the age of the beneficiary (e.g. 32% if the beneficiary is between

65 and 70, 8% if he is over 80).


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How do you refuse an inheritance?

153. If you are an heir and you are about to inherit from someone who

was largely in debt, you are not obliged to accept the inheritance.

154. You can renounce it in a formal statement at the court of first

instance of the place where the deceased was living, or before any

Belgian notary.

155. If you are not sure what debts and liabilities you are taking on,

there is another option. You can accept the inheritance on the

condition that an inventory is first made of the estate, its assets and

debts. You have three months to make a formal statement before

the court of first instance and to get an inventory of assets and

liabilities drawn up. You then have another 40 days to decide

whether you accept the inheritance or not.

156. That is the only way you can avoid being held liable for the debts of

the deceased, but there may be nothing left in the estate.

When you are not married, but you have a partner and a child, what is the applicable regime in the absence of a will?

157. According to Belgian law only the child inherits. The partner

gets nothing. If you want the partner to inherit something you will

have to draft a specific will. Either you can stipulate that your

partner gets your house or that your partner gets the usufruit and

your child gets the bare ownership of your house

And what is the best option tax-wise?

158. The second option is better because you split the value of your

estate over two heirs, who pay inheritance tax starting at the lower

inheritance tax rates. Moreover, all three regions have tax

exemptions or tax reductions when you leave the family home to

your partner or spouse.


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159. A lot also depends on the partner’s age because the value of

usufruit depends on the age of the beneficiary.

I am an EU official with a Bulgarian domicile ; I married a Belgian national. We did not sign a marriage contract. When I inherit, do I pay inheritance tax? And if I die, does my husband inherit. Is Belgian inheritance tax due?

160. When two people with different nationality marry, Belgium

assumes that they have opted for the Belgian matrimonial regime

of community property for everything they acquire during the

marriage with the exception for what each owned before, what

they inherited from their family or what they received as a gift from

their family.

161. There is an exception for couples that have the same nationality

and married before October 2004 ; they are deemed to have opted

for their own matrimonial property regime (e.g. two Brits who

married in 2002 have separate properties and no community

property).

162. When your parents die in Bulgaria, you inherit from them and you

do not pay inheritance tax.

163. What you inherit from your parents remains your own under the

default matrimonial property regime. When you die, your

inheritance would be inherited by your children (with a life interest

for your spouse), or, if you do not have children, by your spouse for

the usufruit and by your family for the bare ownership.

At that moment in time, Belgian inheritance tax will be due.


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Gift tax

Does the Protocol also apply to gift tax?

164. No. The tax law governing a gift depends on the country where you

live or donate. Lifetime donations are often a tax efficient way of

estate planning. What is not in your estate is not normally subject

to inheritance tax. However, you need to check the inheritance tax

rules of the country where inheritance tax is due.

165. Belgian gift tax will always be due on a donation of Belgian real

property (see p 45) ; on movables gift tax is only due if you pass

before Belgian notary or if you volunteer to register the donation

and pay registration tax. If inheritance tax will be due on the

donor’s estate, any donations made during the last three years

before his death will attract inheritance tax unless gift tax has been

paid. The equation is 0% gift tax and live for another 3 years or pay

3% gift tax (for donations to children and parents) now and live for

0 years.

166. Of course that rule is a Belgian rule and does not affect donors

whose estate will be liable to inheritance tax in another country.

However, check the local rules. The UK charges inheritance tax on

donations made in the last seven years before death (in the

meantime, they are Potentially Exempt Transfers).

167. Hand to hand donations are perfectly valid and they are tax free. So

are donations from one bank account to another or donations

before a Swiss of Dutch notary (if you are resident in Belgium).

However, if the donor dies within three years after he made a tax

exempt donation the donation is added back into the estate and

subject to (Belgian) inheritance tax. Of course, that is only a

problem for EU officials who have their residence in Belgium.


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Another complication is that if the beneficiary of the donation lives

in a country that charges gift tax on donations received, gift tax

may be due twice and the donation may not be that tax efficient.

Is there a limit to hand-to-hand donations?

168. No, there is no limit.

169. The only limit is what you can physically hand over. You can hand

over the keys of your car, a million euros in cash (preferably in a

branch of your bank – give them advance warning because they

usually do not have that kind of cash lying around) or hundred bars

of gold (it is not necessary to give it all in one and the same hand).

170. The only thing that cannot be handed over are intangible assets

such as the copyright to “Fifty shades of Grey” or the shares of a

company.

Does Belgium have a notion of “dons d’usage”?

There is but not for the same reasons. In France all donations are,

in principle, liable to gift tax over a certain threshold every 15 years.

Dons d’usage (like birthday gifts) are small donations that are not

liable to gift tax.

In Belgium, such dons d’usage would not be liable to gift tax as they

are hand to hand donations. However, dons d’usage are gifts that

could not be contested by one’s protected heirs.


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Questions of Estate Planning

Rather than leaving my property to my brother or sister in my will (or donating it) at a high inheritance tax (or gift tax) rate, can I not just sell it to him or her against an annuity for the rest of my life.

171. Selling property is a valid alternative for an inheritance or gift; in

particular between brothers and sisters or between people who

have not blood ties. The registration tax on the sale is only 12.5%

(10% in the Flemish Region) rather than rates of 60% or more.

However, you must play this by the rules.

172. Of course, it is not necessary to have the price paid in full at the

time you pass before a notary, but if the purchaser does not pay

the purchase price, you have a claim (an IOU, as in “I owe you”) vis-

à-vis the purchaser, and when you die that IOU falls in your

inheritance and is liable to inheritance tax.

173. If your brother or sister inherits the IOU, the inheritance tax rates

are going to be the same as the inheritance tax rates on the

property. You could consider donating the purchase price, but that

could be seen as a form of tax avoidance, in particular if the

donation follows the sale closely. This is a risky transaction.

174. An alternative is to convert the purchase price into a monthly

annuity (a rente viagère or lijfrente). It is usual to have an initial

capital payment and monthly payments that include capital

reimbursements and interest (like a loan guaranteed by a

mortgage). That requires an actuarial calculation, based on the

value of the property, the life expectancy of the vendor and the

interest rates. If the vendor continues to live in the house, a

deduction is taken by way of rent for the house.

175. The interesting thing about such an annuity is that it is a bit of a

gamble. If the vendor dies after one year the purchaser can stop


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paying ; but when the vendor lives much longer than anticipated,

he pays until then. Remember in France, a lady called Jeanne

Calment sold her apartment in rente viagère to her notary when

she was 90. She lived until 122, outliving her notary who was half

her age.

In any event, keep in mind that once you sell or donate you do not

own your house anymore, and there is not much you can do if you

fall out with your brother or sister.


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ANNEXES

Model of a Handwritten will

This is my last will and testament

The undersigned [ your name ] born in [ your place of

birth ] on [ your date of birth ]

(optional) and married to [ name of spouse ] born in [ place of

birth ] on [ date of birth ] with whom I was married at [

place ], on [ date ], without having signed a marriage

contract, and with whom I established my first habitual

residence after our marriage at [ place ]

and currently residing at [ your residence ]

declare to make my last will and testament as follows.

I revoke any other last wills and testaments which I

may have made in the past.

(optional) I appoint [ my spouse / x ] as my general legatee, and I

bequeath [ to him / her ] the highest disposable

portion of my estate, in full ownership and in usufruct

of all my real and personal property at the time of my

death, as such percentage shall be determined by the

law at that time, without prejudice to [ his/her ]

hereditary rights to the usufruct,

(in Flanders and in Brussels)

and in particular, I wish that my [ spouse ] receives my

share in the family home in [ place ].


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I release my [ spouse] from giving a security for the

usufruct. To the extent that the law will permit me, I

deny my children and descendants the right to request

conversion of usufruct.

If my [ spouse ] predeceases me, or dies at the same

time as me, I appoint my child(ren) [ Name(s) ] as my

general legatees.

I leave my [house/apartment/…_] at [ address ] to [

name of beneficiary ] born on [ date of birth ].

I leave [ other assets ] to [ name of beneficiary ] born

on [ date of birth ].

In case my spouse and I were to die before our

children reach majority, I wish to appoint as their

guardian [ Name ] residing at [ place ], and in case he is

not able to accept this appointment, I wish to appoint

as their guardian [ Name ] residing at [ place ].

I wish that my remains be cremated and I leave the

decision about the scattering of my ashes to my heirs

Handwritten in full, dated and signed by me,

Done in [ place ] on [ date ].

Signature


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Gift and Inheritance Tax Rates


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eu officials and belgian taxes

Documents

tax domicile

eu officials

tax rules

eu withholding tax

tax implications

tax return

outside belgium

consequences of domicile