•
Under the CLA, the lease
contract may not forbid the lessee to
carry out renovation/alteration works that are
useful to the lessee’s business whose costs do not exceed
the sum equivalent to three years’ rent.
•
The execution of such renovation/alteration works is governed
by specific deadlines and procedure.
Î
Subletting/assigning of lease by the lessee
•
Under the CLA, any prohibition of assigning the lease or on
subletting the real estate may not prevent the assignment or
sublease from being made together with any assignment of
the business.
Î
Transfer of ownership of the leased property
•
Even if the lease contract states that the buyer (new lessor) is
entitled to remove/evict the lessee after it acquires the leased
property, the buyer (new lessor) may do so only if certain cir-
cumstances, deadlines, and procedure (as set out in the CLA)
are complied with.
TaX
Î
Direct acquisition of a property
•
The acquisition of a property will give rise to registration duties
(droits d’enregistrement/registratierechten)
and/or value
added tax (VAT).
•
Registration duties are largely regional taxes. The Flemish-,
Walloon-, and Brussels Capital Regions all levy tax on the
transfer for consideration of immovable property in their
territory. The rate is 10% in the Flemish Region and 12.5% in
the other regions. It is applied to the agreed sale price to be
increased by related charges (such as land surveying or soil
decontamination costs, but not legal or notary fees). The rates
will be substantially reduced (to 4% in the Flemish Region, 8%
in the Brussels Capital Region, and 5% in the Walloon Region)
if the property is sold to a professional reseller of immovable
property.
•
However, the sale of new buildings and the land they are built
on is subject to VAT (and exempt from registration duties) if
the seller is either a professional reseller (for VAT purposes)
or any other person who opts to subject the sale to VAT. A
building is considered new until 31st December of the second
year following the year of its first occupation. The VAT rate is
21% (but for some cases, a reduced rate of 6% or 12% may
apply). The taxable amount is the purchase price or the normal
market value, whichever is higher. A sale that is subject to VAT
is exempt from the proportional registration duties (of 10% or
12.5%), but it will be registered at a fixed registration duty of
50 EUR.
Î
acquisition of shares in a company holding a
property
•
Acquiring a company’s shares will not give rise to registration
duties or VAT. In principle the seller will not have to pay capital
gains tax. Subject to certain conditions, capital gains on shares
are exempt when derived from the alienation of shares unless
the seller is a large company, in which case the rate will be
0.412%. Under certain circumstances, the tax administration
could consider the sale of shares to constitute an abusive prac-
Investor Guide to Europe 2014
| 13
tice,
in which
case the sale
could be treated as a
sale of the underlying real
estate.
Î
Special tax aspects
•
Real Estate Investment Trusts
(SICAF Immo-
bilière/ VastgoedBEVAK)
that meet all the relevant
conditions are formally subject to the Belgian corporate
income tax regime, but they are taxed only on a limited tax
base not including business profits. The tax base is limited to
abnormal or gratuitous advantages received as well as disal-
lowed expenses. The withholding tax on dividends distributed
by a Belgian REIT is 25%, which can be reduced to 15% if 80%
of the held real estate consists of qualifying residential real es-
tate. Dividends received from a Belgian REIT will never qualify
for the participation exemption regime and are, consequently,
added to the taxable base of the receiving company.
•
According to Belgian thin capitalization rules, interest pay-
ments on loans will not be tax deductible to the extent that
they exceed a debt/equity ratio of 5:1, and the recipient of the
interests is either a company of the same group or a company
that is either not subject to income tax or in the hands of
which the interest received benefits from a tax regime that is
substantially more beneficial than the one applicable in Bel-
gium. Interest costs will also not be tax deductible if they are
not at arm’s length.
•
The notional interest deduction is a Belgian tax incentive that
grants taxpayers a deduction of a fictitious interest expense
on the corrected net equity of the company. However, Belgian
REITS, as described above, are not eligible for the regime. The
notional interest rate for 2014 is set at 2.742% for large com-
panies and at 3.242% for small and medium-sized enterprises.
The regime offers substantial tax planning opportunities.
