We recently announced that as from income year 2021 (tax year 2022) onwards, new rules apply to Belgian tax residents owning foreign real estate. Resident taxpayers need to report their worldwide earnings in the annual Belgian tax return, including their foreign properties (irrespective whether they are rented out or not).
The reporting obligation even extends to foreign trusts owning real estate abroad of which the founder is a Belgian tax resident.
Since Belgian properties are in general taxed based on their ‘cadastral’ value, the Belgian authorities will now determine a (fictitious) cadastral income (CI) for each foreign property on the same basis as for a property located in Belgium.
To allow the authorities to make this calculation, foreign homeowners need to submit certain information about their real estate. This must be done through a specific reporting, whereby the taxpayer needs to provide: (i) a brief description of the property; (ii) address where it is located; (iii) surface area (for unbuilt land); and (iv) the current market value (demonstrated by an expert valuation) or the initial purchase price and date, including any renovation works done afterwards.
The tax authorities may request additional information if what has been provided is considered to be incomplete or contradictory. The taxpayer also has the obligation to update the authorities afterwards if substantial changes are made to the foreign property or in case it would be sold.
The tax authorities have published some further guidelines on this new reporting requirement. It is only relevant as from income year 2021, so it does not impact your tax filing requirement for income year 2020 (tax year 2021) for which the filing is due coming June.
- If you are the owner of a foreign property acquired before 1 January 2021
You will be able to submit the special declaration as from June onwards. Until then, no further action is required. Furthermore, if you have declared foreign real estate in your previous year’s tax filing, the tax authorities will contact you automatically with a request to submit the information needed to calculate the CI.
In June, you will be able to submit your declaration via MyMinfin or via a form available on the website of the Belgian tax authorities. You can also request the form via foreigncad@minfin.fed.be or by letter to the following department «Administration Mesures et Evaluations – Cellule RC étranger – Boulevard du roi Albert II 33, bte 459 – 1030 Bruxelles».
- If you acquired your foreign property only after 1 January 2021
You are required to spontaneously report the foreign property within 4 months as from the date of purchase by sending either:
- a letter to the following department «Administration Mesures et Evaluations – Cellule RC étranger – Boulevard du roi Albert II 33, bte 459 – 1030 Bruxelles»;
- an email to foreigncad@minfin.fed.be;
- a declaration online via MyMinfin (available as from June 2021, so not applicable for any purchases made early 2021).
If the subject of your e-mail refers to the declaration of the newly acquired property, the tax authorities will consider the date of your e-mail as the date of declaration to determine whether the 4-month deadline has been complied with. The actual reporting can then be done from June 2021 onwards, as soon as the form is available.
- If you become a Belgian tax resident during the calendar year
Foreigners that move to Belgium during the year and are deemed resident taxpayers should take the initiative to spontaneously declare the market value of their foreign property. The same applies to non-resident (expat) taxpayers who become tax resident in Belgium due to a change in their status during the year (e.g. losing your expat status).
Taxpayers will not receive an invitation for this from the Belgian authorities and only have 30 days (!) to comply.
Those who fail to properly report and request a valuation of their foreign real estate, risk being fined, with penalties as high as €3,000. It seems unreasonable that non-compliance triggers such high fines, especially considering that in most cases (based on the double tax treaty in place) the foreign property is only taxable where it is located and remains tax exempt in Belgium.