New tax rules in Wallonia in 2018

On 13 December 2017, the Walloon Parliament has modified certain tax rules regarding inheritances and donations as well as the purchase of a building.

In respect of inheritance tax, the surviving spouse or civil partner will be entitled to total exemption for the family home.  Until 2017, this exemption was limited to € 160,000.  Wallonia is thus on the same footing as Brussels and Flanders.

The top rate for donations of movable property, which was 7.7%, has been abolished. The rates are as follows:

  • 3.3% for donations between spouses and civil partners and in a direct line (between parents and children);
  • 5.5% for donations between all other persons.

As regards the registration tax for the purchase of a building, Wallonia has introduced an allowance of €20,000 on the purchase of a first home that will serve as the principal residence of the purchaser (under certain conditions). This means that the purchaser does not pay registration tax on the first €20,000, which makes a tax saving of 12.5% of €20,000, or €2,500.  It is to be noted that the purchaser is also entitled to this allowance if he buys a “modest” dwelling on which he pays the lower registration tax (6% or 5% if the cadastral revenue does not exceed €745).

Wallonia wants to encourage life annuity sales. When the vendor sells his principal residence for a annuity that he will receive for the rest of his life, the purchaser normally pays 12.5% of the total price, even if the vendor reserves the usufruct (or life interest). If the vendor has had his principal residence there for at least five years, the rate is reduced to 6%. Moreover, if the vendor sells the bare ownership, the registration tax is calculated on 50% of the normal market value, or even 40% if the annuity is agreed for more than twenty years.

This measure should encourage life annuity sales: the purchaser pays only one quarter of the registration tax and the vendor can sell his house more easily against a life annuity and continue to live there.

Author: Marc Quaghebeur

Marc Quaghebeur is a Belgian tax lawyer with Cabinet DAVID specialising in international tax issues and cross border estate planning. He is a member of the Brussels Bar and the Society of Trust and Estate Practitioners. He

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