Expats often opt for a will under foreign law, the law of their country. This is understandable since they are in tune with this foreign law for obvious reasons.

There are, however, important points for attention from the point of view of inheritance tax. Inheritance tax is a mere national matter. In Belgium alone, 3 inheritance tax regimes exist (the Brussels Capital Region, the Flemish Region, and the Walloon Region). There are no double taxation treaties in this area (see below for unilateral tax relief rules).

A first issue that may arise is an erroneous understanding of the foreign will by the Belgian tax administrations. This may result in an unexpectedly heavy tax bill.

An example to illustrate: a friend appointed as executor of a will may be considered as a legatee by the tax administration. This may result in a tax assessment at 55% (other persons) instead of 27% (partner, direct line) in the Flemish Region, or 80% instead of 30% (Brussels Capital Region, Walloon Region).

Another example: from the point of view of protecting the spouse or legal partner, it may be beneficial to appoint the spouse as sole heir, however from a Belgian inheritance tax perspective this may turn out to be very expensive, up to 27% or 30% inheritance tax, except for the family home which is tax exempt. For expats living in Belgium, it is not so relevant that the inheritance tax regime of the jurisdiction of the will would be more beneficial to such arrangements or provides in an exemption (see below).

A second issue may be uncertainty regarding the devolution: who inherits what? If such occurs, there is rule allowing the tax administration to apply the highest inheritance tax.

It is therefore advisable for expats to have their will, and notably their foreign will, audited to anticipate these situations and to minimize the risk of an unexpectedly high tax bill as much as possible.

What expats may be impacted?

The basic rules are as follows: inheritance tax is levied on the worldwide inheritance of the deceased resident. Transfer tax is levied on the Belgian real estate of the deceased non-resident. The tax residence of the heirs is not relevant.

Does the above mean that as an expat, my heirs may need to file an inheritance tax declaration in Belgium?

Yes, if you live in Belgium or if, as a non-resident, you have real estate in Belgium.

What are the deadlines to file an inheritance tax declaration?

The term is 4 months from the day of passing. The term is however 5 months if the passing took place in the EEA and 6 months if the person passed outside the EEA.[1]

What about Belgian and foreign inheritance tax on the same assets?

Most inheritance tax regimes (including Belgium) provide for a taxation of the worldwide inheritance of a deceased resident. In countries were assets in that country of a non-resident are also taxed, such rules may result in a double taxation of those assets: in the country of the tax residency and in the country where the assets are localized.

Unlike income tax, there are no double taxation treaties dealing with this matter in inheritance tax. Belgium provides for a unilateral tax relief rule: the foreign inheritance tax levied on foreign assets is deductible from the Belgian inheritance tax on these assets. The unilateral relief applies only to the inheritance of deceased residents. There is no Belgian relief on foreign tax levied on Belgian assets from an inheritance of a non-resident.

If the taxpayer (i.e., the heir or legatee of a deceased Belgian resident) can provide evidence of the payment of the foreign inheritance tax, the tax may be deducted from the Belgian inheritance tax on the foreign assets. Otherwise, a refund can be requested. This rule applies since a 2021 judgment of the Constitutional Court on both movable and immovable assets (‘real estate’).

FB-tax can assist you in auditing your will or in fulfilling your tax obligations.

[1] The EEA (European Economic Area) consists of the EU member states and Iceland, Liechtenstein and Norway.