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?

• Belgian residents for inheritance tax purposes, which may include the non-residents for income tax purposes living in Belgium under the previous 1983 Belgian expat tax regime
  
• Non-residents with real estate in Belgium

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.

Het bericht Expats, wills under foreign law and Belgian inheritance tax verscheen eerst op FB-tax.

For the TSA, securities accounts are accounts to which financial instruments (of whatever kind) may be credited or debited, regardless of whether the securities account is held in undivided ownership or in split ownership (bare ownership / usufruct). The latter is considered to be a matter for the parties.

With regard to Belgian residents, the TSA applies to their worldwide securities accounts (of whatever kind). Residents include natural persons, legal entities with a separate legal personality taxable in corporate income tax (companies), not-profit generating legal entities with a separate legal personality taxable in legal entities income tax (such as vzw – asbl – VoG, foundations, …) and natural persons or legal entities (taxable in legal entities income tax) that are founders of legal structures for the cayman tax.

With regard to non-resident natural persons, companies or legal entities taxable in non-resident income tax, the TSA applies to the following securities accounts: 

• Belgian securities accounts, i.e., securities accounts held by a Belgian intermediary

• Securities accounts of a Belgian establishment of a non-resident, regardless of where the intermediary is situated

The taxable financial instruments include the cash on the securities account. The taxable base is the average value of the taxable financial instruments during the reference period. The tax must be paid if the average value exceeds 1 million EUR (the threshold).

The annual reference period is the period from 1 October to 30 September. Since the TSA entered into force in 2021, the first reference period started on 26 February 2021. Within the reference period, the reference times to calculate the average value are 31 December, 31 March, 30 June and 30 September.

The tariff of the TSA is 0,15 per cent, although a correction mechanism applies to avoid that due to the payment of the TSA the taxable base would decrease below the threshold.

When a securities account is opened or closed during the reference period, the reference times at which the account existed are taken into account for the calculation of the TSA.

The closing includes the situation where the holder becomes a resident of a state with which Belgium has concluded a double taxation treaty and whereby that treaty has the effect that the power to tax the assets in the securities account accrues to the other state. Is also targeted the situation where the securities account no longer forms part of the business assets of a Belgian establishment of a non-resident, if the result is that Belgium would no longer be competent to tax the assets on the securities account. A ‘closing’ also takes place if the account no longer meets the definition of a securities account.

Anti-abuse rules are put in place to avoid merely artificial arrangements to avoid the TSA.

It must be noted that the law implementing the TSA also installed a general anti-abuse rule for the other miscellaneous taxes than the TSA, comparable to the general anti-abuse rule in income tax.

The tax must be withheld by the Belgian intermediaries. In such circumstances the resident or non-resident holder of the securities account does not have to fulfill any other formalities. Foreign intermediaries may appoint a Belgian representative. In other circumstances the above-mentioned residents and non-resident holders of a securities account have a duty to declare in their annual tax declaration.

Het bericht Annual tax on securities accounts entered into force (‘TSA’) verscheen eerst op FB-tax.

Information about the ultimate owner must be evidenced in the UBO register
Recently, the mandatory information about the UBO must also be substantiated. This is done by means of documents showing that the data are adequate, accurate and up-to-date. Before, it was not mandatory to evidence the data in the application. Entities with registered UBO’s before 11 October 2020 have until 31 August 2021 to upload the documentary evidence in the UBO register (the date of 30 April 2021 was extended). Newly registered entities since 11 October 2020 will immediately follow the new rules.

The news section of the federal tax administration says (translation by the author):

“These documents may be, depending on the specific case and determined by the registering entity, a copy of the share register, the articles of association of the company,  (international) non-profit association, trust or similar legal arrangement, a shareholders’ agreement, notarial deed or any other document (legalized if necessary). Those documents must allow to demonstrate that the information provided in relation to a beneficial owner is adequate, accurate and up-to-date. These documents are only accessible to the competent authorities. Subjected entities or members of the general public do not have access to this. ”

For the record: the “subjected entities” are persons who are required to identify their clients under anti-money laundering legislation (such as lawyers, financial institutions and civil-law notaries).

Important to know

Although certain supporting documents may already be accessible via the Annexes to the Belgian Official Gazette or are already known to the administration in some other way, you must nevertheless upload them in the UBO register. Another new feature is that the history of the recorded data can be consulted. This is especially important in estate planning. Finally, there is the existing obligation to register any change within 30 days and to update your data annually.

Of course we can assist you with this.

Computer says “no”: the mandatory registration of trusts, fiduciary managers and legal arrangements in the companies register

You need an enterprise number for registration in the UBO register. Trusts, fiduciary entities and other similar legal arrangements are therefore obliged from now on to register in advance with the companies register, the Crossroads Bank for Enterprises.

Note that any internet user can do searches in the companies register without identification. This can be a concern for entities whose name is also a family name. This differs from a consultation of the UBO register: unlike for companies, persons who wish to consult the details of a trust or legal arrangement in the UBO register must demonstrate a ‘legitimate interest’ (as is also the case for (international) non-profit associations or foundations).

Het bericht August 31, 2021: deadline for mandatory documentary evidence to UBO register verscheen eerst op FB-tax.