Tax-free Gifts by Belgian Tax Residents before Dutch Civil Law Notary: Act before 15 December 2020

November 23, 2020 | Blog

Trough 14 December 2020, Belgian residents can make use of a Dutch notarized deed of gift to legitimately mitigate Belgian gift taxes

On 1 July 2020 we informed you that the Belgian legislator intended to close down the so-called “kaasroute” (see here). What is meant with the “kaasroute” (literally “the cheese route”) is the opportunity for residents of Belgium to mitigate Belgian gift and inheritance taxes by having a deed of gift passed before a Dutch civil law notary. Pursuant to the Dutch notarized deed of gift, the gifted assets leave the donator’s estate and since it is not required to register the Dutch notarized deed in Belgium, no Belgian gift tax is triggered. Following a waiting period of, currently, three years, the gifted assets fall outside the scope of the donator’s inheritance or legacy. Consequently, they also escape Belgian inheritance tax as they are not fictitiously added back to the donator’s estate for purposes of Belgian inheritance taxes, provided the donator does not pass away within the three-year period following the notarized deed of gift. The latter risk is often covered through a life insurance contract.

As we wrote 1 July 2020, it was unlikely that the draft legislation would be adopted any time soon, duet o the then unstable political climate in Belgium. However, at the end of September, a new Belgian federal coalition government was formed, headed by Mr. Alexander De Croo as Prime Minister. This has helped to re-invigorate the legislative process of the draft bill concerning the closure of the “kaasroute”. It now appears that from 15 December 2020 onwards, it will no longer be feasible to escape Belgian gift taxes by having a deed of gift passed before a Dutch – or any other non-Belgian – civil law notary. From that date onwards, the gift of any movable or immovable assets by a Belgian tax resident through a non-Belgian notarized deed of gift must be registered in Belgium. The registration of such deed in Belgium will inevitably trigger gift taxes in the Region in which the donator is tax resident, i.e., Flanders, Brussels Capital or Wallonia.

This means that, trough 14 December 2020, Belgian residents can still make use of a Dutch notarized deed of gift to legitimately mitigate Belgian gift taxes. AKD’s Dutch civil law notaries are ready to assist our Belgian clients.

For additional information, please contact Werner Heyvaert or Vicky Sheikh.

 

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