Belgian owners of second homes abroad to be taxed more

After the Belgian state was condemned by the European Court of Justice for its taxation policy on the second homes of Belgians abroad in November, the 150,000 Belgians who have a house or apartment in another country could soon face an increased tax bill.

In Belgium, real estate is taxed on the basis of land tax. But abroad, real estate is rent-based or based on rental value, depending on whether the property is rented or not. This difference in treatment is contrary to the free movement of capital, says the European Court of Justice. The residence on Belgian soil has a tax advantage.

The federal government passed a draft bill on Friday to put all second homes on an equal footing; those located in Belgium as well as those located abroad. The draft bill is currently in the hands of the Council of State. It will then have to be passed by the house before becoming law.

“It is very important that our taxation is clear, straight and fair,” said finance minister Vincent Van Peteghem. “This solution ensures not only that our country respects its international obligations and avoids heavy fines, but also, after many years, owners of foreign real estate can understand the rules clearly.”

In order to maintain equal treatment between second homes in Belgium and those held abroad, the tax authorities will themselves determine a land income for the properties. Anyone who owns a property abroad will have to make an unsolicited declaration to the tax authorities. This spontaneous declaration will be mandatory before 31 December 2021.

For those who have already declared property abroad on their tax return, the tax authorities will contact them automatically.

Based on the information provided by the owner, the Belgian tax authorities will set a land tax income. The latter will serve as the basis for taxation, starting in 2021.