Legal news
Tax free gifts in Belgium
Gift tax
In principle, all gifts must be made before a notary. The notary is obliged to submit the deed to the registration office. Once the deed has been registered, the registry office will submit it to the tax administration, which will then charge gift tax.
Over the years, the practice has developed of making hand-to-hand gifts or gifts by way of a bank transfer without the intervention of a notary. This practice is generally tolerated by the courts and the tax administration.
As these gifts can be made without a notarial deed, they are not subject to registration), it is possible to make a gift of movable property (cash, art works, jewellery, gold bars, …) without paying gift tax.
Inheritance tax
The disadvantage of these gifts is that inheritance tax will be payable on the gift if the donor dies within three years of making the gift. This is what we call the ‘suspect’ period, during which the donor must not die.
It is in the donee’s interest to monitor the donor’s health. If it appears likely that the donor will die during the suspect period, e.g. as a result of illness, the donee can register the gift on her own initiative at a rate of 3% or 7% (3.3% or 5.5% in the Walloon Region). She will then effectively avoid having to pay the inheritance tax ; the inheritance tax rates can be ten times higher.
The risk that the donor dies before the end of the suspect period can also be covered by an insurance policy, but it is important that the beneficiary takes out this policy on the life of the donor. If it is the donor who takes out the policy for the benefit of the beneficiary, the money the insurance company will pay out will be assimilated to a bequest and inheritance tax will be due.
With the suspect period, it is essential to establish when the hand to hand gift or the indirect gift by bank transfer was made. In the past, this was often done before a notary in the Netherlands or in Switzerland, free of gift tax.However, since 2020 a foreign notarial gift deed no longer has any authentic value in Belgium. Donors may still opt to make a gift in the Netherlands, e.g. to save on notary’s fees, but the deed will then have to be registered in Belgium to give a valid proof of the date of the gift.
Suspect period extended to five years
The Flemish Region has just announced its intention to extend the suspect period to five years for gifts made as of 1 January 2025 in order to encourage the registration of gifts of movable property.
Wallonia has already done so for gifts made from 2022.
In Brussels, the suspect period remains three years ... for the time being.