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Archive of Private Client news from 2019 to 2022
With a tax landscape in constant evolution and tax reforms around the corner, this Newsflash provides an overview and comparison of envisaged tax measures in Belgium and the Netherlands that may impact high net worth individuals.
On 9 December 2022, the Belgian government came into an agreement to introduce an airline tax on private jets. Mobility Minister, Georges Gilkinet, announced a proposal to tax private jets and short-haul flights and introduce environmental criteria for levying airline taxes. The new airline taxes system would apply as of 1 April 2023.
The taxation of Dutch supplementary pensions payments has been subject to much debate in recent years. With the law of 21 January 2022, Belgium hopes to shift the taxation entirely to Belgium and subject these pension benefits to progressive income tax rates. The law applies to distributions made after 1 January 2021. The Dutch-Belgian Center has taken the initiative to launch an annulment appeal before the Constitutional Court and calls on stakeholders to join the action.
The highest court in the Netherlands, the Supreme Court, ruled at the end of last year that Dutch wealth taxation (box 3) is in violation of the European Convention on Human Rights since 2017. According to the Supreme Court, box 3 income should be determined based on the actual return instead of a fictitious return. The Dutch State Secretary of Finance will issue a clarification regarding a possible taxpayer compensation before 1 May 2022 at the latest.
Further to the Belgian notification of 2019, the Netherlands deposited with the OECD, on 25 November 2021, a notification extending its list of tax treaties to be treated as “covered agreements” under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) to include the 2001 Belgium-Netherlands treaty. This results in a number of substantive amendments applicable as from 1 January 2022. However, negotiations on a completely new tax treaty between Belgium and the Netherlands are still ongoing.
On 22 December 2021, the European Commission released the draft for a new Directive targeting the misuse of EU shell entities for tax purposes.
“Shell entities” are undertakings that are presumably engaged with an economic activity but, in reality, do not perform any.
The draft Directive includes a substance test, specific tax consequences, sanctions and an exchange of information process.
At the time of publication of our previous COVID-19 related newsflash, the vaccination campaign was still in its infancy. At the end of December 2021, Flanders – as a precursor to Brussels and Wallonia – started the campaign to vaccinate 5- to 11-year-olds, after children between 12 and 17 had already received an invitation. Vaccinating minors raises new (legal) questions. Does the minor need the consent of his parent(s)? What if one or both parents refuse this consent? What if the minor himself refuses to consent?
A few appeals before the Constitutional Court were submitted against the annual tax on securities accounts (Law of 17 February 2021). In order to safeguard your rights in light of a possible (albeit partial) annulment by the Constitutional Court, it may be useful to submit a reasoned request for restitution. The deadline to submit this request is 30 December 2022, but the request should preferably be submitted before the Constitutional Court’s final decision (probably fall of 2022).
In a circular letter dated 8 June 2021, the National Bank of Belgium (hereinafter "NBB") clarified the vigilance obligation for financial institutions with respect to client funds that they hold in connection with repatriations from outside of Belgium. The NBB is pursuing a consistent approach in this regard.
A new decree containing various technical amendments to the Flemish Tax Code was approved by the Flemish Parliament on 31 March 2021. Among other things, this decree clarifies the tax treatment of legally granted successive usufruct renunciation. From now on, renunciation of this usufruct by the surviving spouse will only be free of inheritance tax if renunciation takes place before the passing of the first spouse.
With care home residents and the 65-plus age group high on the agenda for the COVID-19 vaccination, attention is drawn to those individuals who lack the relevant mental capacity to provide consent for themselves. Who is qualified to act on behalf of those individuals? What are the advantages of a health and welfare lasting power of attorney? This article answers these questions and more.
For a significant period of time, there have been contrasting opinions in legal doctrine regarding the restitution or reduction of a community property gift. With the judgment of 7 December 2020, the Court of Cassation took a stand. According to the Court, there is only a restitution in the estate of the first deceased spouse/donor to the extent that the donated goods, had they not been donated, would fall into his/her estate.
Developing a sustainable legal tax plan, requires commitment from all family members. To achieve this, it is important to know what family members consider important and why. Only then can they fulfill a role within the family, business and/or investment wealth with full enthusiasm and passion. Working on a family compass (charter) can be an important and even necessary step in this process.
Previous CJEU judgments have found that Belgian provisions for rental income digress from EU law. Rental income generated by foreign immovable property owned by individual taxpayers in Belgium is calculated based on the actual rental value. On the other hand, for property located in Belgium, the calculation is based on cadastral income, which refers to estimated rental income. In general, cadastral income is significantly lower than actual rental income. A new law provides that Belgian taxpayers’ foreign real estate will be assigned cadastral income.
The Hague Convention on the International Protection of Adults entered into force in Belgium from 1 January 2021. From now on, Belgium allows a choice of law in or regarding power of attorney that is exercised as a protection measure. This Newsflash provides a quick practical overview.
The draft bill introducing the new (bis-version of the previous) tax on securities accounts has now been submitted to the Belgian Parliament on 5 January 2021, after adjustments resulting from the Council of State's comments. With this, the new tax on securities accounts (TOSAbis) has entered its final phase; a good moment to go through the general principles of this TOSAbis.
Conflicts are inherent in our daily lives. Especially when people are very connected, as is the case in families, where they are simply inevitable. Conflicts are often perceived as something "negative", but they do not necessarily have to be. If a conflict is dealt with constructively, it can be a breeding ground for family growth and progress. This however is not easy. In conflict, it is difficult to place oneself in someone else’s shoes and listen sincerely. Often, conflicting parties think it is preferable to wait and see, and not talk. A mediator can help make a conflict discussable and manageable.
On 2 November 2020, the Council of Ministers approved a draft law introducing a new annual tax on securities accounts. This draft law is subject to review by the Council of State, but the Government intends to submit the draft law to Parliament as soon as possible. Following a notice published in the Belgian Official Journal on 4 November 2020, the draft law includes a general anti-abuse provision that would apply retroactively as from 30 October 2020.
For every entrepreneur, the company occupies a very important place in their life. This is certainly no different for a family business. What is different however, is that the ins and outs of the business are often influenced by family issues, family values or norms, and the way in which family members interact and communicate with each other. This creates a certain complexity, of which the family is not always fully aware. Here you can read more about how to hit the road to greater transparency and growth for your family business.
Following the 12 June 2018 judgment of the Council of State on split sale, reactions from the various regions were inevitable. After the federal government, the Flemish tax authorities have also been vocal. These reactions, which are largely similar and comply with the Council of State judgment, are in any case conducive to legal certainty.
On 18 September 2020, the Flemish Government approved a preliminary decree covering inheritance and gift tax matters. This preliminary decree contains several amendments to the Flemish Tax Code, regarding the extension of the ‘suspicious period’, an exemption for gifts and bequests to charities, the reform of the duo-bequest and the introduction of the friend-inheritance.
The Greenille Private Client Team recently obtained a favourable decision from the Flemish Tax Authority, ruling that the modification of a marriage contract followed by an aleatory contract between spouses does not constitute fiscal abuse.
Unprecedented times often give rise to questions: How can I deal with these new circumstances? Do I feel happy? What do I really want, or expect? Relying on a coach can help you find answers. The experienced coaches of our Family & Business Dynamics Team offer professional guidance. Stimulating critical reflection, they empower you to find balance, react in resilient ways and move forward.
The Ghent court of first instance ruled on children’s rights to bank accounts and securities portfolios in a situation where these were not liquidated and allocated after the death of a spouse. At the time of the first spouse’s death, the children had already paid inheritance tax on half of the assets, but the Flemish tax authorities did not want to take this into account when calculating the inheritance tax in the second spouse’s succession. We share some advice in preventing misunderstandings with the Flemish tax authorities.
Since the new Code of Economic Law, Belgian civil law partnerships qualifiy as 'enterprises'. Consequently, civil law partnerships are obliged to keep accounts. If the return of the last financial year is below EUR 500,000 (excl. VAT), single-entry bookkeeping will suffice. If the return meets the EUR 500,000 threshold, double-entry bookkeeping is mandatory. The CBN/CNC recently published a draft advice with more details on the single-entry and double-entry bookkeeping rules for civil law partnerships, also broadening the scope, including some portfolios held in undivided property by a family.
Wealthy families are complex systems that may give rise to conflicts. Based on conflict literature and our ‘three gear model’, we identify no less than 28 potential sources of conflict given the interaction between private life, business as well as investment wealth. We propose that families develop a ‘conflict embracing’ mindset in which conflict is seen as an energy source that can be used for growth. In addition, many families would benefit from learning how to deal with conflicts in a constructive way in order to avoid conflict escalation. This is on ongoing process in which people should be involved as early as possible by developing their communication skills.
Both the Flemish Tax Authority and Flemish Legislator have taken measures to ensure tax payers are provided with the necessary flexibility regarding the completion of formalities and payment of inheritance tax in times of COVID-19. On 21 April 2020, a decree entered into force allowing heirs to make an additional choice for the valuation of publicly listed companies' shares that they inherit during the pandemic.
During these uncertain and unprecedented times it is worth reflecting, both personally and professionally, on the crisis resistance of your business and personal asset management.
Peace of mind is brought by arrangements and constructions that guarantee continuity in the midst of calamity. This peace of mind is crucial, as many other decisions have to be taken to manage the COVID 19-challenges.
Due to the COVID-19 outbreak, the Flemish tax authority announced that they will be flexible in granting filing deadline extensions for inheritance tax (upon request). If a tax filing extension request is filed in a timely manner, there will be no penalties for late filing.
In its decision of 14 November 2019, the Belgian Court of Cassation ruled on the interpretation of a day-to-day settlement clause in a marriage contract of separation of property.
To obtain maximum protection and comfort for the surviving spouse, with acceptable tax consequences, several techniques are available. Between spouses married under a ‘separation of property regime’, an attribution clause regarding undivided property is a useful alternative to an attribution clause in a community property regime, or to the final participation clause or accrual clause for spouses married with a contract of property separation.
Under the new Belgian inheritance law, the surviving spouse inherits a right of usufruct on property donated by the deceased, with reservation of usufruct during marriage, provided that this usufruct was maintained by the latter until death. The unilateral deprivation thereof is only possible in a last will. Eliminating this legally granted usufruct in the initial donation (or any other contract) always requires the surviving spouse’s consent.
In its judgment of 17 October 2019, the Constitutional Court cancels the tax on securities accounts.
However, in order to take into account the budgetary and administrative consequences, as well as the litigation that could arise from this cancellation judgment, the Constitutional Court decided to maintain the effects of the tax for this year (i.e. annulment without retroactive effect).
When it comes to wealthy families, emphasis is often placed on the family business as a vehicle for growth, succession and prosperity. In this article, we propose that the family business can be an overly narrow interpretation of family wealth. In that sense, family members may only see a few pathways for how they can contribute to sustainable shareholdership. We extrapolate the meaning of “wealth”, and offer a broader scope for families so they can seize the opportunity for an inclusive, sustainable vision on shareholdership.
Although several arguments exist to counter the qualification of a Dutch foundation administration office (StAK) as a legal arrangement, certificate holders should consider to report the StAK as a legal arrangement in their personal income tax return.
The deadline for completing the UBO register (30 September 2019) is in sight. On 23 September 2019 the Treasury announced that there will be no additional postponement, but that it will carry out a tolerance policy until 31 December 2019 and will not impose sanctions during that period.
A different approach on family values can unlock insights for families to successfully navigate their private, business and investment spheres. In this article, Greenille by Deloitte Legal – Lawyers’s Family Dynamics experts outline common pitfalls, and describe concrete solutions to harness family values as a sustainable competitive advantage.
The deadline for the first submission to the UBO-register is fast approaching (30 September 2019). In an addendum of 26 August 2019 to the UBO FAQ of 22 July 2019, the Treasury clarifies the interpretation of the UBO-registration exemption for listed companies (Dutch | French; under 2.1.4).
In the Flanders Region, a participation clause (in a marital contract of assets separation) has been subject to inheritance since 24 December 2017. In its decision of 10 July 2019, the Constitutional Court upholds the constitutional validity of the inheritance tax consequences of a final participation clause in the Flemish Region.
The treasury recently published a brand new FAQ (NL – FR) regarding UBO register procedures when a Foundation administration office (‘Stichting Administratiekantoor’ | ‘Fondation bureau d'administration’) is involved. The FAQ offers answers to practical questions, details how to determine the ultimate beneficiary owners (UBOs), and addresses privacy concerns. With this FAQ, the treasury finds a balance between the international call for transparency on the one hand and the requests from families to respect certain private aspects of their planning on the other hand. At the same time, the Treasury applies the current Anti Money Laundering Directive, its Belgian legal implementation and respects the (sometimes difficult) differences in the application of these rules to companies, other entities, and companies held through other entities.
Enterprising families struggle to keep every member aligned regarding day-to-day affairs, as well as major strategic decisions concerning the private, business and wealth spheres. A family council could be the platform to keep everyone on the same page. However, how do you design, implement and maintain a family council that meets the specific needs of every family member? In this article, Greenille by Deloitte Legal – Lawyers provides a blueprint for enterprising families and their advisors to make the family council work for them.
The Regulation employs the notion of “habitual residence” of the deceased at time of death as a general connecting factor to determine both jurisdiction and applicable law. On 29 May 2019, the French “Cour de Cassation” ruled on the notion of “habitual residence” in a succession with cross-border implications.
Enterprising families too often end up conflicted in times of succession. This can often be explained by the fact that succession is defined too narrowly, focusing solely on ‘who gets to be the new CEO of the family business’. In order to deal with succession in a smooth way, Greenille by Deloitte Legal – Lawyers offers enterprising families a unique matrix to plot family roles to open up the scope of succession and embrace diversity in talent and ambition.
‘Jiro Dreams of Sushi’—a documentary that aired in 2011—portrays the life of the 85-year old sushi master Jiro Ono and his two sons.
Below the surface of the only sushi restaurant in the world awarded with three Michelin stars, one finds more universal challenges that every family business faces.
In this article we use valuable insights from ‘Jiro Dreams of Sushi’ to formulate questions for family business owners and advisors towards a more unified perspective on ‘sustainable shareholdership’
The long awaited update to the UBO FAQ is available on the Treasury’s website since 2 April 2019 (Dutch | French). In addition to the FAQ, the user manual for legal representatives of non-profit associations and foundations has also been updated.
This update also provides some details on more complex issues, which remained unaddressed in earlier versions of the FAQ. What follows is a selection of the most important clarifications from a private client’s perspective.
A decree of 21 December 2018 provides that the Flemish Tax Authority will be obliged to give notice within two years after expiration of the delay to file an inheritance tax declaration if it challenges the value of the declared assets. A similar rule was introduced for gifts, or transfers of real estate. The new rule should contribute to more legal certainty.
It has been confirmed that the deadline for the registration of UBOs in the Registry has been postponed again, this time until 30 September 2019. The UBO-registration was initially foreseen for 30 November 2018 but was immediately postponed until 30 March 2019.
On 29 January 2019, the European Regulations on Matrimonial Property Regimes and the Property consequences of Registered Partnerships became applicable. The Regulations harmonise in the area of jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regime and in matters of the property consequences of registered partnerships.
On 31 January 2019, the Belgian federal parliament approved a law on fiscal, anti-fraud, financial and miscellaneous provisions (“the Law”).
The Law extends the tax audit period for income tax fraud (illegal tax evasion) from 7 years to 10 years, provided such fraud involved the use of a legal arrangement (as defined under the Cayman Tax Legislation).
Real subrogation has both civil and tax relevance, but one has to document everything properly when replacing one good with another. With this article, Greenille by Deloitte Legal – Lawyers aims to underline the importance of providing proper documentation when claiming real subrogation, because the tax authorities do pay close attention to this.
Unfortunately, divorce cases easily end up in long-winded proceedings. Not only should child arrangements be made, but also property arrangements. The preparation of the latter, i.e. division of matrimonial property and assets, involves a lot of paperwork. With this article, Greenille by Deloitte Legal – Lawyers aims to underline and clarify the importance of good administration and more specifically what impact this can have in terms of occupation rent.