Taxable persons

Heirs, resident as well as non-resident, are taxable persons for the purposes of inheritance tax. The liability is incurred at the time of death of the deceased (Article 1 of the Belgian Inheritance Tax Code - BITC).

Taxable base

If the deceased was a Belgian resident at the time of his/her death, the inheritance tax is levied on his/her worldwide net property, i.e. the value of all movable and immovable property situated in Belgium and abroad less the amount of debt on this property.

If the deceased was a resident abroad at the time of his/her death, inheritance tax was originally levied on the value of the immovable property situated in Belgium, without deduction of any debt, even if related to the immovable property. This restriction was abolished late 2008 (for the Flemish region) and early 2009 (for the Walloon region) (see below).

The tax is, in principle, computed on the fair market value of the property each beneficiary is entitled to receive from the estate (Article 19 BITC). Special valuation rules apply to certain types of property (e.g. quoted shares)(Article 21 to 26 BITC).

Rates and personal allowances

Inheritance tax is levied at progressive rates and varies according to the degree of kinship, the region where the inheritance is opened and to the share inherited by each of the heirs. The inheritance tax rates are thus determined on the basis of the proximity of relationship between the deceased and the beneficiary and on the basis of the beneficiary’s share in the estate. Different inheritance tax rates apply depending on whether the deceased was a resident of the Brussels, Flemish or Walloon region.

*  Brussels region

If the deceased was resident in the Brussels region, the spouse, direct descendants and direct ascendants are entitled to a tax-free allowance of EUR 15,000 each. For children below 21 years of age, the allowance is increased by EUR 2,500 for each year below the age of 21. For other beneficiaries, inheritances not exceeding EUR 1,250 are not taxable and thus fully exempt.

For the closest relatives, the Brussels inheritance tax rates are as follows (Article 48 of the Brussels-Capital Inheritance Tax Code - BCITC):

BRUSSELS REGIONAL TAX RATES
Taxable amount	Tax rate
up to EUR 50,000	3 pct.
EUR 50,000 - EUR 100,000	8 pct.
EUR 100,000 - EUR 175,000	9 pct.
EUR 175,000 - EUR 250,000	18 pct.
EUR 250,000 - EUR 500,000	24 pct.
EUR 500,000 and more	30 pct.

The rates for brothers and sisters vary between 20 per cent and 65 per cent, where the minimum rate applies to inheritances up to EUR 12,500 and the maximum rate applies to inheritances exceeding EUR 250,000. The inheritance rates vary between 25 per cent and 70 per cent for uncles, aunts, cousins, nieces and nephews.

For all other individuals, the tax is levied between 40 per cent and 80 per cent. The minimum rate applies to inheritances up to EUR 50,000 and the maximum rate applies to inheritances exceeding EUR 175,000.

*  Walloon region

If the deceased was resident in the Walloon region, the spouse and relatives in the direct line of ascent or descent of the deceased, are entitled to a tax-free allowance of EUR 12,500 each. The allowance is increased to EUR 25,000 if the inheritance does not exceed EUR 125,000. For children below the age of 21 years, this allowance is increased by EUR 2,500 for each year below the age of 21. For other beneficiaries, inheritances not exceeding EUR 620 are fully exempt.

For the closest relatives, the Walloon inheritance tax rates are as follows (Article 48 of the Walloon Inheritance Tax Code):

WALLOON REGIONAL TAX RATES
Taxable amount	Tax rate
up to EUR 12,500	3 pct.
EUR 12,500 - EUR 25,000	4 pct.
EUR 25,000 - EUR 50,000	5 pct.
EUR 50,000 - EUR 100,000	7 pct.
EUR 100,000 - EUR 150,000	10 pct.
EUR 150,000 - EUR 200,000	14 pct.
EUR 200,000 - EUR 250,000	18 pct.
EUR 250,000 - EUR 500,000	24 pct.
EUR 500,000 and more	30 pct.

The rates for brothers and sisters vary between 20 per cent and 65 per cent. The inheritance rates vary between 25 per cent and 70 per cent for uncles, aunts, cousins, nieces and nephews. For all other individuals, the tax is levied between 30 per cent and 80 per cent.

The minimum rates for all these groups apply to inheritances up to EUR 12,500 and the maximum rates to inheritances exceeding EUR 175,000.

*  Flemish region

If the deceased was resident in the Flemish region, the inheritance is split into an immovable and a movable part, which are taxed separately according to the following progressive tax rates (Article 48 of the Flemish Inheritance Tax Code - FITC):

FLEMISH REGIONAL TAX RATES
Taxable amount	Tax rate
up to EUR 50,000	3 pct.
EUR 50,000 - EUR 250,000	9 pct.
EUR 250,000 and more	27 pct.

A reduction is granted to the extent that the taxable share does not exceed EUR 50,000. The maximum reduction is EUR 500. If certain conditions are met, an exemption of inheritance tax applies to the net value of assets invested in family-owned businesses and to the net value of shares in a family-owned company (Article 60bis FITC).

The rates vary between 30 per cent to 65 per cent for brothers and sisters and between 45 per cent and 65 per cent in all other cases. The minimum rates apply to inheritances up to EUR 75,000; the maximum rates apply to inheritances exceeding EUR 125,000.

Double taxation relief

Any foreign inheritance tax levied on foreign immovable property may be deducted from Belgian inheritance tax due on the same property (avoidance of double taxation under domestic law)(Article 17 BITC).

To avoid double taxation of inheritances, Belgium has concluded treaties with France and Sweden (avoidance of double taxation under treaty law).  However, the inheritance tax in Sweden was abolished in 2005 so the practical effect of such treaty is relatively small. Some treaties were negotiated but remain unratified (e.g. US-Belgian treaty). And some existing treaties are not recognized by the OECD (e.g. French-Belgian treaty).

Special expat tax status

Inheritance of foreigners temporarily employed in Belgium, who are treated as non-residents (for example under the special expatriate tax regime), are generally subject to inheritance tax only in respect of real estate located in Belgium. In the latter situation, the inheritance tax due was originally based upon the gross value of the property. No deduction of debts was allowed.

This legal restriction was recently abolished by the Flemish and Walloon legislators due to European jurisprudence.

The difference in treatment between the heirs of a person who, at the time of death, had the status of resident and those of a person who, at the time of death, had the status of non-resident was brought before the European Court of Justice in the «Eckelkamp-case» (Case Nr. C-11/07, ECKELKAMP, dd. 10 March 2007). The Dutch equivalent in which the court takes a similar view, is known as the «Arens-Sikken-case» (Case Nr. C-43/07, ARENS-SIKKEN, dd. 8 November 2008).

The Court of Justice decided that by treating the inheritances of those two categories of persons in the same way (except in relation to the deduction of debts) for the purposes of taxing their inheritance, the national legistator had in fact admitted that there was no objective difference between them in regard to the detailed rules and conditions relating to that taxation which could justify a different treatment. The court concluded that national legislation could not, without giving rise to a discrimination, treat those heirs differently in the taxation of that property so far as concerned the deductibility of charges secured on it.

With (Article 29 of) the Flemish Decree of 19 December 2008 (Official Gazette 29 December 2008), the Flemish region introduced the deductibility of the debts relating to such property (e.g. mortgage, etc.). In other words, if the deceased was a non-resident at the time of death but living within the European Economic Area (EEA) the debts relating to the immovable property are deductible to the extent that the heirs can verify this (Article 27 FITC).

The Walloon region introduced a similar deductibility with (Article 49 of) the Walloon Decree of 30 April 2009 (Official Gazette 1 July 2009)(Article 27bis BCITC). To our knowledge, the Brussels-Capital legislator has not yet adjusted its inheritance tax code as previously recommended by the European Court of Justice.

Additionaly we can state that the Dutch legislator abolished the inheritance tax for non-residents (the so-called «recht van overgang») as of 1 January 2010.