Belgian law does not ban foreigners from purchasing or financing real estate. However, as non-residents (for tax purposes) are subject to varied tax consequences, Belgian tax residency plays a part. Belgian real estate expenses are cheaper than those of many of its European neighbors, but buyers must pay for the high transaction costs in the nation.
The procedure of buying real estate in Belgium
Send a formal, written offer to the seller as soon as you’ve located a suitable business property. Before agreeing on a final price, which may be up to 15% less than the asking price, it is common to bargain. You must finish the transaction after both parties have signed the contract of sale. You’re required to put 10% of the agreed-upon selling price into a trust that you’ll forfeit if you break the contract. The relevant document transferring ownership is prepared by notaries who are the buyers’ and sellers’ representatives. You get the property’s keys when the parties sign the deed. Within four months, you must pay the transfer tax and record the sale at the local office. In Belgium, the process of effectively transferring ownership of a property to a new owner takes around 62 days. It’s also crucial to remember that all contracts must be written in either French or Dutch following Belgian legislation. If your estate agent or notary cannot help you with translations, you will need to hire an interpreter.
While the buyer typically covers the majority of the fees, the seller often halves those charges. Charges may be as high as 21%, depending on your property. When buying a business property in Belgium, the following fees are the buyer’s responsibility:
Transfer and registration fees
Only properties older than two years are subject to the location-specific registration tax, which varies. For Brussels and Wallonia, the transfer charge is 12.5% of the purchase price; for Flanders, it is 10%.
Properties that are less than two years old are regarded as new and are eligible for VAT instead of transfer taxes. A 21% of purchase price tax is paid by the buyer of a new building.
The state establishes notarial service fees based on the property. You should budget 1.6% of your purchasing price on average.
Your property will be surveyed for €200 + VAT. When using a mortgage, these assessments are often required.
The annual costs of owning Belgian commercial property
In Belgium, certain taxes are levied at the local level, and several municipalities may impose extra fees. Owning a business property in Belgium entails the yearly taxes listed below:
Property taxes (immovable withholding tax)
If their rental revenue reaches €2,500, non-residents who rent out real estate in Belgium must pay tax. If the owner’s sole source of income in the nation is less than the limit, no information about it has to be declared. Based on the alleged yearly rental value of your real estate, officials determine your annual property taxes (cadastral income). This sum represents the potential annual net rental revenue for your facility, whether or not it is leased. The value is calculated using rentals from 1975, is then adjusted for the current tax year, and maintenance and repair expenses are subtracted. The cadastral income is subject to a tax rate of 20–50%. When compared to levies determined using actual rent collected, they are often cheaper.
Some municipalities impose variable yearly taxes in addition. These are between 3 and 9% for tax residents. A set municipal rate of 7% is charged to non-residents who receive more than €2,500 in immovable property income.
Purchasing commercial real estate in Belgium
The taxes owed after selling your business property in Belgium depend on the particulars of the transaction. Non-residents are normally not subject to Belgium’s capital gains taxes. If the taxpayer realized the gain on the moveable property in Belgium, withholding taxes would nonetheless be due. Rates of taxes are based on whether or not the transaction fell within the category of “normal management” of private assets. Under Belgian tax legislation, “normal management” is not explicitly defined. The standard is undoubtedly acting prudently to increase and maintain one’s wealth. The only permitted assets are transportable property, financial investments, stocks, and real estate. The owner acquired the assets through inheritance, gifts, or personal savings (in a normal way). Within five years of purchase, a 16.5% withholding tax is applicable if your sale falls within the “normal management” of your estate. The cost is increased to around 18% when municipal taxes are included. After this time, the sale would be tax-free. The simultaneous sale of many properties is one scenario that can be deemed “beyond the scope of regular management” of assets. The withholding tax rate rises to 30.28% in this instance.