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Belgian Specialized Real Estate Investment Fund

Belgian Specialized Real Estate Investment Fund

A promising fund-vehicle for institutional investors



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The Belgian government is expected to introduce a new Specialized Real Estate Investment Fund (referred to as ‘Sreif’). This new fund-vehicle would be aimed at institutional investors willing to invest in real estate. Yet, the current notion of this ‘institutional investor’ could result in the vehicle being an interesting platform for real estate in general.


The vehicle is expected to be introduced as one of the investment platforms governed by the Act of 19 April 2014. A Royal Decree complementing that Act and implementing the Sreif, is rumored to be under preparation.


Based on the information that is currently available, the Sreif promises to be an interesting tool for real estate and affiliated investments. Let’s have a look at the most relevant topics:

  • The Sreif would have a very flexible regulatory framework: Listing on a stock exchange would not be required, prudential control would commonly be limited and there would be almost no requirements to spread investment risk or distribute revenue.
  • The Sreif would in principle be subject to common corporate income tax. Its taxable basis would however be limited to specific elements, with as a result that effective operational income would remain virtually exempt. Upon receiving the Sreif-status, a so-called exit tax would still be levied. Latent or realized capital gains on the assets contributed would be taxed at 16,995%. 
  • Distributions from income sourced outside of Belgium would benefit from a specific exemption of Belgian withholding taxes, besides commonly available exemptions.
  • A practical consequence of the Sreif-structure may be that acquisitions/disposals of real estate need to be structured as asset deals. This would then imply that there would be a Real Estate Transfer Tax.

On the basis of the currently available information, the Sreif could be an interesting tool:

  • for corporations with real estate;
  • as hub for pan European portfolios;
  • to efficiently structure private portfolios.


Expected Strengths

  • Flexible regulatory framework:
    • Daily operations organized in a way similar to common law companies;
    • No specific authorizations would be required in the hands of the Sreif (but the manager of the Sreif may be subject to a strict prudential control).
  • Expected tax treatment:
    • Subject to corporate income tax but with a taxable basis limited to specifically listed items. The effective income from investments would thus remain tax exempt;
    • Distributions from income sourced outside of Belgium would benefit from a specific exemption of Belgian withholding taxes. Moreover, existing exemptions from withholding taxes, such as e.g. exemptions for distributions to non-resident investors or for the distribution of liquidation bonuses by investment companies, may also apply.


Possible weaknesses

  • Limitation in time: maximum of 10 years extendable with 5 years.
  • Distributions received from Sreif would not benefit from “dividends received”-regime.


Potential opportunities

  • Large scope of possible investments expected to be allowed. 
  • No real diversification of investments-obligation. 
  • Limited “indirect” distribution-requirements. (This could still change). 
  • Possibility to create compartments


Potential threats

  • Access limited to qualifying investors (however: definition of qualifying investors expected to be broad).
  • “Exit tax” upon setting up of the vehicle may represent an upfront cost.
  • Transfer taxes may represent a substantial drawback. 

Go back to the Tax Corner.

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