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Estate planning aspects to consider

Estate planning aspects to consider

Measures taken by the authorities

Since most taxes that are relevant for estate planning purposes fall under the jurisdiction of the Regions, different measures have been taken by the Flemish, Brussels and Walloon authorities. Below is an overview of these measures.

The Flemish Region

The Flemish tax authorities have granted a general extension of the deadlines to fulfill (tax) obligations for inheritance and registration tax purposes.

All deadlines are extended until two months after the end of the period during which the coronavirus restrictions apply. Therefore, there is currently a general extension until 30 September 2020.

This extension applies to all deadlines that expire between 13 March 2020 and 30 September 2020.

If the current restrictions are extended beyond 31 July 2020, the general two month extension will automatically be extended as well. Taxpayers and notaries do not have to ask for this extension.

This extension applies, for example, to:

  • the filing deadline of an inheritance tax return;
  • the ultimate date for registering a privately signed purchase contract (“compromis”) with respect to immovable property;
  • the ultimate date for the resale of real property in order to benefit from a reimbursement of 3/5 of the registration taxes paid upon the acquisition of that same real property.

Heirs that normally had to file an inheritance tax return by 15 May 2020 at the latest, now have time to do so until 30 September 2020. The deadline of 30 September 2020 will automatically be extended if the coronavirus measures remain in force after 31 July 2020.

In addition to the general extension of deadlines, the Flemish tax authorities have also announced more flexibility in granting payment plans.

 

Besides this general extension of the deadlines to fulfill (tax) obligations granted by the Flemish tax authorities, the Flemish legislator has introduced a temporary measure for the heirs of a deceased person to lower the impact of the crisis.

If the deceased person’s inheritance contains an investment portfolio of listed securities, the heirs already have a choice with respect to the value of these securities that needs to be declared in the inheritance tax return. They can chose to declare:

  • the value these securities had on the date of death; or
  • the value they had one month after the date of death; or
  • the value they had two months after the date of death.

The valuation date that is chosen applies to all listed securities of the portfolio.

 

Further to the above, the Flemish legislator has now introduced the additional possibility to opt for the value the securities had three months after the date of death. However, this new possibility is temporary and only applies if the deceased passed away:

  • between 13 November 2019 and 30 September 2020, if he/she died in Belgium;
  • between 13 October 2019 and 30 September 2020, if he/she died in another Member State of the European Economic Area (EEA); or
  • between 13 September 2019 and 30 September 2020, if he/she died outside the EEA.

 

Moreover, the Flemish legislator offers the same possibility to those heirs that filed an inheritance tax return before 21 April 2020 (i.e. the date this new measure was published). If the legal filing deadline for someone who passed away as from 13 September/October/November 2019 respectively, expired before 21 April 2020, the heirs can file a new inheritance tax return in which they can ask to modify their previous choice. This new inheritance tax return must be filed within four, five or six months as from the date of expiration of the original filing deadline, depending on whether the deceased passed away in Belgium, in another Member State of the EEA or outside the EEA.

In principle, heirs of a deceased person who passed away in Belgium on 10 December 2019 had to file the inheritance tax return within four months, i.e. on 10 April 2020 at the latest. These heirs can file a new inheritance tax return if they wish to declare the listed securities at the value they had three months after the date of death. That new return needs to be filed at the latest on 10 August 2020.

The Brussels Region

Currently, no specific tax measures have been decided or announced by the Brussels authorities.

The Walloon Region

The Walloon tax authorities have decided to suspend the due date for payment of regional taxes, and to extend it for the duration of the crisis.

With respect to tax litigations in the administrative phase, deadlines (to start a procedure or to make an appeal) have been suspended and negative decisions are put on hold. Decisions that are positive for the taxpayers will be executed in order to provide financial means to the private individuals and/or companies concerned.

The ultimate date for the resale of real property, in order to benefit from a reimbursement of 3/5 of the registration taxes upon the acquisition of the same real property, was suspended until 30 April 2020 with a possibility for the Walloon government to extend this date as many times as necessary but each time with 30 days. So far, no extension has been published.

The Walloon tax authorities have also announced more flexibility in granting payment plans.

Additional possibilities to keep in mind

In these turbulent times, there are some additional possibilities to reduce the impact of the crisis.

For instance, and as mentioned above, if a deceased person’s inheritance contains an investment portfolio of listed securities, the heirs have a choice with respect to the value of these securities that needs to be declared in the inheritance tax return.

In all three Regions (Flemish, Brussels and Walloon), the law provides that they can chose to declare either the value these securities had on the date of death, the value they had one month after the date of death, or the value they had two months after the date of death. As mentioned above, in the Flemish Region, the legislator has now extended this choice to include the possibility to opt for the value these securities had three months after the date of death.

It remains to be seen if the Brussels and Walloon Regions will follow the Flemish Region and introduce a similar possibility into their legislation.

The valuation date that is chosen applies to all listed securities of the portfolio. Given the recent stock market crash, this choice could have a considerable impact on the final inheritance tax bill.

When declaring non-listed shares of privately held companies in an inheritance tax return, the general valuation rule applies which is a valuation of the company shares at market value on the date of death in a ‘going concern’ scenario. Needless to say that the current crisis has a considerable impact on this ‘going concern’ value for a lot of companies.

Estate planning with the intervention of a public notary - digital proxy

When the restrictions were first imposed by the Belgian government, it was not possible to meet in person with a public notary, and existing appointments had to be postponed. Notaries could only make an exception in a limited number of cases, such as an extreme urgency to sign the notarial deed (e.g. in case of imminent death) or if the non-signing of the deed would have excessive financial consequences for the parties involved.

It was up to the notary to assess this case by case, and to take the necessary measures while safeguarding public health.

However, as these exceptions were difficult to sustain in practice, it was decided that public notaries are now available again to sign all deeds. But, since notaries also need to respect the necessary precautions, notarial deeds are signed from a distance as much as possible in order to avoid that parties have to be physically present for the signing.

To help notaries achieve this, a new legal initiative has been voted to allow for the signing of a notarial deed through a digital proxy that is given during a video conference set up by the public notary. During the video conference the public notary discusses the deed with the parties, who can then give a digital proxy (via their electronic ID or the app itsme) to, for example, an employee of the notary who is physically present to sign the deed.

This digital proxy is up and running since the beginning of May 2020, and is possible for most notarial deeds, such as for real estate transactions, donation deeds, matrimonial contracts and company deeds. During the current period of exceptional measures, the use of this digital proxy is free of charge for the parties involved; meaning no notary fees or expenses, and no taxes either.

However, it is important to know that for some transactions and operations, there are alternatives to settle matters without the intervention of a public notary (neither in person nor by proxy), such as:

  • a gift in cash, an investment portfolio or other movable assets, which can be made from hand-to-hand or by a simple bank transfer;
  • the drafting of a private (healthcare) proxy; and
  • the drafting of a holographic last will which the testator must write entirely by hand, sign and date, in order to be valid.

 

Some of these approaches are slightly more restrictive than what’s possible through a notary deed, and the tax consequences might differ, but they can certainly be a valid alternative for rather basic estate planning transactions.

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