Belgium: Tax relief for commercial landlords, waived rent and lease incentives (COVID-19)

Provisions intended to address liquidity issues that landlords may encounter from the economic consequences of the coronavirus (COVID-19) pandemic

Provisions intended to address liquidity issues that landlords may encounter

The government on 18 May 2021 announced expanded income tax relief for landlords of commercial real property that voluntarily and definitively waive rent for certain months in 2021.

The provisions are intended to address liquidity issues that landlords may encounter from the economic consequences of the coronavirus (COVID-19) pandemic.

The income tax relief applies for the months of March, April, and May 2021 and is being expanded to the months of June, July, August, and September. Further details on this expansion (e.g., whether certain existing thresholds would be increased) are still to be expected.

Tax relief

Individuals who are landlords are granted a tax deduction while companies that are landlords can benefit from a non-refundable tax credit.

The tax relief is determined to be 30% of the waived rent and lease incentives, without exceeding the following thresholds:

  • €5,000 per month per lease agreement
  • €45,000 per lessor/landlord for all the lease agreements together

Conditions

In order to benefit from the tax relief, several conditions must be satisfied, such as:

  • The immovable property is located in Belgium and allocated to the business activity of the lessee.
  • The lessee is a self-employed private individual or qualifies as a small or medium-sized enterprise (SME) or small association and is registered as “active.”
  • The establishment located at the leased property was obliged to close its doors as a result of the COVID-19 restrictions.
  • The waiver is equal to at least 40% of the monthly rent.
  • The exemption cannot be applied if both parties have a “direct relationship” (spouses, children, company director).

The waiver is to be recorded in a written agreement and subsequently sent to the tax authorities by 15 July 2021.

Similar to other support measures, the benefit will not be available if the tenant is identified as a “company in difficulties” at the time of the waiver. Furthermore, there cannot be any outstanding rent owed on 12 March 2020.  

KPMG observation

Parties to a commercial lease arrangement may also need to consider the value added tax (VAT) as well as the commercial law implications of a rent waiver.
 

Read a May 2021 report prepared by the KPMG member firm in Belgium

 

 

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