When you sell your property in Belgium
, you'll need to pay a few important costs. One of them is the capital gains tax. This tax is imposed on the profit you earn when you sell real estate in Belgium. But make no mistake, there's more to it than that! There's also the tax rate and how it differs depending on your specific situation. Or if you can be exempt from paying the Belgian this tax altogether. There are a few things you need to know about this specific tax and it's better that you're aware of them before you start selling your property.
Is There Capital Gains Tax in Belgium?
If someone tells you that there's no capital gains tax in Belgium, they're partly right. The tax itself exists in the country's tax system
, but it's a different story when it comes to private property. According to Mondaq
, capital gains earned outside of professional activities don't count as 'income
,' per se. So as long as you don't sell real estate in Belgium for work, you won't have to pay the capital gains tax here. Your profit, however, may fall under 'miscellaneous income' and falls under your income tax in the country.
What's The Tax Rate?
As already mentioned, the capital gains tax on selling property virtually doesn't exist. With that said, the profit you earned can still be taxed as miscellaneous income. But is it the same as your income tax from your work here
? Not necessarily. Though they relatively fall under the same umbrella, the tax rates differ. With standard income tax, your tax rate depends on how much you earn annually. The higher your salary, the higher your tax rate. But with this miscellaneous income, you will be taxed at a fixed rate of 16.5%. You can say that this is equivalent to the capital gains tax on your property sale.
What Can Make You Exempt From This Tax?
Just like any form of tax, there are certain conditions that may exempt you from having to pay this tax when you sell your property. They all pertain to time and how long you've owned the said real estate in Belgium. For land, as long as you've owned it for more than 8 years, you'll be exempt from paying the capital gains tax (any other version of it as already mentioned. For buildings and houses in Belgium, if you've owned them for more than 5 years, you'll also be exempt from paying tax/es on your profit. Especially if you used it as your main residence in the country too!
Do Non-Residents Need To Pay Capital Gains Tax?
Since non-residents are allowed to purchase and sell their own properties in Belgium, they're also required to pay the appropriate taxes on them too. Though in the special case of the capital gains tax, it depends. As already mentioned, there's no official capital gains tax imposed o the profit you earn when you sell real estate in Belgium. Instead, the country sees it as a form of income and requires you to pay a fixed-rate income tax. But that not might be the case for your country of origin. Check with your own local tax system and see if you need to pay capital gains tax there.
When you sell your property in Belgium, there's a good chance you'll have to deal with the country's capital gains tax as well. Learn the basics about this specific tax so you'll be ready when the time comes!