Reporting of foreign real estate: Penalties for noncompliance announced

A royal decree (Dutch | French) of 20 September 2023 implements provisions of the Belgian Income Tax Code providing for administrative penalties for the failure to report foreign real estate on a timely basis.

As from 1 January 2021, Belgian individual resident taxpayers have been required to report all foreign real estate to the Belgian General Administration of Patrimonial Documentation (see our Tax Alert dated 10 March 2021). This requirement also applies to all individuals becoming Belgian tax resident on or after that date in respect of all foreign real estate they own at the date of becoming resident. Although the reporting obligations have existed since 2021, the penalties for noncompliance had not previously been specified. The decree provides for potential penalties that are severe and range from EUR 1,000 to EUR 3,000. If the failure to report is due to circumstances beyond the taxpayer's control, no penalties would apply.

It is currently unclear how strictly the authorities will apply the financial penalties or which circumstances would qualify as a waiver. However, it is certain that going forward all taxpayers will need to be very diligent in reporting any change in the foreign real estate they own on a timely basis.

Obligation to report

Individuals owning foreign real estate (immovable property) must report details in any of the four situations outlined below within the specified time period. Ownership includes co-ownership, easements, usufruct, emphyteusis, surface rights, special privileges, pledges, mortgages, and retention rights.

1. Becoming Belgian tax resident: All foreign real estate must be reported within 30 days of becoming tax resident.

2. Buying or otherwise obtaining real estate: Ownership must be reported within four months following the date of acquisition on the appropriate form (Dutch | French).

3. Any modification to foreign real estate: Must be reported within 30 days of the date of the modification on the appropriate form (Dutch | French). Modifications include:

• The (first) occupation or rental (if this precedes the occupation) of a newly constructed or reconstructed building (i.e., the date the taxpayer is registered at that address);

• Completion of building alteration work;

• Alterations to the plans for property that Is not yet constructed (i.e., a change in intended use, any design changes, or improvements); and

• The use of new or additional equipment or machinery, as well as the alteration or definitive decommissioning of equipment or machinery.
  

4. Sale: Must be reported within four months following the date of sale on the appropriate form (Dutch | French).

Potential penalties

The potential penalties for noncompliance (other than as the result of circumstances beyond the taxpayer's control) are set out in the table below. The penalties are based on the notional annual rental value allocated to the foreign real estate for Belgian individual income tax purposes.