Want to fit in a gift before the end of the year and avoid paying gift tax?

Following Wallonia’s example, Flanders will also be making it riskier not to register gifts from 1 January 2025. What exactly is changing and what are your options?

1. What are the options for gifts of moveable assets?

Belgium has two options regarding gifts of money, investments, works of art, vehicles or other moveable assets.

> You register the gift and pay gift tax

If you register the gift with the competent public authority, you must pay gift tax. The tax rate depends on the relationship between the donor and the beneficiary. In Flanders and Brussels, you pay:

• 3% for gifts to immediate family (grandparents, parents, children, grandchildren) or between partners
• 7% for gifts to all other persons

In Wallonia, these rates are 3.3% and 5.5%, respectively. The gift tax is a flat rate: whether you are giving 5,000 or 500,000 euros, the rate remains unchanged.

If you have a notary draw up a deed of gift, this will incur a fee, but you will be certain that the gift is handled correctly and the documents are non-contestable. Furthermore, a deed of gift is always required for gifting shares in a company and gifts with reservation of usufruct. The main benefit? If you register the gift, generally speaking, the beneficiary will no longer owe inheritance tax on the gifted assets on the death of the donor later on. This is important, because the rates for inheritance tax are much higher than gift tax.

> You do not register the gift, but risk a higher inheritance tax

You can also gift moveable assets without registering these as such. At first glance, this is the cheapest solution. No registration means no gift tax, after all. A compelling advantage… but the disadvantages are also significant.

If the donor dies within a certain period after giving the gift – known as the suspect period – the beneficiary will need to pay inheritance tax. Moreover, unlike the gift tax, inheritance tax rates are progressive. Depending on the bracket and the relationship between the donor and the beneficiary, these can be between 3% and 55% in Flanders, and from 3% to as much as 80% in Wallonia and Brussels. However, as the regions are currently working on reforms, these rates may change in the coming months. The value of the gifted assets is also indexed at the time of death. An additional risk: if you draw up the gift documents yourself instead of having this done by a notary, you run a greater risk of having the gift challenged by the tax authorities or of making a mistake.

2. What will change from January 2025?

In Flanders, the suspect period will increase from three to five years. In other words, a beneficiary will still owe inheritance tax if the donor dies within five years of gifting. This change is therefore relevant to donors wishing to make an unregistered gift. Such gifts will become much riskier, as the donor must survive for five more years instead of three.

With the amendment, the Flemish government aims to encourage people to make gifts earlier (or rather, register their gifts), so that the money also goes back into circulation faster and can be spent economically.

The longer period of five years is expected to apply solely to new gifts made from 1 January 2025. Based on various media reports, the likelihood of a retroactive extension appears small, but this has not yet been officially confirmed.

Wallonia has already increased its suspect period to five years. There was also talk of Brussels raising its suspect period from three to five years in 2024, but this has not happened yet.

3. What does this mean if you were planning to give a gift?

If you are considering making an unregistered gift, you must also take the higher risk of inheritance tax into account from January. Still want to make an unregistered gift, but prefer to limit the suspect period to three years? In that case, you will need to do so in 2024. Don't rush this decision. Talk to a notary or financial adviser first so you can carefully assess the consequences and define a suitable strategy based on everyone’s personal and financial situation.

4. Can you change your mind and still register a gift later?

Certainly. There is no need to register a gift immediately. The donor can decide not to register the gift and simply wait and see. If they fall seriously ill during the suspect period, they can still register it voluntarily. Registration will mean paying gift tax, but they avoid the higher inheritance tax.

5. How do you register a gift?

You can register a private gift (without a notarial deed of gift) in several ways. The quickest is online via MyMinfin (Mijn interacties tab - select Een document indienen), by post or by appointment at your local Legal Security Office (Kantoor Rechtszekerheid). Please note that the gift documents will be subject to close examination. These documents must include such information as the value of the gifted assets, the tax residences of both the donor and the beneficiary during the five-year period prior to the gift and more. You can also draw up the documents yourself and have a notary handle the registration.

6. What documents must you prepare for a private gift?

Gifts must meet a long list of formal requirements. Any errors may result in the gift being disallowed and the beneficiary owing inheritance tax after all. If you draw up the documents yourself, consider having them checked by a notary or other wealth management adviser. In the case of a bank gift, the donor transfers the money and/or investments to the beneficiary’s bank account. It is better not to mention the word ‘gift’ in the description at all. Instead, either leave this field empty or refer to the associated ‘pacte adjoint’ or side agreement.

The pacte adjoint is an accompanying document that is drawn up by the donor and the beneficiary shortly after making the gift – not before! This document confirms that it is a gift and not a loan. It is important that the agreement be drawn up in the past tense, not the present. The document lays out any agreed conditions, charges and stipulations. The donor must send the signed pacte adjoint to the beneficiary by registered post, preferably shortly after making the gift.

To do this, you can fold the document into an envelope shape and seal the edges with tape. That ensures the postmark will be placed directly on the document itself, making the date much harder to dispute. You can also use an ordinary envelope and have the beneficiary keep it unopened on receipt. This envelope can then be opened in the presence of the tax authorities if any concern arises. Finally, carefully store the bank statements together with the pacte adjoint and the proof of registered post. For manual gifts such as jewellery or art, also make sure the document describes the gift well.

Does the gift come with any conditions, charges or stipulations? In that case, a letter (or email) of intent is advisable. The donor uses this letter to state the terms and conditions before transferring the gift, and the beneficiary replies with their acceptance. While this may seem like a lot of hassle, it is necessary to ensure the beneficiary has agreed to the terms and conditions beforehand, as this is tricky to do once the gift has already been made.

7. What about gifts of immoveable assets?

A notary is always required for gifts of immoveable assets, such as real estate. That means the suspect period does not apply.

Not quite ready to start thinking about gifts yet?

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