What is inheritance tax?
When you inherit something from someone, you have to pay tax on the value of what you've inherited. This is called inheritance tax.
The relevant Belgian tax authorities for the region where the deceased passed away calculate how much you owe them based on the inheritance tax return you have to submit when you receive an inheritance.
On what property do you have to pay inheritance tax?
If the deceased was deemed a resident of Belgium
If the deceased was deemed a resident1 of Belgium
- All assets they left behind must be declared
- Inheritance tax applies to all their assets
The value of the assets the deceased left behind can be reduced by deducting funeral expenses and any debts the deceased had. In Flanders, you don't have to vouch for these expenses or debts as set amounts of 6,000 euros for funeral costs and 1,500 euros for debts are automatically deducted as standard from the deceased's estate (2015 figures). These fixed amounts are linked to the consumer price index. Debts specifically incurred to acquire or retain real estate such as mortgage loans are excluded from this lump-sum system. You may want to substantiate such costs and debts anyway.
If the deceased was a non-resident of Belgium
If the deceased was a non-resident of Belgium
- A tax return most only be submitted for any real estate the deceased had in Belgium
- So-called 'transfer duty' will be levied instead of inheritance tax
Transfer duty is calculated on the value of the real estate in Belgium, without deduction of funeral costs but with a modest allowance for debts. In Flanders and Brussels, you can deduct debts specifically incurred for acquiring or retaining real estate if the deceased was an EEA2 resident. In Wallonia, debts relating to real estate located in Belgium may always be deducted, regardless of where the deceased lived.
If the deceased was a non-resident of Belgium or resident of Belgium with non-Belgian nationality, inheritance tax may be payable in their country of residence or origin. This rules vary from country to country, so it's advisable to get legal advice in the relevant country to ensure everything is dealt with properly.
What's treated as part of the estate when inheritance tax is calculated?
Heirs pay inheritance tax on any assets the deceased effectively owned when they died. Certain assets are also fictitiously included in the estate, so you'll also have to pay inheritance tax on them.
Unequal division of matrimonial property
Surviving spouses who under a marriage contract receive more than half of any joint assets must pay inheritance tax on the portion of the assets that exceeds one-half.
Gifts made within less than three years or five years before death
If you don't register a gift of moveable property, you don't pay gift tax. However, the gift will be added to the estate if the donor dies within three years (Flemish Region and Brussels Capital Region) or within five years of making the gift (for gifts made on or after 1 January 2022 in the Walloon Region). Then you have to pay inheritance tax on the gift.
If the gift was made by a Belgian or other notarial deed, you have to pay gift tax. In such cases, you don't have to pay inheritance tax even if the donor dies within three years of making the gift.
Third-party beneficiary clauses
Life insurance is one situation where clauses like this are used. If the deceased had life insurance with you named as a beneficiary, inheritance tax is usually payable on any benefits you stand to receive. Whether you are liable to pay inheritance tax on life insurance depends on the situattion.
How much inheritance tax do you have to pay?
The tax authorities calculate inheritance tax on
- The value of what you have inherited
- Your relationship to the deceased
The higher the amount, the more inheritance tax you have to pay. The closer your relationship to the deceased, the less inheritance tax you pay.
Inheritance tax varies between the regions. The deceased's last place of residence for tax purposes (tax residence) will determine whether Flemish, Brussels-Capital or Walloon Region legislation applies. If the deceased lived in more than one place in Belgium in the five years prior to their death, the place where they lived the longest during that time will define which region's rules apply.
1 Any person who had their tax residence in Belgium when they died is deemed to be a resident of Belgium
2 European Union member states, plus Iceland, Liechtenstein and Norway