In our previous update, we informed you that the Belgian Government was preparing new support measures in the context of the COVID-19 crisis, in particular, the introduction of a tax benefit in the event of a rent waiver for tenants that have been obliged to close their business due to the COVID-19 pandemic.
The law has meanwhile been voted and published. According to the law, the landlord can benefit from either a tax reduction if the landlord is an individual, or a tax credit if the landlord is a company. This benefit amounts to 30% of the rent and the rental charges that were waived.
What are the conditions for this tax incentive?
Firstly, the immovable property subject to the lease:
– must be located in Belgium;
– must be leased. The measure is not limited in the context of commercial leases but is also applicable, for example, in case of a long-term lease.
– is affected to the professional activity of the tenant. If part of the leased premises is not used for the professional activity of the tenant or is supplied to a third party, this part shall not qualify for the bene t of the measure.
Secondly, the tenant:
– is either an individual self-employed, a small company according to article 1:24 paragraphs 1-6 of the Belgian Company and Association Code, or a small association according to article 1:28 paragraphs 1-5 of the same Code;
– must be “active” as a business at the address of the leased premises according to the Crossroads Bank of Enterprises;
– has been obliged to close totally or partially its business as a result of the COVID-19 measures;
– may not have had rent arrears as at 12 March 2020 with respect to the relevant agreement;
– is not considered as a “company in dif culty” according to the article 2, paragraph 1 4°/2 of the Income Tax Code at the time of the rent waiver.
– is not af liated to the landlord. For instance, should the parties be both individuals, they may not have family ties up to the second degree or they may not be part of the same household. Should the tenant be a company, the landlord cannot, among others things, hold directly or indirectly a position in the company (director, manager, etc.) or hold a participation of more than 30% in the company.
Thirdly, the rent and rental charges waiver:
– is based on the exemption to pay (part of) the rent and the rental charges (but at least 40%) for the months of March and/or April and/or May 2021.
– is granted voluntarily and de nitively by the landlord;
– needs to be established in a written agreement concluded between the tenant and the landlord and transmitted to the tax authorities by 15 July 2021 at the latest.
Calculation
As said above, the tax reduction/tax credit is equal to 30% of the amount waived. But the benefit is subject to a double limitation. Firstly, the maximum amount related to the rent and the rental charges per lease agreement cannot exceed 5,000 EUR per month. Secondly, the overall maximum of waived rent is 45,000 EUR per landlord (i.e. all leases agreement concluded by the landlord).
One can say that the outlines of this incentive still need to be further detailed. In this view, the bill provides for the possibility to determine the modalities of application by Royal Decree.
We will continue to follow the development of this measure for you.
Caroline Orban
