What are gifts and how are they taxed?
What is a gift?
A gift is an agreement by which a donor, irrevocably and without consideration, gives up a movable or immovable property in favour of a beneficiary and by which the beneficiary accepts that property.
What is a manual gift?
In the case of a manual gift, movable property (money, jewellery, antiques ...) simply passes from one hand to another, without any official procedure.
Manual gifts are not subject to a registration requirement and therefore the beneficiary does not have to pay any gift tax. But if the gift is submitted for registration, gift tax will be levied.
Please note:
If the gift has not been registered and the donor dies within 3 years of the gift (or 5 years in the Walloon Region), the gift has to be included in the declaration of estate. In that case, inheritance tax will be due on the amount of the gift. Inheritance tax rates are higher than gift tax rates.
As a beneficiary you can register a manual gift yourself, i.e. without the intervention of a notary, by transferring the documents (letters ...) proving the existence of the gift to the Legal Certainty Office. In that case, you will pay a gift tax on the gift of movable property, but, if applicable, you will no longer have to mention it as an heir in the declaration of estate and you will therefore not have to pay inheritance tax on that gift.
What is an indirect gift by bank transfer?
An indirect gift by bank transfer is a mere banking transaction in which the donor transfers money from their bank account directly to the beneficiary's bank account.
There is no registration requirement for gifts by bank transfer so no gift tax has to be paid. But if the gift is submitted for registration, gift tax will be levied.
Please note:
If the gift by bank transfer has not been registered and the donor dies within 3 years of the gift (or 5 years in the Walloon Region), the gift has to be included in the declaration of estate. In that case, inheritance tax will be due on the amount of the gift. Inheritance tax rates are higher than gift tax rates.
As a beneficiary you can register an indirect gift yourself, i.e. without the intervention of a notary, by transferring the documents (letters, proof of the bank transfer ...) proving the existence of the gift to the Legal Certainty Office. In that case, you will pay a gift tax on the gift of movable property, but, if applicable, you will no longer have to mention it as an heir in the declaration of estate and you will therefore not have to pay inheritance tax on that gift.
I would like to give a movable property before my death. Is this gift subject to taxation?
If you register the gift, it is subject to taxation, otherwise it is not.
If you consider giving movable property, there are several options:
- a manual gift
- an indirect gift by bank transfer
- a notarial gift
There is no obligation to register manual gifts or indirect gifts by bank transfer:
- If the manual gift or the indirect gift by bank transfer are not registered, the beneficiary does not have to pay any gift tax. Please note: if the donor dies within 3 years of the gift (or 5 years in the Walloon Region), the beneficiary has to pay the higher rate of inheritance tax.
- If the manual gift or the indirect gift by bank transfer is registered, the beneficiary has to pay a gift tax. If the donor dies within three years (5 years in the Walloon Region), no inheritance tax on the gift is due.
A gift by notarial deed is always registered. In that case, the beneficiary always has to pay a gift tax.
I would like to give an immovable property before my death. Is such a gift subject to taxation?
Yes, since gifts of immovable property always have to be done by a notarial deed. These deeds are registered and in that case the beneficiary has to pay a gift tax.
How is the gift tax calculated?
The gift tax is calculated:
- on the gross value of the goods received by the beneficiary
- at a rate that rises as the value of the goods increases
- at a rate that varies according to the degree of kinship between the donor and the beneficiary (the more distant the kinship, the higher the rate)
The rates vary depending on the region where the donor is tax resident at the time of the gift. If the donor was tax resident in more than one place in Belgium during the five-year period prior to his gift, the rate of the region where the donor was tax resident for the longest time during that period will be applied.