Real Estate

Suspicious period for donation remains three years

The Flemish government is abandoning the plan to extend the so-called ‘suspicious period’ for donations to four years. The current three-year term will be maintained.

In the case of an ‘ordinary’ donation of money or investments – for example via a simple transfer from one account to another (a hand or bank gift) – there is no registration obligation and no gift tax is due. But if the donor dies within three years after the donation, its value is added to the inheritance and the heirs have to pay a (higher) inheritance tax on it.

It was the intention of the Flemish government to extend that term – which is called ‘suspicious period’ – to four years. That extension would take effect from July 1, 2021.

But the Flemish Minister of Finance, Matthias Diependaele (N-VA), says that the extension will not take place. The three Flemish government parties (N-VA, CD&V and Open VLD) reached agreement on this last weekend.

Diependaele had previously indicated that the longer term is no longer desirable if the so-called ‘cheese route’ were to be closed. The cheese route is a popular track with Flemish people who want to donate tax-free movable goods. The solution was to donate through a foreign (read: Dutch) notary.

Pending the closure of the cheese route, the extension of the ‘suspicious period’ had already been included in draft legislative texts of the Flemish government. But the federal government (of which Diependaele’s party is not a part) has closed the cheese route since the middle of this month. And now the N-VA has convinced its Flemish coalition partners not to extend the suspicious period in exchange.

The Diependaele cabinet has announced that the draft legal texts that already include the extension will be amended again.

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