Private Tax & Litigation


Department : 

The Act of 31 July 2017, published in the Belgian Official Gazette, introduced profound changes in our civil code. The parliament intends to simplify and modernise the current rules while allowing greater freedom to dispose of one’s assets. Thus, most notable feature of this reform, the available quota will in the future be equivalent to 50% of the estate, regardless of the number of children. The parliament wanted to take into account the societal development of (i) people living longer and (ii) often having many lives. This law will apply to all successions starting from 1 September 2018.  All acts of donation made even earlier will be, in principle, subject to the new rules except in certain cases (automatically or by means of a notarised confirmation taking place before 1 September 2018).


1. The reserve and the reduction of donations

Today, the rightful heirs are the descendants, the spouse and, in the absence of descendants, ascendants. The available quota is equal to 50% (if a child), 1/3 (if two children) and ¼ (if three or more children).

From 1 September 2018, the reserve for the descendants will be understood as a global reserve equal to half of the succession. The other half will be allocated to the freely disposable portion.

The reserve of the surviving spouse has not been modified (except as regards the actual reserve which has been extended to a leasehold on the dwelling house). However, when assessing this reserve, it was stipulated that the surviving spouse will no longer be able to assert their right to the reduction on gifts made before marriage to the donor.

The reserve of ascendants has been removed and replaced by a maintenance claim in the event of need (limited to one quarter of the succession).

The deceased will be able to freely dispose of half of his/her estate.  From 1 September 2018, the reduction of a donation will accomplished with less effort.  The recipient of the donation will therefore keep the property and will have to provide, primarily, monetary compensation.  The recipient may, however, agree to a reduction in kind. Important new feature of the law: the valuation of goods.  As part of the reduction, the indexed value of the donated assets on the day of the donation will be taken into account. However, if the donor has not been able to freely dispose of the donated property due to, for example, an unavailability or usufruct encumbrance, the valuation of the asset will be made on the day when the encumbrance ceases or the usufruct ceases.

2. The donation report

The donation report aims to maintain equality between the different rightful heirs. In the absence of precision, the permissible variations with regard to the spouse and the descendants are now presumed reportable.

Three important changes are worth noting:

  • Only donations made to descendants will still be presumed to be reportable.
    The report will no longer exist for or against the surviving spouse. However, for donations made before 1 September 2018, the parliament has nevertheless allowed the maintenance of the rules relating to the mode of the report as provided at the time of the donation.
  • The donation report will be made easier and take into account the indexed value of such donations on the day of donation (harmonisation with the rules applicable to reduction; distinction based on whether the recipient of the donation was able to freely dispose of the donated goods or not.
  • If it is now possible to transform a reportable donation into a non-reportable donation, the opposite, however, is not possible. The new law will enable, subject to the agreement of the recipient of the donation, change in both directions.

3. Future succession pacts

The principle of the prohibition of pacts on future succession remains applicable but has been relaxed. The law has, in fact, provided for global succession pacts (imperative that it be concluded with all of the heirs in a descending line) and specific (being able to take place among some of them). In both cases, these inheritance pacts will have to be done in notarial form and comply with a significant formalism.

These pacts enable the setting of the donations made to avoid any dispute between the heirs on the opening date of the succession of the donor’s estate. Such donor will have to detail and prioritise them in order to demonstrate that, according to the donor, a balance, as subjective as it is, has been maintained among the different descendants. If all of the parties sign this pact, they definitively waive their right to ask for the reduction of a donation or contest its value.

In addition to the heavy formalism attached to the establishment of these pacts, certain tax uncertainties may also limit the excitement: the act prior to being notarised, would the registration rights be due on the donations already made and specifically inventoried in the pact? The question remains open.

4. The conversion of the usufruct of the surviving spouse

The conversion of the usufruct of the surviving spouse remains possible, except as concerns the family dwelling (the agreement of the surviving spouse must and will always be necessary).  However, if the judge currently has the power of discretion, such discretion will not remain the same tomorrow.  The new law no longer requires the involvement of the magistrate in the event of children from another union.  In addition, this conversion cannot be discussed and only legal mortality tables will be applicable.


We have examined some frequently encountered situations in practice in order to analyse them in the light of the new law.

1. Between spouses

The donation between spouses, married in a separation of property regime, is often privileged when the children are still young.  It is very flexible (revocability of donations between spouses) and if it is reportable in kind, retains the 'natural' effects status in the event of the death of the donor: the children are instructed to report the donated property in bare ownership and the surviving spouse retains the usufruct.  From a tax point of view, however, inheritance taxes are avoided.

Given the removal of the report by the surviving spouse of the donations received from the deceased, this procedure will have to be reviewed. In fact, the assets given to the spouse will no longer be reported to the estate but will be allocated primarily to the freely disposable share. On the death of the second of the spouses, if the donated assets are still in the estate of such spouse, the children of the donor will pay inheritance tax on these assets (in the absence prior estate planning by said second spouse). It would therefore be interesting, in the frequent scenario where the donor does not wish to benefit, as such, his/her spouse in relation to their children, to plan a donation to the spouse, reportable in kind with respect to the succession and to do it before 1 September 2018.

The application of the transitional rules provided for by law allows that all of the donations already made (as of 1 September 2018) on the basis of this scheme will remain applicable, on the day of the donor's death, as provided for and originally desired by such donor.

2. To the descendants

In the context of donations, when a donor possessed assets of different values and nature (cash, securities and real estate), it was common to resort to the "double act" technique. This method consisted in giving the same goods on the same day to all the descendants in joint ownership in order to avoid, on the opening date of the succession of the donor’s estate, that the application of the reporting rules not give rise to undesired inequalities among the children. It was then up to the children to circumvent the joint ownership and divide the donated assets between them, according to their affinities. This method could lose its raison d’être given the harmonisation of valuation rules in this area. It will be enough for the value of the donated goods, on the day of the donation (in full ownership) to be the same for each of the donation recipients.

However, it will be necessary to think about (i) the spouse to whom these donations will no longer be reportable and (ii) the equality of the valuation rules which will be wiped out in the event of a gift with a usufruct reserve. 

With regard to the spouse, if the donation occurs after the marriage, and it is done with a usufruct reserve, the parliament in this case has provided for a "continued" usufruct for the surviving spouse. Since this usufruct is a new right of inheritance, we assume that it will not be taxed under inheritance tax law. This provision will ultimately allow, as before, the surviving spouse to benefit from a non-taxable estate usufruct on the property donated by the deceased spouse to the children.

On the other hand, as far as the report is concerned, the value of the property must be based on the day of death (if the deceased had not given up his/her usufruct beforehand) and, consequently, inequities related solely to the report could reappear.  Thus, the double act technique will not necessarily be over.

3. To third parties

While it is true that the increase in the disposable portion will in the vast majority of cases make it possible to more broadly benefit third parties, it should be noted that, in certain particular cases, the situation will be different particularly when the deceased wanted to reduce his/her spouse to his/her reserve. In this case, the parliament provided that the reserve of that descendants (namely, children) should be free of usufruct. As a result, the surviving spouse's reserve will be charged for its usufruct on the freely disposable portion. Thus, the liberality in full ownership that the deceased would have made to third parties (and who necessarily count on the freely disposable portion) will be systematically reduced to bare ownership.  On the other hand, if the rights of the surviving spouse are not reduced by will, the usufruct/bare ownership separation will take place as before, between the children and the spouse. 

One of the major axes of the reform was precisely the following: a principle of increased autonomy demonstrated by the quantitative expansion of the freely disposable portion in order to allow larger legacies to third parties, such as stepchildren (taking into account favourable rates in different regions) or for philanthropic work.

Everyone is concerned, even those who do not think about it: It will indeed be necessary to be very attentive and verify the formulation of the current testamentary dispositions: a person who has three children and bequeaths to a friend/foundation the largest freely disposable portion, currently bequeaths a quarter of his/her estate, whereas from 1 September 2018, the donor would leave half of his/her estate.


This reform brings us back to our past practices to ensure that the initial volition of the donor or testator will be respected in light of the new legal provisions.

Balances within the family have in fact been modified and it is important to use the next ten months to check whether acts of donation or testamentary dispositions contain statements that need to be corrected or whether it is necessary to confirm their retention in an express declaration before a notary.

For the future, the new rules will provide more freedom to the donor/testator and more legal certainty to the donation recipient/legatee.

Finally, it will be absolutely necessary to follow the evolution of the current reform on matrimonial regimes because the links between the two subjects are inseparable and will also have impacts on the patrimonial organisation of families.



Department : 

I. Saga of the split registration: Standpoint no. 15004

The saga of the split registration continues to make waves in the Flemish Region: this is due to the online publication on 26 April 2017 on the VLABEL website of the last update of Decision 15004, this time targeting the donation of the bare ownership of the shares of a société de droit commun/burgerlijke maatschap (i.e. a company without legal personality).

As a reminder, Article of the Flemish Tax Code, hereinafter “FTC” (of Article 9 of the Inheritance Tax Code) contains a fiction according to which movable or immovable property acquired in usufruct by a person and bare-owned by the heirs of such person will be considered part of the succession of the usufructuary, unless it is proved that the acquisition did not disguise per se a benefit to the third party beneficiary. On the basis of an interpretation of the jurisprudence of the Court of Cassation, the administration had long admitted that contrary evidence was validly relied upon if the parties proved that a pre-donation (even from the parent to the child) had allowed this split acquisition.

It will be recalled, however, that this mechanism was included on the black list published by the Federal Administration in its circular of 19 July 2012 and was subsequently deleted in the circular of 10 April 2013.

However, the respite was short-lived, since by a decision of 19 April 2013, the administration considered that the contrary evidence required under Article 9 of the Inheritance Tax Code could not consist of a prior donation.

After being firmly called to order by the Minister of Finance, the administration finished by issuing a decision (RJ S9/06-07) on 18 July 2013 , according to which a prior donation can constitute contrary evidence under two conditions: (i) when the prior donation has been subject to the registration duties of the donation, or (ii) where it is demonstrated that the beneficiary of the donation could freely dispose of the assets; this would be the case, for example, if it were shown that the donation made by the acquirer of the usufruct was not specifically intended to finance the acquisition of the bare ownership of the split acquisition.

By a decision of 21 March 2016 (No. 15004), VLABEL took a position on the application of Article of the FTC: with regard to the split purchase of movable or immovable assets, the position of VLABEL follows the aforementioned federal position.  Nevertheless, a supplementary mention has been added, diverging fundamentally with the federal position concerning split registration.

In effect, VLABEL specifies that Article is also applicable to split registrations of securities and financial investments. Evidence contrary to the presumption may be reported in the same manner as described for the split purchase of property.

In other words, VLABEL goes exactly against the federal position since, in the latter’s decision, it is expressly stated that the decision on split acquisition does not apply by analogy to split registrations.

II. Application to the Société de droit commun

1. The shares of the société de droit commun/burgerlijke maatschap and the underlying assets

In its new version, VLABEL attacks the sociétés de droit commun/burgerlijke maatschap. As these do not have legal personality, they are - as VLABEL recalls - fiscally transparent. Accordingly, for VLABEL, when analysing the question of registration or inheritance taxes, the underlying assets need to be considered. Where the assets contributed to the société de droit commun/burgerlijke maatschap consist of securities or financial investments, the presumption of Article of the FTC will apply. In the absence of the ability to provide proof of a previously registered gift (to reverse the liberality presumption), the registration of the underlying securities or investments that have been dismembered will be considered as a legacy.

This split registration will be either (i) material (as it appears in the Register of Shares or bank records) or (ii) legal (resulting from such acts as, for example, a gift with a usufruct reserve).

2. The income of the société de droit commun/burgerlijke maatschap

As regards the société de droit commun/burgerlijke maatschap, VLABEL goes a step further in its reasoning.

Thus, the presumption of liberality may also apply to the income generated from these securities and financial investments.

Indeed, if the income generated by these assets were themselves to be registered in bare ownership and usufruct (for the heirs, on the one hand, and the deceased, on the other) then Article of the FTC would also apply to this income.

A summary table could be drafted as follows:

Pre-registered donation

Distributed civil fruits [income]

Use of the civil fruits by the usufructuary




Full ownership

No application (attention, however, if the donation was made by the usufructuary in the three years preceding death: application of Article




Bare ownership

Application upon the






Yes on the whole (pre-donation - civil fruits and other income).



Full ownership

Application on the entirety, including civil fruits but possibility of reduction




Application on the civil fruits but not on pre-donation or capital gains


3. Replacement of the initial securities and financial investments

Standpoint 15004 specifies that the replacement of financial securities and investments initially registered in a split manner by other securities and investments that are also split up is not considered as a new split-up registration. Consequently, to rebut the presumption in Article of the FTC, it will suffice for the bare owner to demonstrate an absence of a disguised liberality only for the initial registration.

4. Entry into force

The taxation will take place if the usufructuary is a Flemish resident at the time of death, irrespective of the residence at the time of the split registration of the securities that took place from 1 June 2017.

This also applies to the civil fruits received from that date even if the donation of the "shares" of the société de droit commun/burgerlijke maatschap was made earlier

III. Conclusion

Logically, the position of VLABEL is quite worrisome for several reasons.

As an initial matter, this decision (i) calls into question the enforceability of company contracts and (ii) will raise many questions as to the very notion of civil fruits.

Thus, as VLABEL confirms in an example under Standpoint 15004, capital gains are, in principle, not considered as civil fruits in the strict sense of the term, and are, by definition, not distributable. Moreover, there are still controversies concerning the attribution to the usufructuary of certain dividends. What, in practice, is the individualisation of these non-distributable incomes relative to the other types of company income over the years? There is reason to fear that the inheritance tax may not be claimed for the entirety.

In conclusion, what solution can be envisioned for Flemish residents wishing to transfer their household effects to their heirs without departing from the effective management of these assets?

First, for donations already made in the past, to ensure the transfer of civil fruits, as a whole, in full ownership to the usufructuary from 1 June 2017.

Then, in the future, it will certainly be advisable not to use a dismemberment. It is not necessary to "throw the société de droit commun/burgerlijke maatschap out with the bath water". If split-up registration is to be left out, it is still possible to continue to manage these assets through the intermediary of this company. In this case, the transfer of securities and cash must have been granted in full ownership and with an annuity, for example, in order to avoid the application of Article of the FTA, which, as we have seen, only applies to situations of dismemberment in bare ownership and the usufruct of securities and financial products.


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