When a company puts a house or an apartment at the disposal of one of its directors or employees, a taxable benefit in kind arises in the hands of the beneficiary. Typically, the calculation of this benefit in kind depends on whether the housing is provided by an individual (100/60 x indexed cadastral income) or by a company (100/60 x indexed cadastral income x 3.8 if the cadastral income is higher than EUR 745 – x 1.25 if the cadastral income is lower than or equal to EUR 745).
The abovementioned difference in calculation of the benefit in kind provided by a company (legal entity) compared to a natural person has been judged to be in violation of the principles of equality and non-discrimination. In order to avoid an (non-justified) unequal treatment, individuals who are in a similar position should be taxed in the same way. Based on their practice note of 15 May 2018 (2018/C/57) and in anticipation of new tax legislation, the Belgian tax authorities have agreed with the recent case law (see our news flash of 22 May 2018). In doing so, the tax authorities decided to no longer multiply the result (of 100/60 x indexed cadastral income) with 1.25 or 3.8 as this would result in an unjustified difference in tax treatment.
The anticipated change in tax law is coming up. Indeed, based on a recent announcement, the factor that would need to be applied in all cases of free disposal of a housing – both provided by an individual and by a company (legal entity) will amount to 2. It expected that tax Belgian tax law will be adapted in that sense before the end of this calendar year and with (retroactive) effect as from 1 January 2018.
Please note that if it concerns a furnished house or apartment, the result of the updated formula (= 100/60 x indexed cadastral income x 2) will still need to be further multiplied by 5/3 (= increased with 2/3).