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.
Discriminatory old rules
During many years, the calculation of this benefit in kind depended on whether the housing was 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 was higher than EUR 745, or x 1.25 if the cadastral income was 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 2018, the Belgian tax authorities agreed with the recent case law (see our news flash of 22 May 2018). In anticipation of a change in tax law, the Belgian 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.
New tax rules
In the course of 2018 new upcoming tax rules were announced (see our news flash of 8 August 2018). According to the Royal Decree of 7 December 2018, the factor that needs to be applied in all cases of free disposal of a housing – both provided by an individual and by a company (legal entity) now amounts to 2. Moreover, the difference in valuation depending on whether the cadastral income exceeds EUR 745 or not, is abolished. The formula to be used for company provided housing located in Belgium is always: 100/60 x indexed cadastral income x 2. In practice, this factor would be more realistic (compared to the monthly rent that a person – without company provided housing – would need to pay to rent a similar house or apartment).
It was expected that Belgian tax law would be adapted with retroactive effect as from 1 January 2018. However, based on the actual wording of the Royal Decree of 7 December 2018 (as published on 27 December 2018), the amended formula is applicable on the relevant benefits in kind (housing) provided as of 1 January 2019.
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).