Alternatives to the Kaasroute for donations
July 2021 – Since 15 December 2020, donations made through a foreign notary must be registered in Belgium. Donation duties are therefore due in Belgium. Although the fees of the Dutch notary are often lower than those of the Belgian notary, it may no longer be worth it. Is there no alternative?
Which properties?
First of all, it should be pointed out that the "Kaasroute" was only possible for donations of movable property, ranging from cash to shares. Transfers of real estate, such as land or buildings, must be registered in Belgium anyway, so they can never escape registration duties.
Donation of cash
In the Flemish Region, the donation of movable property is subject to two rates.
In the direct line (donation from parents/grandparents to their children/grandchildren or vice versa), the rate applicable to a donation of movable property is 3%. This rate also applies between partners.
Between all other persons, the rate is 7%.
So if you give your children a sum of money, for example, they will normally have to pay 3% gift tax when the gift is registered. The document on which you accept the donation must be registered. If you have the donation recorded by a notary, the notary will take care of the registration. In the case of a private deed, you will have to do this yourself.
You can also make a donation without a deed: the manual donation, where money is passed from hand to hand, is an accepted technique. However, there are two disadvantages to a manual donation. Proof of the donation (e.g. if there are other parties involved who feel aggrieved) and the date of the manual donation are difficult to establish. The date can be important, because if a donation takes place shortly before the donor's death (shortly means less than three years in this case), the tax authorities will assume that the sum is still present in the estate. It is then up to the donee to prove that the donation took place more than three years before the death or that gift tax was paid.
Another way of making donations without a deed is by simple transfer. The sum is simply transferred to the account of the donee (in the case of a manual donation, the cash is literally passed from hand to hand). The date can then be established fairly quickly. But proving that it was a donation (and not, for example, the liquidation of an account or a loan) remains difficult.
Donation of shares
If you want to donate shares, there are several other possibilities.
First of all, there are special rates for the donation of family businesses. If you transfer your company to the next generation by means of a donation of shares, you can benefit from an exemption in all three Regions (technically, the Walloon Region applies a zero rate). However, you must meet a number of conditions, not to mention that this is a rather radical decision: perhaps you are simply not yet ready to pass on your company to the next generation.
A second alternative is a simple transfer of shares. Such a transfer is only possible with dematerialised securities. This assumes that the shares are actually held in an account at a bank. Just like cash, you can transfer shares or stocks from one account to another. And as with cash, this transfer will be considered an indirect donation.
In the past, donations were sometimes noted in the shareholder register. All shareholders are listed in this register. If the names of the shareholders change, this is in principle the beginning of proof that a transfer has taken place. As in the case of a manual gift of cash, the principle remains that it must be proven not only that a transfer took place and when it took place, but also that this transfer was a gift.
It is also unclear whether this alternative is still possible under the new Companies and Associations Code (CSA). According to the doctrine, an entry in the register does not in principle lead to a transfer of ownership. This would mean that the entry in itself is not yet a donation.
But in general, the CSA offers other possibilities for the distribution of shares in a company. The possibility of issuing non-voting shares or shares with double voting rights in particular offers you numerous possibilities for splitting up the management and ownership of the company.
Sound planning is possible even without going through the Netherlands
It is clear that a gift of movable property on which you do not have to pay gift tax is still possible within a perfectly legal framework. It is true that the Dutch notarial deed offered the possibility of refining the donation and, above all, of recording your intention to make a donation on paper. In principle, this is not possible without the payment of gift tax, except for the donation of a family business. But there are still many alternatives.
