Less Flemish inheritance tax on 'vriendenerfenis'
February 2022 – In mid-2021, Flanders introduced the 'vriendenerfenis' (friend inheritance). This technique allows you to leave part of your estate to non-family members or 'distant' relatives, without the taxman taking the lion's share.
Take into account the heirs with rights of retention
If you are making a will because you want to benefit certain people, you should first of all take into account the legal limits on disinheritance of your close relatives - the so-called reserved heirs.
If you do not have any heirs subject to reserve or if you remain within the limits, you can more or less write what you want in your will.
The rate of 'erfbelasting' (the official name for Flemish inheritance tax) depends on
the amount; and
the family relationship.
Partners and children
The lowest rates are between spouses and towards children/grandchildren and parents/grandparents: from 3% to 27%, with further possibilities for reducing erfbelasting.
Siblings
0.01 to 35 000 euros: 25%;
from 35 000.01 euros to 75 000 euros: 30%; and
from 75,000.01 euros: 55%.
Example
These rates apply to the net acquisition of each brother or sister individually.
Sister A receives 30 000 euros and sister B also receives 30 000 euros. In both cases the rate is 25%.
So A and B each pay 7 500 euros in “erfbelasting” (i.e. 15 000 euros together).
Other family members
In the case of bequests to third parties and relatives more distant than siblings, the rates are as follows
from 0.01 euro to 35 000 euros: 25% ;
from 35 000.01 euros to 75 000 euros: 45%;
75 000.01: 55%.
For those who cannot see the difference directly: take a look at the rate for the middle bracket.
But there is another difference: these rates apply to the total net acquisitions of all successors.
Example
Cousin C and cousin D both receive 30 000 euros.
The "erfbelasting" amounts to :
35 000 euros at 25% = 8 750 euros; and
25 000 euros at 45 % = 11 250 euros.
Total "Erfbelasting" on 60 000 euros = 20,000 euros.
Since C and D receive the same amount, they each pay 10 000 euros in tax.
"Vriendenerfenis”
“Vriendenerfenis” is possible for deaths from 1 July 2021.
It is only possible in the case of bequests to distant friends and relatives and is only granted if the deceased has designated in a will one or more natural persons who may apply for the reduction.
By "friends and distant relatives" is meant siblings and more distant relatives, as well as third parties.
You must also state precisely and unequivocally in your will to whom you are making your bequest as a friend. This can be several people, but also one person.
Reduction for one friend
In fact, the “vriendenerfenis” consists of a reduced rate of 3% on a maximum of 15 000 euros.
Example
You plan to leave 15 000 euros to a friend.
Without the “vriendenerfenis”, the “erfbelasting” amounts to 750 euros (15 000 x 25%).
Thanks to the vriendenerfenis, your friend will pay 450 euros in erfbelasting (15 000 euros x 3%).
If you leave 25 000 euros to your friend, he or she will still pay 450 euros on the first 15 000 euros. The next 10 000 euros will be subject to the normal rates (10 000 euros x 25% = 2 500 euros).
The saving will therefore never be more than 3 300 euros.
If the amount bequeathed is less than 15 000 euros, the reduction will obviously also be smaller.
Reduction for several friends
If you have designated more than one person, the 3% reduction applies to a maximum amount of 15 000 euros, for all persons together.
Example 1
Let's take the example of sisters A and B.
They paid 15 000 euros together.
If they are named in the will for a "vriendenerfenis", they benefit together from a reduction of 3 300 euros. The total tax then amounts to 11 700 euros (5 850 euros per sister).
Example 2
Same story with cousins C and D. They had to pay 20 000 euros in erfbelasting together.
In the case of “vriendenerfenis”, they will also receive a reduction of 3 300 euros, leaving a total of 16 700 euros (8 350 euros per cousin) to pay.
Be precise
You must indicate in the will who will benefit from the "vriendenerfenis". It does not have to be an authentic will. A handwritten will is sufficient.
However, you must clearly specify that such and such a natural person will receive a legacy from you which you consider as a "vriendenerfenis". The tax authorities will not automatically apply the reduction if you make a bequest to a friend, brother or sister!
You can even state in your will that you want to leave a "vriendenerfenis" (with a reduction) to one friend and not to the other.
Example
Let's take the example of cousins C and D. If you leave a "vriendenerfenis" of 30 000 euros only to cousin C and you leave 30 000 euros to cousin D without any further specification, the "erfbelasting" is calculated as follows. The total "erfbelasting" amounts to 20 000 euros, i.e. 10 000 euros for each cousin. But cousin C gets a reduction of 3 300 euros (and therefore still pays 6 700 euros), while cousin D has to pay the 10 000 euros.
So there are many possibilities. Make sure you are aware of the possibilities, because a small mistake in the wording can cost you (or rather: your heirs) 3 300 euros.
