Belgium: Overview

RENTAL YIELDS

Last Updated: May 18, 2009

Belgium remains static at 5.5%

Gross rental yields in Brussels, Belgium are around 5.5%, almost unchanged from last year (5.3%).

An upper-end apartment in central Brussels would cost €2,651 per square metre (sq. m.), according to the Global Property Guide, almost unchanged from €2,514 per sq. m. last year.

The index of apartment prices across Belgium rose 6.26% in 2008, according to the Institut National de Statistique, or 1.73% after inflation.

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TAXES AND COSTS

Last Updated: Aug 26, 2008

Moderate to high
effective income taxes in Belgium

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	11.6%	15.6%	21.9%
Click here to see a worked example
Source: Disclaimer

Rental Income: Personal income tax rates range from 25% to 50%, depending on the taxable net income. The taxable net income is the cadastral value, increased by 40%, minus deductible expenses. As a result, the effective rental income tax is a bit lower than the headline rate, ranging from 12% to 21%.

Capital Gains: Capital gains tax of 16.5% is payable on gains on developed property held for less than five years. After a holding period of five years, no Capital Gains Tax is payable.

Inheritance: Inheritance tax rates in Belgium are progressive and vary according to the degree of kinship, region where the inheritance is opened, and the share inherited by each of the heirs.

Residents: Residents are taxed on worldwide income, at the rates previously mentioned.

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BUYING GUIDE

Last Updated: Mar 06, 2007

Total transaction costs are high in Belgium

Closing costs are high in Belgium, between 13.9% and 22.1% of property value. The bulk of the cost is accounted for by transfer duties, at 12.5% or 10%, depending on the property’s location. Roundtrip costs for new properties are much higher because of the 21% VAT.

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LANDLORD AND TENANT

Last Updated: May 30, 2006

Tenant protection laws are well-established in Belgium

Belgian law is pro-tenant.

Rents: Rents can be freely negotiated but rent increases above the inflation rate cannot be written into the contract. If there is a written contract, the rent will be automatically adapted once a year in accordance with the cost of living. Deposit payments must not exceed three month’s rent.

Tenant Security: Belgium’s landlord and tenant law is restrictive as regards the length of rental contracts. The main options for the duration of a lease are: a contract of 9 years and, alternatively, a contract for less than three years.

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ECONOMIC GROWTH

Last Updated: Jun 25, 2008

Weaker economic growth

Belgium is a small developed country in Western Europe, with a GDP per capita of US$42,560 and a population of 10.4 million. Its capital, Brussels, is home to several international organizations, including the headquarters of the European Union and the North Atlantic Treaty Organization.

In 2007, Belgium’s GDP growth rate was 2.8%. Belgium’s economy expanded by an average of 2.6% between 2004 and 2006, higher than the average of 1.05% GDP growth from 2001 to 2003. Real private sector wages rose by 3.8% in 2007, and 3.2% in 2006. The unemployment rate was 7.5% in 2007, down from 8.2% in 2006 and 8.5% in 2005.

The economy is expected to expand by only 1.7% in 2008 and 1.5% in 2009. Real wages are expected to rise by 3.5% in 2008.

Inflation fell to 1.8% in 2007, from 2.3% in 2006 and 2.5% in 2005. Inflation is expected to rise to 3.6% in 2008.