Tax system
The legislator, in establishing the RREC Act, has given RRECs a favourable tax status.
Corporate tax
An RREC is subject to the normal corporate tax rate, however this only applies to a limited taxable basis, consisting of the sum of (1) the abnormal or benevolent benefits it has received (2) expenses and costs that are not deductible as professional expenses, other than depreciations and losses on shares. The results (rental income and gain from sale minus the operating expenses and financial charges) are thus exempt from corporate tax on condition that the amount of obligatory dividend payment is paid in accordance with article 13 §1 of the RREC Royal Decree and Chapter III of Annex C of the RREC Royal Decree. It can also be subjected to the special secret commissions tax of 309% on commissions and remunerations paid that are not properly documented in individual pay sheets and a summary statement.
Withholding tax
The withholding tax on the dividends that are paid out by a public RREC equals 30% as from 1 January 2017, to be withheld when paying the dividend (subject to certain exemptions) (Programme act of 25 December 2016, published in the Belgian Official Gazette of 29 December 2016).
This is a discharging withholding tax for private individuals who are residents of Belgium.
Exit tax
If a company converts to the status of RREC, or if a (normal) company merges with an RREC or splits part of its immovable assets with a transfer to an RREC, it must pay a one-time tax (the so-called exit tax) of 15%. After that, the RREC is only subject to taxes on very specific elements, such as rejected expenses and gratuitous advantages. This exit tax is the fiscal price that such companies must pay in order to leave the normal tax system. In terms of the tax system, this transfer is treated as a (partial) division of the company’s assets by the company to the RREC. When dividing the company’s assets, a company must treat the difference between the payments in cash, in securities or in any other form and the revalorised value of the paid-up capital (in other words the gain that is present in the company) as a dividend.