Table of contents • Flash back on 2015 • Flash forward to 2016 • 2016 Real Estate seminars * * * 15 January 2016 Real Estate Quarterly - Flash Back on 2015 and Flash Forward to 2016 Real Estate Quarterly 2 Flash back on 2015 Bodemdecreet: The modifications to the Flemish Soil Decree entered into force on 1 January 2015. The modifications relate to, amongst others, the cancellation of the reporting obligation in case of transfer of risk land, the cancellation of the requirement for an orientation soil survey in case of expropriation of risk land and the introduction of the concept of ‘mixed soil contamination’. In parallel, on 23 October 2015, the Flemish government modified the executive decree (VLAREBO). Budget fund: The Ordinance dated 9 July 2015 creates a new budget fund in Brussels, dedicated to fines resulting from urban offenses and crimes. The new fund entered into force on 20 July 2015. Change of function: Pursuant to two executive decrees of the Flemish Government dated 17 July 2015 and 30 October 2015, both entered into force on 29 November 2015, the list of the changes of function (of a plot of land) subject to a building permit has been broadened. In addition, new categories of functions have been created such as “common services and public utility services” and “military functions”. Cobrace tax: The Brussels’ environmental tax for the “excess” parking space is due since 1 January 2015 for each new environmental permit and for each environmental permit renewal. Code du Développement Territorial: After having been postponed to 1 October 2015, the entry into force of the CoDT (new planning code in the Walloon Region) has been postponed to an unknown date, “when the Government shall find it appropriate”. Complex projects: The Flemish Decree on complex projects dated 25 April 2014 entered into force on 1 March 2015. This Decree introduces an optional integrated procedure for the realisation of projects with significant social and spatial importance, which requires an integrated permit and zoning process. Energy Performances of Building: 2015 brought a lot of changes in EPB regulations. In 2015, the second EPB Directive called “EPB Recast” (2010/31/UE) has been fully incorporated into the legislation of the three Regions. Fiscal and social debts: On 24 July 2015, the Chamber adopted a proposal of law extending the ‘waterfall principle’ to the principal. As a consequence, the principal can now be jointly liable for fiscal and/or social debts of one of his (sub) contractors. Power of taxation: The federal State will continue to provide the “service” (i.e.the collection) related to the former “national” taxes that have been devolved to the Regions, until the relevant Region decides otherwise. Since 1 January 2015, the Flemish Region has taken over the service relating to registration and inheritance duties. The Flemish Region has also consolidated its tax legislation in a Flemish Tax Code and has created its own ruling service. Management of regulated real estate funds: According to the ECJ (ECJ-Case Fiscale Eenheid dd. 9 December 2015), the VAT exemption for ‘management of special investments funds’ may apply to companies investing in real estate that 3 are subject to a regulatory regime. This interpretation leads to a broader interpretation of the current Belgian law, which does not refer to all regulated funds as such, and in particular to AIF. The ECJ also confirmed that property management services, which are currently anyway treated as VAT taxable in Belgium, may however not benefit from the exemption. Security interest: Since the Flemish Region is competent for the collection of the registration duties on mortgages as from 1 January 2015, the Federal exemption/reduction of registration duties on mortgages granted for the same guaranteed amount, does not apply anymore when the real estate asset is located in Flanders. The Flemish tax administration has given its interpretation of the legislations at stake to avoid double taxation but the neutrality in all cases is not guaranteed. Self-supply of a building: A deemed “self-supply” should occur when a building is finally used for a VAT exempt activity despite the previous deduction of the input VAT on the construction costs of that building. According to the ECJ ( ECJCase Property Development Company dd. 23 April 2015), when a building is not purchased but is built, the taxable amount for the self-supply is, in principle, the purchase price of similar buildings at the time the self-supply occurred, and not the construction price. Tax ruling: Following the take-over by the Flemish Region of the collection of real estate transfer taxes, the Ruling Commission has lost its competence in Flanders. To remedy the situation for Flemish taxes, it is therefore possible since 14 August 2015 to ask Vlabel (the Flemish tax administration) for a ruling or for an interpretation. Both Ruling Commission and Vlabel are currently working on a protocol for transaction or question concerning both Federal and Flemish legislations. The idea of a common working group that would give a ruling legally binding both Flemish Region and Federal State is currently studied. Transfer of existing split deal structure: the Ruling Commission is now considering, on a case-by-case basis, to allow the reunification of the full ownership in the hands of a third party with payment of 2% registration duties on the long-term lease right and 12.50% on the residual property right. Vlabel, which is competent for Flanders, has a totally different standpoint: the commitment taken in the initial ruling cannot be waiver or modified. As a consequence, should such a reunification occur, then the Flemish tax administration is allowed to (i) assess 10% transfer tax on the initial transaction (split deal) and (ii) assess 10% transfer tax upon reunification of the full ownership over the real estate asset in the hands of a third party, in addition to the Federal tax administration that may still assess 2% registration duties on the transfer of the long-term lease right to this third party. * * * 4 Flash forward to 2016 Air - climate - energy: The air, climate and energy plan of the Brussels government, adopted pursuant to the COBRACE, should be applicable as from 2016 (exact date unknown). Bodemdecreet: A public consultation has been organised by the OVAM at the end of 2015 in respect with a draft of decree aiming to implement the OVAM’s ‘Soil Management Optimising Policy’. The proposed decree relates to: (i) the cancellation of the conform declaration on soil investigations, (ii) the general obligation of proceeding to an orientation soil survey for lands with a potential historical soil contamination by 2025, (iii) the adjustment of the conditions for soil remediation organisations and (iv) the combination of the descriptive soil investigation and the (limited) soil remediation project in one report only. CoBAT: The reform of the ‘Code Bruxellois de l’Aménagement du Territoire’ is on tracks and shall be reviewed by the Parliament during the first semester of 2016. The building permit proceeding should namely be reviewed and made easier. Hotels - city tax: The government of the Brussels-Capital Region intends to transfer the current “City Tax” from the municipalities to the Region for harmonisation purposes. This tax would therefore become a regional tax in Brussels and a non-deductible expense for corporate income tax purposes in the hands of the taxpayer. Leases: The entry into force of the regional lease laws is planned for the year 2016. For the Walloon Region, a reform of the agricultural lease is on-going. For the Flemish Region, a decree proposal on short-term commercial lease is pending. For the Brussels-Capital Region, an ordinance proposal aiming to regulate the lease market through a regulation of the rent is currently assessed. New town planning players: The ‘Bureau Bruxellois de la Planification’ (BBP) and the ‘Société d’Aménagement Urbain’ (SAU), created pursuant to two Ordinances of the Brussels-Capital Region dated 29 July 2015 (SAU) and 12 August 2015 (BBP) shall take office during the year 2016. Both entities shall ease the realisation of the Brussels-Capital Region’s projects on its own parcels. The BBP shall collect all relevant information and send it to the government, in order to ease the allocation of the budget. The SAU shall execute the said projects, with public or private entities. To date, the executive decree has not been adopted yet. Omgevingsvergunning: On 1 December 2015, the Flemish government approved the “omgevingsvergunning” executive decree. The “omgevingsvergunning” creates a unique permit encapsulating both environmental and building permit. The main parts of the ‘omgevingsvergunning’ will enter into force around December 2016. Meanwhile, the authority organises training days for municipal, environmental and town-planning officials. Property tax: The government of the Brussels-Capital Region intends to increase in 2016 the property tax up to 12% in the Region. However, the owner of a main residence located in the Brussels-Capital Region shall benefit from a capped EUR 120 on its property tax bill. 5 Reduced VAT rates (private dwellings): Before 2016, construction works to private dwellings were subject to the VAT reduced rate of 6% provided that the building had been occupied since at least 5 years. As from 1 January 2016, this period is increased from 5 to 10 years, so that for works performed in 2016, the building must have been occupied since 2006. Transitional measures apply for works contracts signed in 2015 and relating to dwellings occupied since at least 5 years. Reduced VAT rates (school buildings): As from 1 January 2016, the 6% reduced VAT rate will be applicable to construction works to buildings used in the framework of official education. The 6% rate also applies to the supply, granting of a right in rem and VAT-leasing of a new school building. REIT: The Belgian budget for 2016 includes new taxes from the introduction of a new real estate investment vehicle dedicated to institutional and professional investors. The regulatory and tax framework should be largely similar to existing SIR / GVB subject to (i) private character (no stock quotation), (ii) no financing restrictions or distribution requirements, (iii) an adapted dividend withholding tax regime where Belgian-source income distributed to investors should be subject to dividend withholding tax (subject to foreign pension fund or treaty exemption) and foreign-source income distributed to investors should be exempt from withholding tax. Tax-point rule: Since 1 January 2013, the time of issuance of an invoice was no longer relevant when determining the tax point of a supply. For local B2B transactions, the VAT became due at the time the supply was made or when a prior payment was received (with several transitional measures applying). As from 1 January 2016, the issuance of an invoice is reinstated as tax-point. VAT becomes due at the time an invoice is issued, either before or after the supply, knowing that an invoice should be issued at the latest on the 15th of the month following the month of the supply. If no invoice has been issued on that date, VAT becomes due in any case on that date. VAT obviously still becomes due if a payment is received before the time of the supply. Tours & Taxis: The Tour and Taxis Site remains an important target for the Brussels-Capital Region. On 2016, the development of the public park shall start, as well as the review of the town-planning request for the construction of the Passerelle Picard, creating a bridge between the site and the city centre. Town planning regulation: 2016 is the year of the reform of the old ‘Règlement Régional d’Urbanisme’ of the BrusselsCapital Region. The current version entered into force on 3 January 2007 and has not been (heavily) modified since then. The current text shall be reviewed during 2016 and should enter into force in 2017. VAT on management fees of directors: According to an administrative tolerance since 1994, directors acting through a legal entity may choose not to charge VAT on their fees received as remuneration for their mandate. The administrative decision dd. 20 November 2014 has abolished this optional regime, so that directors-legal entities will have to apply VAT on their fees. The entry into force of this new rule had already been postponed until 1 January 2016 and is now further deferred to 1 April 2016, meaning that director services invoiced after 30 March 2016 will in principle be subject to VAT. Administrative guidelines should be published soon. www.loyensloeff.com Although this publication has been compiled with great care, Loyens & Loeff CVBA/SCRL and all other entities, partnerships, persons and practices trading under the name “Loyens & Loeff”, cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice. Disclaimer Christophe Laurent - Partner T +32 2 743 43 05 E christophe.laurent@loyensloeff.com Contacts Ariane Brohez - Counsel T +32 2 743 43 21 E ariane.brohez@loyensloeff.com Sophie Van Berkel - Knowledge and BD Manager T +32 2 773 23 41 E sophie.van.berkel@loyensloeff.com VAT treatment of services connected with immovable property: The European Commission published a binding guidance regarding the Regulation N°1042/2013 on services connected with immovable property. The Regulation, ensuring the VAT taxation at the place where the property is located, will become effective in all Member States as of 1 January 2017. The guidance provides clarifications on the application and scope of this specific localisation rule, and especially on the question which services fall within the scope. Most of the clarifications have already been implemented in Belgium. * * * 2016 Real Estate Seminars Loyens & Loeff Real Estate Team shall organise the following lunch-seminars in 2016, in our offices, from 12:00 to 2:00. 26 January: Town-planning infringements Speakers: Justine Thiry and Martin Manzanera 23 February : Do’s and don’ts in joint venture, forward funding and forward commitment Speakers: Christophe Laurent and Wim Vande Velde 22 March: New real estate investment fund and update IFRS Speakers: Ariane Brohez and Yvan Stempnierwsky * * *