The Flemish Tax Administration’s latest and enlarged position on split purchases leads to confusion

The Flemish Tax Administration has recently expanded its position on split purchases to include the split registration of securities and investments. When securities or investments are purchased by the parents for the usufruct and by the children for the bare property, the funds necessary to achieve the purchase of bare ownership cannot have been previously donated for that purpose. If they have been donated for that purpose, gift tax should be paid in order to avoid inheritance tax on the value of the full ownership of those securities or investments.

Content of the standpoint

The position of the Flemish Tax Administration relates to the following situation:

  1. First, a gift of funds takes place;
  2. Secondly, the beneficiaries of the donation make a split purchase together with the donors. The donors buy the usufruct, and the beneficiaries buy the bare ownership.

The Flemish Tax Administration states that, in such a case, the assets purchased in this way are deemed to be part of the donor’s estate in full ownership. Inheritance tax will be due on the value of the full ownership of the assets so purchased.

No inheritance tax, however, is payable if the following evidence is provided:

  1. The funds of the donation were not earmarked for the purchase of the bare ownership. The donation was not made to finance the purchase of the bare ownership; OR
  2. The donation was subject to gift tax before the purchase (for donations from 1 September 2013).

Recent expansion of that standpoint

This position has been recently amplified by the issuance of a statement to the effect that the above also applies to a split registration of securities and investments, although the above-mentioned counter evidences in rebuttal may also be given.

Standpoint of the Flemish Tax Administration

This position only applies if the donor is a tax resident of the Flemish Region on the date of decease. The position does not apply if the donor dies as a tax resident of the Brussels or Walloon Region.


One noteworthy response to this enlarged standpoint has been an announcement in the press that all donations of movable property, with reservation of usufruct, will henceforth be subject to inheritance tax in the donors estate if no gift tax has been paid.