QUARTERLY 2 - APRIL 2018
We produce a quarterly newsletter to keep you updated on legal developments and important trends in the real estate sector. In this issue, we address the following topics:
Real Estate Investment and Taxation -- Belgium will implement an optional VAT system for immovable letting -- Corporate tax reform: the "Repair Bill" and the proposed (major) changes in terms of interest
deduction restriction -- New LuxembourgFrench tax treaty: changes for funds and real estate investments
Real Estate Management -- Housing Leases -- New Walloon Decree on short-term retail lease -- Cancellation of the index jump for residential leases in Wallonia
Real Estate Development -- Soil Data Bank available in Wallonia
We hope this will be useful to you.
Christophe Laurent and Ariane Brohez
Real Estate Investment and Taxation
Belgium will implement an optional VAT system for immovable letting
Currently, immovable letting is, as a general rule, exempt from VAT. This implies that the landlord does not charge any VAT to the tenant and is, on the other hand, not allowed to deduct input VAT paid upon construction or acquisition of the real estate and during the investment lifetime (e.g. VAT on asset management fees). The Belgian VAT legislation provides for certain exceptions to this general rule (e.g. for the lease of warehouses, hotel rooms, lease of a building in connection with the operation of an airport, the so-called "VAT-lease" or "financial lease").
According to the VAT Directive, Member States are free to provide for an optional VAT system for immovable letting, this possibility having been exercised with different modalities by all Member States except Belgium to date.
With a view of boosting the real estate and construction sector and reducing the competitive disadvantage of Belgium compared to its neighbouring countries, the Belgian government has finally decided to provide for an optional VAT system for immovable letting. While this system would have initially been limited to the logistics sector, it has been extended, with different modalities, to all commercial letting.
The introduction of such an optional VAT system could be beneficial for all actors in the real estate industry in Belgium. VAT paid on construction and operating costs which previously had to be considered as a `non-deductible cost of the building' will now in several situations become recoverable.
Below an overview of the announced changes.
In a nutshell, it should be always possible to submit the letting of warehouses to VAT, based on one of the following VAT regimes, it being understood that
the condition of "new building" applicable to this optional regime, is not applicable to warehouses: -- contracts existing and subject to VAT before
1 October 2018: the current regime continues to apply to those contracts; -- new contracts as from 1 October 2018, for which the VAT option cannot be exercised (i.e. when the lessee does not use the leased premises for its economic activity): a new exception for warehouses (exception to the nonsubmission to VAT) shall apply; -- new contracts as from 1 October 2018, for which the VAT option can be exercised: those contracts can be subject to VAT if both parties agree so and comply with the option formalities.
For all other commercial letting, an optional VAT regime shall be introduced as from 1 October 2018.
Under "commercial letting", it must be understood the letting of premises that are exclusively used by the tenant for its economic activity granting such tenant the quality of VAT taxable-person (even if without right to deduct input VAT). In other words, the letting of residential properties to individuals shall not be subject to VAT, neither the letting of office spaces to pure holding companies. On the contrary the letting of residential properties to professional operators shall fall under the new VAT regime.
This commercial letting might be subject to VAT under the following conditions: -- the letting concerns a `new building' (or parts
thereof) (and accompanying land), possibly also including heavily refurbished building qualifying as `new building' after the refurbishments; -- the option to apply VAT will need to be agreed upon by both the landlord and the tenant; and -- the option to apply VAT will be valid during the entire lease.
New buildings and VAT claw-back
The option may only be exercised for buildings for which VAT on construction costs has become chargeable for the first time on 1 October 2018 at the earliest. On the basis of the explanatory notes, this "construction cost" is to be interpreted broadly and should include preliminary feasibility cost (e.g. architect) if related to the specified project.
Under this concept of "new building" should probably also be understood the heavy refurbishments being defined as either: -- a drastic modification of essential elements,
being the nature, structure or destination, whatever the costs of the works might be; or -- modifications for which the cost of the works (excluding VAT) equals to at least 60% of the market value of the building (excluding ground) at the end of the works.
Moreover, an extended VAT claw-back period of 25 years (instead of the standard 15 years) should apply to buildings which have been subject to this optional VAT letting regime. This extended claw-back period should start upon first utilisation of (part of) the building.
With respect to this VAT claw-back, and knowing that the option to submit letting to VAT depends on the will of both the landlord and the tenant, the explanatory gives interesting information: -- the VAT is deductible, by the landlord
who intends to lease with VAT, during the construction phase, and no claw-back shall (initially) apply in case it appears that the option has been validly exercised; -- no claw-back shall have to apply in relation to any rent-free period; -- no claw-back shall apply in case of vacancy provided that the landlord demonstrates its intention to lease with VAT and that the vacancy is independent from the landlord's will (e.g. force majeure, damage to the property, refurbishment works).
It goes without saying that, on these aspects, further clarity from the VAT administration should be welcome.
As from 1 October 2018, the letting of nonresidential real estate (e.g. pop-up store) for a period of maximum 6 months shall be subject to VAT. Letting in the framework of certain specified social and cultural purposes shall however continue benefiting from a VAT exemption.
Note that this contribution is based on the preliminary draft law approved by the Council of Ministers dated 30 March 2018. There is still a long way to go and conditions will likely be fine-tuned along that process. We will keep you updated and remain at your disposal in case of any questions.
Corporate income tax reform: the "Repair Bill" and the proposed (major) changes in terms of interest deduction restriction
The law reforming the Belgian corporate income taxation has been discussed and voted in the framework of the very last rush of the end-year1. As this law is still subject to many (justified) interrogations, a draft "Repair Bill" is currently under discussion. Please find hereafter a short overview of items relevant for the real estate sector.
Notional interest deduction
Pursuant to the Belgian corporate tax reform, as of 1 January 2018, the notional interest deduction (NID) no longer applies to the total equity but only to the increase of equity measured over a rolling 5-year period. The equity base to calculate the NID is equal to 1/5th of the positive difference between (i) the corrected equity at the end of the taxable period and (ii) the corrected equity at the end of 5th preceding taxable period.
Companies that are decreasing their equity on a regular basis to upstream their excess cash through capital decreases, which shall be the case for a large majority of real estate companies, shall therefore no longer benefit from the NID.
1 Dated 25 December 2017 and published on 29 December 2017.
The draft Repair Bill includes the result of the current taxable period to the "corrected equity at the end of the taxable period" and introduces a new anti-abuse provision to avoid "artificial" increases of equity. A capital contribution by an affiliated company will be excluded from the calculation basis of the NID if the contribution was financed with a loan and the affiliated company claims a tax deduction for interest payments on this loan.
Interest deduction restriction based on the Anti-Tax Avoidance Directive (ATAD)
As from tax year 20212, arm's length exceeding borrowing costs will be deductible in the tax period in which they are incurred only up to the higher of 30% of the taxpayer's EBITDA or 3,000,000 EUR (de minimis)3. This new interest limitation rule shall replace the 5:1 debt-to-equity ratio but also extends the former thin capitalisation rule since it applies to all interest and not only intragroup interest.
BE-REIT, SREIF, real estate certificates and leasing companies As previously published, this new interest deduction restriction is subject to exclusions (certain loans) and exemptions (certain taxpayers).
However, based on the bill voted last year but not yet in force it was concluded that -- BE-REIT, and potentially SREIF, would not be
exempt from the application of this new rule although the interest paid by them does not lead to a decrease of their taxable basis due to their specific tax regime; -- Real estate certificates would not be excluded from the scope of application of this new rule although the tax system is similar to a BE-REIT or a SREIF, namely a shift in taxation from the vehicle to the beneficial owner of the real estate income.
Leasing and factoring companies were also no excluded from the scope of application while they benefit from specific provisions under the current thin capitalisation rule.
In terms of exemption, the draft Repair Bill adds companies that are solely or mainly active in the financing of real estate through the issue of real
estate certificates, as well as companies that are mainly conducting leasing and factoring activities. With respect to real estate certificates, the draft Repair Bill specifies that public issue and trading is not required; in other words, institutional or private issue shall not jeopardise this exemption.
With respect to BE-REIT and SREIF, the draft Repair Bill does not modify the provisions with respect to interest deduction restriction, but well the tax regime of BE-REIT and SREIF. Under the current regime, non-deductible interest, including as a result of the application of the ATAD, are included in the taxable base of a BE-REIT or a SREIF, and therefore subject to corporate income tax at the standard rate. In accordance with the draft Repair Bill, non-deductible interest in the sense of the ATAD shall not be added (anymore) to the taxable result of a BE-REIT or a SREIF.
Group provisions The draft Repair Bill makes an attempt to clarify the "group provisions" applicable to this interest deduction restriction. Further administrative comments and Royal Decree are however still needed and the relevant provisions might still be subject to interpretation: -- interest paid between Belgian taxpayers of the
same group should be excluded; -- payments made between Belgian taxpayers
of the same group are "neutralised" (i.e. either added or deducted from the EBITDA) to determine the EBITDA; -- the de minimis threshold of 3,000,000 EUR which should be allocated proportionally among the Belgian taxpayers of the same group.
Note that non-deductible borrowing costs can be carried-forward to compensate future profits to following tax periods under the form of a new tax deduction. The draft Repair Bill specifies that this tax deduction remains however limited to the unused part of the 3,000,000 EUR or the 30% EBITDA for the current tax period (i.e. unused interest deduction capacity), and is not allowed when another company member of the group exceeds its own interest deduction capacity.
2 Financial years ending on 31 December 2020 or in 2021 at the latest on 30 December. 3 Subject to group provisions.
In such a case, a transfer of the unused portion of interest is available at the level of the group, but also under the limits of the interest deduction capacity.
Moreover, the draft Repair Bill specifies that a company might be allowed to transfer more than its unused interest deduction capacity, to the extent such additional transfer is then considered as disallowed expenses at the level of the transferor company.
As from tax year 2020 (taxable periods starting on or after 1 January 2019), Belgian tax law shall provide for a possibility to consolidate profits and losses within a group through a so-called "intragroup transfer" between a Belgian taxpayer and another qualifying taxpayer.
The draft Repair Bill neutralises the consequences of a reorganisation (e.g. a merger) as regards the qualification as a qualifying taxpayer for the purposes of this tax consolidation, when all companies that participated into the reorganisation could have been considered as a qualifying taxpayer on a standalone basis (i.e. "going concern").
As the Constitutional Court recently ruled that the fairness tax is contrary to Belgian constitutional law, the abolition of the fairness tax as from tax year 2019 (taxable periods starting on or after 1 January 2018) is included in the draft Repair Bill.
New LuxembourgFrench tax treaty: changes for funds and real estate investments
Georges Simon and Yves-Marie Persin
On 20 March 2018, France and Luxembourg signed a new double tax treaty (the "Treaty") based on the latest version of the OECD model convention and implementing BEPS minimum standards. The Treaty will facilitate various types of investments in France through Luxembourg funds; changes to taxation of certain real estate investment vehicles may, however, have an impact on some existing structures and require a restructuring.
The Treaty reduces the minimum shareholding threshold to 5% (with a minimum one-year holding period) in order to qualify for an exemption from dividend withholding tax.
Another development concerns undertakings for collective investment (UCIs): although not fulfilling the new subject-to-tax requirement in order to qualify as a "resident" for purposes of the Treaty, they may to a certain extent benefit from withholding tax reductions on dividends and interest.
The Treaty also implements the BEPS Action 6 "principal purpose test", which aims at preventing treaty abuse.
The change in the Treaty will also impact investments in French real estate investment funds which are obliged to annually distribute most of their income and whose income or capital gains from real estate are tax exempt (e.g., French Organismes de Placement Collectif Immobilier (OPCIs)).
Dividend withholding tax
Dividends distributed by such an investment fund to a Luxembourg investor owning (directly or indirectly) a participation representing at least 10% of the investment fund's capital, will no longer benefit from the reduced French withholding tax rate of 5%, but will instead be subject to the French ordinary withholding tax rate (currently 30%, to be reduced to 25% by 2022). In case the participation represents less than 10% of the investment fund's capital, the French withholding tax rate will be 15%.
In accordance with French domestic rules, a reduced withholding tax rate of 15% applies on dividend distributed by OPCIs in case the shareholder is considered as a foreign "eligible" UCI, irrespective the percentage of shareholding. In order to qualify, notably the following conditions are to be met (subject to further review and assessment by French counsel). The foreign fund must: -- be established in an EU Member State or in a
State having signed a tax treaty with France; -- raise capital from a certain number of investors
for investment purposes according to an investment policy that is in the interests of these investors; and
-- have similar characteristics to certain French pooled investment vehicles (organismes de placement collectif), namely UCITS, alternative investment funds or employee savings funds.
Given the range of the UCI regimes available in Luxembourg, it is to be considered whether a suitable Luxembourg UCI structure would be available that could secure the 15% reduced French withholding tax rate on dividends distributed by an OPCI on the basis of French domestic law. For example, commonly used Luxembourg alternative investment fund structures such as a specialised investment fund (fonds d'investissement spcialis) could potentially be eligible for the reduced rate.
Luxembourg taxation of dividends received
In addition, Luxembourg will no longer, based on the Treaty, exempt from Luxembourg corporate income taxes dividends distributed by a French capital company to a Luxembourg capital company that holds directly at least 25% of the French company. Instead, Luxembourg will grant within certain limits a credit for the French withholding tax paid.
Corporations that benefit from the provisions of the Parent-Subsidiary Directive should not be impacted by this modification. But note that this
exemption was previously also available to French entities not subject to tax such as OPCIs. In other words, after the entry into force of the Treaty, dividends distributed by OPCIs to Luxembourg regular companies shall no longer be exempt from Luxembourg corporate income taxes but should benefit from a limited tax credit for the French withholding paid.
The Treaty will become effective as of 1 January of the year following the year during which both France and Luxembourg have notified that ratification has been completed (i.e. 1 January 2019 at the earliest).
Since many investments in French real estate have been made by Luxembourg tax resident entities, it is expected that the Treaty will have a significant impact. Taxpayers should assess whether they need to restructure existing investments before the Treaty enters into force, with particular focus on complying with applicable (French) anti-abuse rules and avoiding a disposal which would lead to taxation in France.
Real Estate Management
Domino De Groodt
Until 1 July 2014, tenancy law was a federal competence meaning that all lease regimes were governed by Federal law.
The Special Law of 6 January 2014 concerning the 6th State Reform, which entered into force on 1 July 2014, transferred the legislative competences regarding retail lease, housing lease (which includes but is not limited to residential lease) and agricultural lease from the Belgian federal level to the regional level.
-- Brussels: On 27 July 2017, the Brussels-Capital Region made use of these new competences by adopting an Ordinance on the regionalisation of the housing lease which entered into force on 1 January 2018.
-- Wallonia: A few months later, the Walloon Region also adopted a Decree on housing leases which shall enter into force on 1 September 2018.
-- Flanders: As for the Flemish Region, a project Decree on housing leases has been approved on 17 November 2017 by the Flemish government, but has not been voted yet by the Flemish parliament. Its entry into force is currently expected on 1 September 2018.
The present contribution aims to provide an overview of the most important changes and innovations brought by the Brussels Ordinance on the regionalisation of the housing lease dated 27 July 2017 and the Walloon Decree on the housing lease dated 15 March 2018.
The Brussels Ordinance on housing leases
The Brussels Ordinance on the regionalisation of the housing lease repeals and replaces the provisions of the law of 20 February 1991 on residential leases as well as certain provisions of the common lease law.
The Ordinance includes, on the one hand, general provisions applicable to all housing leases and, on the other hand, provisions specific to each type of housing lease. The provisions of the Ordinance are incorporated in the existing Brussels Housing Code.
In addition to the types of leases already existing under the law of 20 February 19914, the Ordinance creates a new legal framework for two types of housing leases which were previously governed by the general lease principles, namely student housing and co-housing.
General provisions Changes were made in the following areas: a) The Ordinance specifies which information the
landlord is allowed to require from a selected candidate tenant (e.g. its identity, capacity to contract, number of persons in the household, financial means of the tenant).
b) The landlord must provide the future tenant with a number of pre-contractual information (e.g. description of the premises, the amount of rent, an estimate of the individual and municipal charges to be borne by the tenant, whether or not the building is provided with individual gas, water and electricity meters as well as the energy performance certificate). The Ordinance provides for severe sanctions if the landlord does not comply with its pre-contractual information obligation (e.g. claim in view of the judicial dissolution of the lease and/or to obtain damages, administrative fines).
c) The landlord is obliged to inform his tenant if he intends to sell the premises before any public announcement is made.
d) The landlord is allowed to perform, once per 3-year period, works in view of the improvement of the energy performance of the rented premises.
4 namely the residential lease, the lease to certain legal entities serving a social purpose in order to sublet to a natural person and the renovation lease.
e) If the lease agreement was not registered within a period of 2 months following its signature, the tenant must notify in writing the landlord and request the registration within a month following the notification. The tenant can then terminate the lease without notice or compensation if the landlord fails to register the lease agreement.
f) In case the lease agreement does not have a "certain date" prior to the transfer of the rented premises, the purchaser disposes of a period of 6 months, instead of 3 months, as from the signature of the authentic deed, to terminate the lease on certain grounds.
Short-term lease In accordance with the Ordinance, the short-term lease may end prior to its expiry date subject to a 3-month notice and an indemnity equal to 1-month rent.
In addition, the Ordinance provides for the possibility to extend the short-term lease several times, at the same conditions, for a total maximum duration of 3 years.
Student housing As mentioned above, the Ordinance creates a new non-binding legal framework for student housing which is more suitable to the current student lifestyle (e.g. Erasmus, second examination sessions). a) In order to benefit from this specific regime,
the tenant must provide proof of his regular enrolment within a school of secondary or higher education.
b) The duration of the student lease agreement is of maximum 12 months, renewable by periods of one year.
The landlord may terminate the lease subject to a 3-month notice prior to the expiry date. The tenant may terminate the lease at any time subject to a 2-month notice. In addition, the tenant is given the possibility to terminate the lease until one month prior to its effective entry into the premises, provided that he invokes good grounds which may be demonstrates by all legal means. In this case, he pays the landlord an indemnity equal to one month rent.
A new student housing label will be awarded to student houses that meet quality criteria.
Co-housing The Ordinance also creates a new non-binding legal framework for co-housing which ensures security for all the occupants of the premises as well as the landlord.
One single lease agreement binds the tenants to the landlord and a co-housing pact (fixing the rules of common life, the distribution of rent, the guarantee, the subscription of insurance, etc.) is attached to this lease agreement.
The co-tenants are jointly and severally liable towards the landlord for the obligations resulting from the lease.
If one of the co-tenants wants to leave the premises, the co-housing regime foresees a 2-month notice, without any indemnity, provided that a new cotenant, accepted by the group, is found or that an active and sufficient search to find a new co-tenant was done.
Entry-into-force Most of the provisions of the Brussels Ordinance are directly applicable to ongoing leases, except for the provisions with regard to student housing, cohousing and those regarding the conclusion of lease agreements.
The Walloon Decree on housing leases
The Walloon Decree on housing leases includes, on the one hand, general provisions applicable to all types of housing leases and, on the other hand, provisions specific to each type of housing lease.
The Walloon reform also deals with movable property in order to take into account new forms of habitat (such as yurts, barges or caravans).
The provisions of the Walloon Decree shall be incorporated in the existing Walloon Code on Housing and Sustainable Housing.
General provisions It is now clearly stated that all housing leases must be established in writing and that the contract must contain minimum information (e.g. the identity of the contracting parties, date of entry into force of the lease, duration of the lease, type of lease, amount of rent, amount and nature of the private and common charges). For each type of housing lease, a procedure exists which allows one party to oblige the other party to draw up the lease contract following formal notice and if necessary by the judicial way.
Each public/official announcement in order to rent the premises has to contain a certain number of elements (e.g. the amount of rent, the amount and nature of the private/common charges).
In order to avoid any discrimination, the Walloon Decree specifies which information the landlord is allowed to require from a selected candidate tenant (e.g. the name, address, birth date, composition of the household, amount of financial resources, proof of payment of the last 3 rents).
The rented premises must comply with safety, health and habitability requirements during the entire duration of the lease.
The sub-lease and assignment of the lease by the tenant is prohibited without a prior written approval by the landlord.
The parties are obliged to draw up a detailed contradictory state of premises upon entry-into-force at common costs.
Residential lease This type of lease is concluded for a duration of 9 years (or 3-6-9) and may be terminated by the tenant at any time subject to a 3-month notice and by the landlord for personal occupation of the premises. By derogation, it remains possible to conclude a short term lease (<3years) or a long term lease (>9 years).
regarding the notice period and indemnities do not apply to the tenant, provided he has sent a formal notice to register that has remained ineffective for one month.
In addition, the Walloon Decree also specifies the modalities with regard to the revision of rent (between the 9th and 6th month preceding the expiry of each quarter), the charges, especially in case of successive leases, the rental guarantee (which may not exceed an amount equal to 2 or 3 months of rent depending on its form).
Student housing The tenant must provide proof of his regular enrolment within a school of secondary or higher education in order to benefit from this specific regime. The duration of the student lease agreement is also of maximum 12 months, renewable by periods of one year. The lease shall end at the expiry of its term subject to a 1-month notice.
The tenant may early terminate the lease subject to a 2- month notice (which has to be given prior to 15 March) and the payment of an indemnity equal to three month of rent. In certain cases, this indemnity will not be due by the student (such as refusal of inscription or death of a parent).
The tenant is allowed to sub-lease the premises in certain cases with the prior explicit or deemed approval of the landlord.
A student housing label will be awarded to student houses in the Walloon Region that meet quality criteria.
Co-housing One single lease agreement binds the co-tenants to the landlord and the date of signature, and a co-housing pact has to be annexed to the lease agreement. The co-tenants are jointly and severally liable towards the landlord for the obligations resulting from the lease.
The landlord is responsible for the registration of the lease agreement. The costs resulting from a late registration are therefore borne by the landlord. After the 2-month period foreseen by the Code of Registration Duties for the registration and as long as the lease agreement is not registered, the provisions
If all the co-tenants end the lease at the same time, the notice has to be signed by each of them. In case of early termination of the lease by one of the co-tenants, a 3-month simultaneous notice has to be given to the landlord as well as each of the other co-tenants.
If no replacement is found within this timeframe, the tenant has to pay to his co-tenants an indemnity equal to three times it part of the rent. Should at least half of the co-tenants give their notice, the landlord may end the lease subject to a 6-month notice within the month following the last notice given by a cotenant.
New Walloon Decree on shortterm retail lease
Sophie Van Berkel
Almost two years after the adoption of the Flemish Decree on pop-up stores5, the Walloon Decree of 15 March 2018 on short-term retail lease has been published in the Belgian Official Gazette on 28 March 2018. Most of the provisions of the Walloon Decree will enter into force on 1 May 2018 but will not apply to on-going contracts.
As the Flemish Decree, the Walloon Decree aims to establish a legal framework for pop-up stores and restaurants for which the (mandatory) provisions of the Commercial Lease Act of 30 April 1951 are not suitable. It is very positive to note that provisions of both Decrees are quite similar.
The Walloon Decree on short-term retail lease applies on (i) written leases of (parts of) immovable premises, (ii) which are leased for the operation of a retail or craftsmen activity, (iii) with direct contact between the tenant and the public and (iv) which are concluded for a term which is equal to or less than one (1) year.
You find hereafter an overview of relevant key items: -- Written leases: contrary to the Commercial
Lease Act which is applicable to verbal leases as well, the new Walloon Decree only applies to written leases.
-- Duration: the short-term retail lease automatically ends on its expiry date. However, the lease can be renewed (i) under the same conditions, (ii) if the parties agree so in writing and (iii) provided that the total duration do not exceed one (1) year. Failing this, the lease agreement will be deemed to be concluded for 9 years starting from the date on which the lease initially entered into force and the provisions of the Commercial Lease Act will apply.
-- Early termination: the tenant can terminate the short-term retail lease at any time with onemonth prior notice sent by registered mail6, starting on the first day of the month following receipt of the mail. This possibility does not exist under the Commercial Lease Act and early termination by the tenant is subject to very strict mandatory conditions. In addition, the parties can terminate the lease agreement at any time in writing by mutual consent, where the Commercial Lease Act requires a notarial deed or a joint declaration made before the Justice of the Peace.
-- Alterations: the tenant is entitled to carry out works that are useful for its business provided that (i) the costs of the works do not exceed the annual rent (instead of 3-year rent under the Commercial Lease Act), (ii) the works do not affect the safety of the leased property, its health aspects and its esthetical value, and (iii) the tenant informs the landlord before the start of the works by registered mail (notification by bailiff's writ is also allowed under the Commercial Lease Act)7. Contrary to the Commercial Lease Act, at the end of the lease, the landlord can request the removal of the works but he cannot refuse it. In addition, no indemnity is due to the tenant if the works are kept, unless agreed otherwise.
-- Sub-lease and assignment of the short-term lease are prohibited, unless otherwise agreed in writing between the parties. The Commercial Lease Act provides the opposite.
5 Flemish Decree of 17 June 2016 on short-term retail lease, published in the Belgian Official Gazette on 26 July 2016. 6 According to the Flemish Decree on short-term retail lease, the termination notice can also be given by bailiff's writ. 7 The Flemish Decree on short-term retail lease only provides that the notification shall be done in writing.
Cancellation of the index jump for residential leases in Wallonia
Sophie van Berkel
As mentioned in our Quarterly Newsletter of January 2017, the Walloon Region adopted the Decree of 3 March 2016 providing for an index jump for all residential leases (regardless of their duration) that were on-going on 1 April 2016. The index jump implied an indexation freeze for the first year of the lease and a delayed application of the indexation for the following years. This measure aimed to partially neutralise the index jump on wages imposed by the Federal Government in 2015.
On 15 March 2018, the Constitutional Court cancelled the relevant provision of the Decree, considering it in breach with the equality and nondiscrimination principles provided for in articles 10 and 11 of the Constitution. Indeed, the Court considered that different categories of persons who are essentially in different situations (i.e. those who are affected by the index freeze on wages and those who are not) are treated the same way as they all benefited from the index jump on rent, and that there is no reasonable justification for this.
In order to avoid legal uncertainty or financial difficulties for tenants benefiting from the index jump on rent, the Court maintained the effects of the cancelled provision. The tenants concerned do not have to pay the difference between the amount of the rent as if it had been indexed in application of the legal formula and the amount of the rent as affected by the index jump.
Real Estate Development
Soil Data Bank available in Wallonia
Sophie Van Berkel
On 1 March 2018, the Walloon Parliament has adopted the Decree on soil management and soil remediation (Dcret relatif la gestion et l'assainissement des sols), being a new version of the Walloon Soil Decree which will enter into force on 1 January 2019. It namely implements the longawaited "Soil Data Bank" (Banque de Donnes de l'Etat des Sols - BDES). The Soil Data Bank is accessible to all since 9 April 2018 and contains for each cadastral parcel the available data related to a potential soil pollution. This will allow anticipating on administrative procedures that would be required, particularly in the event of a transfer of land or permit application. The Soil Data Bank will be regularly updated with the results of future investigations.
Until 1 January 2019, the Soil Data Bank is available for information purposes only. As from 1 January 2019, some information contained in the Soil Data Bank will remain purely indicative but different obligations will also come into force: -- Soil investigation or remediation: the information
available in the Soil Data Bank for a given plot may generate an obligation to proceed to a soil investigation or remediation, if a triggering event is encountered and provided that no derogation applies. Special measures from soil control certificates and / or attestation that are already issued could also be taken into account. -- Provision of a certified copy of the Soil Data Bank information, i.e. in case of transfer of land or environmental permit application with regards to a risk facility or activity.
Christophe Laurent Partner T +32 2 743 43 05 E firstname.lastname@example.org
Ariane Brohez Partner T +32 2 743 43 21 E email@example.com
Sophie Van Berkel Professional Support Lawyer T +32 2 773 23 41 E firstname.lastname@example.org
Contributors to this issue
Hlne Bourleau Associate T +32 2 773 23 83 E email@example.com
Antoine Bchaimont Associate T +32 2 700 10 39 E firstname.lastname@example.org
Domino De Groodt Associate T +32 2 700 10 16 E email@example.com
Georges Simon Tax Senior Associate - Luxembourg T +352 466 230 242 E firstname.lastname@example.org
Yves-Marie Persin Tax Associate - Luxembourg T +352 466 230 262 E email@example.com
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