Real Estate Quarterly – Q3 2015: Flanders: (double) taxation of security interest (avoided) clarified
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By Ariane Brohez
The Regions have authority to determine the base, rate and exemption for e.g. registration duties on mortgages; the Flemish Region is, since 1 January 2015, competent for the collection of these registration duties as well. Taxation (if any) on other security interests, like floating charges, remains within the remit of the Federal State.
Mortgages (hypothèque / hypotheek) are subject to 1% registration duties in the three Regions, in accordance with regional legislation, and floating charges (gage sur fonds de commerce / pand op handelszaak) are subject to 0.5% registration duties, in accordance with federal legislation. The Federal legislation provides, however, that:
- These duties cover all mortgages or floating charges granted as security interest for the same receivable and the same guaranteed amount. In other words, if asset A has been mortgaged as security for a receivable and the
amount of that receivable, (X) has been subject to 1% registration duties, then a mortgage on asset B, granted as security for the same receivable (X), will be exempt from these 1% registration duties.
- A mortgage on real estate to secure a debt which is already secured by a floating charge is subject to 1% registration duties subject to deduction of the 0.50% registration duties already assessed on the floating charge.
This avoidance of double taxation, or increased taxation, on security interests, under Federal legislation, was, however, no longer guaranteed in Flanders once responsibility for collection of taxes was transferred to the Flemish Region. Vlabel has recently clarified the position, under Flemish law, concerning the assessment of the registration duties in this situation.
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