Flanders Extends Inheritance Tax Deadline to Five Years

Brussels (Eurotoday): Starting January 1, 2025, Flanders will extend the inheritance tax period for unregistered gifts from three to five years. Notary Bart van Opstal emphasises this change aims to prevent tax avoidance. Registered gifts will face lower taxes of 3% for close relatives and 7% for others, excluding them from inheritance tax.

In Flanders, people can give away money without paying taxes, either by handing it over in cash or transferring it through a bank. However, if the giver of the gift dies within a specified period, the value of that gift will be included in their estate, which will attract inheritance tax. This makes such gifts less attractive to those who wish to pass on their wealth. These gifts are subject to a 3% tax rate for close relatives and 7% for others, and they are not subject to inheritance tax. Therefore, these gifts are popularly used in long-term estate planning.

What are the new gift tax rules in Flanders starting January 1, 2025?

The Flemish government is changing gift rules starting January 1, 2025. Notary Bart van Opstal says this change is to prevent people from trying to avoid taxes by giving cash gifts. Instead, the government wants people to use registered gifts, which have lower taxes. This means people will need to plan better for their money and taxes.

Notaries are advising people to be careful about giving away money as gifts, even if it can help with taxes. Some are so eager to avoid taxes that they might affect their finances. Donors need to keep enough money for things they might need later, like medical care, which can cost more as they age. According to experts, gifting is a smart financial decision rather than an impulsive action caused by the new tax laws. The change of the law underlines that obtaining good advice is quite necessary when one is trying to balance tax savings and financial security.