When a company director (administrator, manager or liquidator) lets a building (of which he is the owner, proprietor, leaseholder, building lease holder or beneficial life interest holder) to the company or association in which he conducts his activity, the positive difference between the rent and 5/3 of the revalorized cadastral income are considered as a professional income.
The added value coefficient for the cadastral income is set at 4.47 for the income year 2018 (4.39 for the income year 2017).
Withholding tax shall be applied on the part considered as professional income. When the rent is paid monthly, the part of the rental income that is reclassified as a professional income must be treated as a periodic remuneration; it can be added to the remuneration of the month concerned and it is liable to withholding tax, just as the periodic remuneration. The reclassified amount must also be stated on the tax slip of the company manager (slip 281.20).
Example: An administrator lets a building with a cadastral income of € 2,000.00 to his company. The annual limit is € 14,900.00 (= 2,000 x 4.47 x 5/3). The company pays a monthly rent of € 1,500, i.e. € 18,000 per year to the administrator; consequently, there is a positive balance of € 3,100.00. This amount of € 3,100.00 is reclassified as a professional income is liable to withholding tax.
Source: Royal Decree of 24 June 2018 amending the Royal Decree for the implementation of the 'Code des impôts sur les revenus 1992' with regard to the section of the added value coefficient for cadastral income, Belgian Gazette 4 July 2018.
Author: Peggy Criel