Centre for Philanthropy

What will be the impact of the new tax rules in Flanders on donations or bequests to good causes?

The Flemish government has made changes to the fiscal treatment of donations and bequests, relating to philanthropy. The new rules come into force on 1 July 2021, and will apply to donations or bequests after that date for everyone who is domiciled in the Flemish Region.

Zero rate
There is a 0% rate of both gift tax and inheritance tax that applies to good causes. This means that donations to good causes are no longer subject to tax. Good causes also no longer have to pay any inheritance tax for bequests made in a will, if the death occurs after 1 July 2021. As a public welfare foundation, the King Baudouin Foundation benefits from these 0% rates.

No remaining tax benefit from a “duo legacy” (combined bequest)
At the same time the tax benefits of the “duo legacy” in the Flemish Region have been reduced. There are a number of variants of this technique, but it comes down to a will with two bequests: one bequest to a good cause combined with a second bequest to other persons (often distant family members, friends or acquaintances), for which the good cause pays all the inheritance tax. In practice this was beneficial for the recipient of the bequest and an amount also went to the good cause. The method used to calculate “duo legacies” is changing, however, so that more inheritance tax is due and there is little remaining benefit or even a detrimental impact on the good cause: in these situations the organisation will reject the legacy.

In the Flemish region a so-called ‘friends legacy’ is also being introduced: a limited share (maximum of € 15,000) of the estate can be bequeathed to one or more good friends or distant family members and receives preferential tax treatment.

Reviewing your will
The new tax rules - including those that apply to “duo legacies” - come into force on 1 July 2021, and the relevant date is the date of death, not the date of the will. Anyone who has already made a will with a “duo legacy” should check the impact of these changes and consider whether a change is necessary.

The advice provided by our philanthropy advisers is always based on the current legislative framework. In addition to personal changes in the individual’s own life, expectations and wishes, tax changes like this are a further reason why we always recommend regularly reviewing any philanthropic arrangement that has been put in place.

The advisers at the Centre for Philanthropy are available to help you with your philanthropic plans and will be happy to provide more information about the changes. We also suggest that you ask for recommendations from your notary or adviser.