Tax Deductions for Art Gifts - Belgium

Belgium - tax deduction for cross border art gifts

Belgium has one of the highest tax burdens in Europe. It amounts to – including social security – 57.3% for a single earner. This compares to an average 44.5% in Europe. Belgium has a corporate income tax rate of 33.99% (including a 3% so-called 'crisis surcharge'). 
 
After a small and very insufficient modification of the tax law in favour of cultural organizations in December 2008, Belgium has now extended the income tax deductions for cross border gifts to nearly all the categories of non profit organizations listed in its domestic law.

The tax deduction is applicable if the beneficiary is located in one of the states of the EEA (European Economic Area), if it can be considered as similar to one the abovementioned types of organizations and if the organization is recognized in its own country under conditions that are comparable to those which are set out by the law, which in fact means "being recognized by the public authorities of the concerned country".  For example, the Cultural Heritage Fund of the King Baudouin Foundation  benefits from in-kind donations from generous philanthropists in Belgium and abroad.  Donations to an institution aiming at public welfare may be deducted from income tax. As for the deductibility of a single donation, there is a minimum and a maximum limit. In the case of regular donations, when the instalments are determined in a notarial act of donation and when there is a commitment for a period of five years during which a given amount is paid every year, the donation is fully tax deductible.

It should be noted that cultural institutions which are an emanation of a foreign EU member State or of a subdivision of that state (for instance a State museum, or a regional museum in the other country) will in principle not qualify for income tax deduction. The Belgian tax authorities will most probably follow the preliminary report (exposé des motifs) to the law of December 22, 2009. According to this report, the principle of free movements of capital as foreseen by article 56 of the Treaty of Rome is only applicable to private legal entities (associations, public benefit foundations, or private foundations) and not to public institutions. Donors who envisage making a significant gift to a (EU) foreign museum should first verify the legal status of such a museum before making the gift, either directly or through TGE.  The new regime will apply to all the gifts made as from January 1, 2010

More information on taxes in Belgium and Art Gifts contact Ministère des Finances/Ministerie van Financien, Central Administration of Direct Contributions, CAE Tour des Finances - Boîte 32, Boulevard du Jardin Botanique 50, 1000 Brussels www.minfin.fgov.be