Taxation based on actual rent received
When renting to a company, the landlord is taxed on the actual rent received, minus a 40% flat-rate expense deduction. This net amount is added to the landlord’s other income and taxed at the marginal personal income tax rate (up to 50% plus municipal surcharges). This is significantly more than renting to a private individual for residential use.
The tax treatment of rental income in Belgium depends on who the tenant is and how the property is used:
- Renting to a private individual for residential use: taxed on the indexed cadastral income only (often very low)
- Renting to a company (legal entity): taxed on the actual rent received minus 40% flat-rate expenses
- Renting to a self-employed individual for professional use: same as renting to a company
This distinction makes renting to a company fiscally less attractive for the landlord, which is why the rent charged to companies is often higher.
How the tax is calculated
Taxable base = (Annual gross rent - 40% flat-rate expenses) or (Annual gross rent - cadastral income x 40%), whichever is lower. This amount is then added to the landlord’s global income and taxed at the applicable marginal rate.
Example calculation:
| Element | Amount |
|---|---|
| Annual gross rent | 12,000 EUR |
| Flat-rate expense deduction (40%) | 4,800 EUR |
| Maximum deduction (cadastral income x 40%) | Depends on cadastral income |
| Taxable net rental income | 7,200 EUR (assuming flat-rate applies) |
| Tax at marginal rate (e.g. 50%) | 3,600 EUR |
| Municipal surcharges (e.g. 7%) | 252 EUR |
The flat-rate expense deduction is capped. It cannot exceed 2/3 of the revalued cadastral income (cadastral income multiplied by the annual coefficient set by Royal Decree).
The landlord must declare the actual rent received in their annual tax return. Failure to do so can result in penalties and back taxes. The tax authorities can verify the declared rent against the registered lease.
Comparison with renting to a private individual
| Criterion | Private individual (residential) | Company / professional |
|---|---|---|
| Taxable base | Indexed cadastral income | Actual rent - 40% expenses |
| Tax rate | Marginal rate on low base | Marginal rate on high base |
| Tax burden | Low | Significantly higher |
| Withholding tax | None | None (but higher declaration) |
| Registration | Mandatory | Mandatory |
For the landlord, the fiscal impact can be considerable. It is advisable to consult an accountant to optimise the tax position, particularly regarding the deduction cap.
The tenant (company) can deduct the rent as a business expense, which partly explains why companies are willing to pay higher rents.
Regional specificities
Brussels-Capital Region
The cadastral income used in the deduction cap is determined at federal level. The Brussels property tax (precompte immobilier) is a separate regional tax that does not affect the income tax calculation directly.
Walloon Region
The same federal income tax rules apply. The Walloon property tax rates may differ but do not change the income tax calculation for rental income from company leases.
Flemish Region
The same federal rules apply. The Flemish property tax (onroerende voorheffing) is separate. The Flemish Region has been discussing potential reforms to rental income taxation but no changes have been enacted to date.
Income Tax Code 1992 (CIR/WIB), Articles 7-14 (immovable income). Article 13 (flat-rate expense deduction). Royal Decree setting the annual revaluation coefficient.