What is the purpose of this coefficient?
This coefficient helps to check whether the first category company managers are charging excessive rents when renting a property they own or have the right to use, to the company they are associated with. Company managers include directors, managers, liquidators, or individuals in similar roles.
What happens if the limit is exceeded?
If the rents received are higher than the amount calculated using the following formula: cadastral income (non-indexed) x 5/3 x revaluation coefficient, the excess rent is treated as remuneration.
A numerical example
Marc, a single company manager, receives an annual rent of 240,000 euros for the property he owns and rents to his company. The cadastral income for this property is 25,000 euros.
The revalued cadastral income for the tax year is 239,583 euros (25,000 euros x 5.75 x 5/3).
The rent of 240,000 euros exceeds 5/3 of the revalued cadastral income. Therefore, the difference of 417 euros (240,000 – 239,583) will be taxed as professional income for Marc.
How are reclassified rents calculated?
The rents that are reclassified as remuneration must be calculated based on how often the rent is paid or allocated. It is necessary to withhold an advance tax levy on the reclassified amount of each rent when it is received.
Example 1 : A company manager rents a building to their company and receives monthly rent. In this case, the advance tax levy is due monthly, and the reclassification must also occur monthly.
Example 2 : The same company manager rents their building to their company for an annual rent (as in Marc's example). The calculations for reclassifying rents and withholding the advance tax levy will also be done annually. The same applies to the payment of the advance tax levy.
What does Securex do for you?
If you have more questions about the revaluation coefficient of cadastral incomes, your Securex Legal Advisor is happy to help you at myHR@securex.be.
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