Fiscal Issues (1): Accommodation

Bart Van den Bossche writes:

Most international lawyers arriving in Brussels soon discover the city has a good selection of accommodation to satisfy their rental or purchase needs.

Whether you are about to start practising law in Brussels or are already living here and are looking to change accommodation, you should keep in mind the benefits of choosing the right type of accommodation for work and living purposes.

As most newcomers are initially looking to rent accommodation that is the focus of this article.

Mixed private/professional accommodation

Many self-employed lawyers look for accommodation where they can both live and also have an office for their professional activity. Such accommodation is often referred to as a mixed private/professional property.

This article explains the fiscal benefit of renting in your professional capacity. It starts by explaining why renting your accommodation as a private or commercial tenant can be an important decision.

Private landlords and tenants

To have a wide supply of rented accommodation, the Belgian tax system encourages private individuals to rent out property to tenants who are also private individuals.

Private landlords pay tax based on a fixed-value of their property (derived from an assumed income that the property receives each year).

In general, this policy is successful.  Many Belgians and increasing numbers of Brussels-based foreigners are private landlords and there is a high supply of rented accommodation.  The supply and rental costs in Brussels compare well to other European capitals, such as Paris, London or Stockholm.

But private landlords do pay tax, based on the real received rent, if their property is rented to a commercial tenant (such as a person performing a professional activity, like a self-employed lawyer).

Due to that increased tax liability, private landlords generally either:

- do not permit any professional activities in their rented property; or

- (less commonly) demand a higher rent to make up for their own increased tax liability.

This means a self-employed person will often have to rent privately-owned accommodation as a private tenant. Officially, no professional activity is supposed to take place in that private accommodation and so no business rental deduction can be made.

Commercial landlords and tenants

By contrast, commercial landlords are mainly companies whose business is renting property. They pay tax whether their property is rented to private or commercial tenants.

In Brussels, some commercial landlords rent property suitable for mixed professional/private use.

For a self-employed lawyer such rented accommodation has a benefit: the percentage of the overall space that is used for professional use (such as an office) is a deductible business expense.

Such business expenses are paid with pre-tax professional revenue. That financial benefit is not possible if the property is rented by a self-employed person as a private tenant.

Balance: private living v. professional gain

Choosing accommodation that satisfies both your private and professional needs involves a careful balance. Try to find somewhere you want to live, as well as where you can have your professional office (allowing you to make the fiscal rental deduction you are entitled to make).

Next article: (2) Corporate Form

Author: Bart Van den Bossche ©
First published: 12 November 2005
Last updated: 19 August 2006