A growing number of people buying a house or flat in Brussels and Wallonia are facing large fines in connection to lowered registration duties. But after a rise in complaints, the federal Ombudsman has intervened.
When purchasing a property in Belgium, buyers face a regional tax which has to be paid on top of the purchase price. In some cases, they can receive a discount on the taxable amount of registration duties (known in Brussels as abattement).
However, people are often not fully informed about the conditions of this scheme by FPS Finance, which collects registration fees in Brussels and in Wallonia, and the possible consequences if the conditions are no longer met.
"We discovered that FPS Finance does not inform people sufficiently about the consequences. Some people suddenly have to pay almost €30,000," the government agency noted in a statement.
Five-year rule
Every year about 1,000 people in Brussels and Wallonia must pay back the tax benefit they received when they bought their house or flat. This happens when homebuyers leave their recently-purchased home within the minimum period of five years but after occupying the property for more than two years since purchase.
Yet the Ombudsman reported complaints about the lack of information provided about the terms and conditions and the difficulty with having to suddenly pay back such large amounts of money.
The Ombudsman consequently looked into how FPS Finance requires people repay the discount they received, as well as any additional penalty which is imposed if conditions are not met.
It found that in many cases buyers felt they were no longer bound by the conditions – for example, if renovation works dragged out. The report also noted that the already significant sums often keep rising because of fines and sometimes additional bailiff fees.
Reminder letter and repayment plan
The report following the investigation was delivered to the FPS Finance, the Federal Parliament, and the finance minister. It makes nine recommendations, including that the government should better inform people about the conditions and the penalty they risk if they do not repay the tax benefit.
It also recommended a reminder letter for when the deadline to move it is approaching, as is done in Flanders by its Tax Administration.
"This reminder would prevent problematic situations as we find in the complaints," federal public advocates David Baele and Jérôme Aass said in a statement.
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Finally, it also suggested that repayment plans and fines adapted to a person's financial situation: "Those who find it particularly difficult to repay the amount should be allowed a more flexibility by FPS Finance. For instance, an instalment plan of up to 60 months – as is already the case for the repayment of tax debt."
The FPS Finance commented that it is committed to implementing the recommendations.
