Waiver Of Registration Duties In Case Of Amicable Termination Of A Private Sales Agreement

• Published date: 29 March 2024
• Subject Matter: Real Estate and Construction, Tax, Real Estate, Tax Authorities
• Law Firm: Loyens & Loeff
• Author: Mr Alexander Vandendries and Bianca Praet

In case of amicable termination of a private sales agreement for a property signed under condition precedent, the proportional registration (evenredig registratierecht / droit d'enregistrement proportionnel)duties that were levied may be waived. In its decision of 21 December 2023, the Court of Cassation clarifies the conditions. Although this decision concerns a property located in Flanders, the pragmatic reasoning of the court seems equally applicable to the similar regime foreseen in the Brussels and Walloon regions.

Context

Registration of the sale of an immovable property must take place within four (4) months of the signing of the private sales agreement (onderhandse verkoopovereenkomst / compromis de vente). Proportional registration duties of (in principle) 12% (12,5% in the Brussels and Walloon Region), calculated on the sale price, are then levied upon registration of this agreement.

In this context, the amicable termination (minnelijke ontbinding /résiliation amiable) of a private sales agreement would trigger a double taxation. The first taxable event would be the conclusion of the private sales agreement, which establishes the transfer of ownership rights to the buyer and triggers the levying of registration duties. The second taxable event would happen when the private sales agreement is amicably terminated and where the ownership rights on the same property are transferred again.

To avoid this unfair situation, a favourable tax regime is foreseen in the Flanders Region since
1 November 2007, consisting in the application of a specific fixed rate of 10 EUR.

In essence, instead of paying the proportional registration duties of 12%, the parties only pay a total of 20 EUR (i.e.10 EUR for the registration of the private sales agreement and 10 EUR for the registration of the agreement containing the amicable termination).

In case the private sales agreement was registered before the agreement containing the amicable termination, the parties must request a waiver (or refund) of registration duties on the private sales agreement. When granting the waiver or refund, the tax administration will withhold 10 euros for the registration of the private sales agreement.

To profit from this specific fixed registration duty of 10 EUR, following conditions must be met:

• The sale has not yet been authenticated in a notarial deed.
• All parties involved in the agreement declare this agreement amicably terminated. This declaration must be evidenced by a registered...