As from assessment year 2026, more non-residents owning Belgian real estate will be required to file a non-resident income tax return ("NRI") as a result of the abolition of the federal interest deduction for immovable property that does not qualify as the own dwelling.
Non-residents with Belgian real estate should therefore assess whether they will be required to file an NRI return as from assessment year 2026.
What is changing?
Up to and including assessment year 2025, interest paid on loans taken out to acquire or retain immovable property that did not qualify as the taxpayer's own dwelling (such as a second residence) could be deducted from immovable income.
As from assessment year 2026, this federal interest deduction will be fully abolished, without any transitional regime and regardless of when the loan was concluded.
What does this mean for non-residents?
Non-residents who rent out immovable property located in Belgium are exempt from filing an NRI return if their total immovable income amounts to less than 2,500 EUR per year, unless they have other income subject to declaration.
When assessing whether the 2,500 EUR threshold was exceeded, interest on loans taken out to acquire or retain immovable property could be deducted. In practice, this often resulted in the threshold of 2,500 EUR not being exceeded, meaning that no NRI return had to be filed.
Due to the abolition of the federal interest deduction, however, more non-residents will be subject to a filing obligation as from assessment year 2026, as this threshold will now be exceeded in many cases.
The legislator most likely did not intend to effectively broaden the scope of the NRI filing obligation. The 2,500 EUR threshold was introduced precisely to avoid requiring non-residents with limited Belgian immovable income to file a tax return, as the administrative burden outweighs the potential tax revenue.
General trend — more non-resident tax returns
Since income year 2023, the tax authorities have already been applying a stricter interpretation of the exemption. Since then, they have taken the view that non-residents with immovable income of less than 2,500 EUR must nevertheless file a return if they have Belgian professional income that is not taxable in Belgium, for example due to the application of a double tax treaty. This position is open to dispute.
The abolition of the ordinary interest deduction will now lead to a further increase in the number of non-resident tax returns.
Authors (Tiberghien):
- Laurine Vanherck (Counsel, Brussels) and Arif Keskin (Associate, Ghent)
