3 minTaxation of woodland assets: selling and passing on woodland (part 3 of 3)
Bernard Goffaux & Anne-Gaëlle Van Walleghem Is woodland an asset like any other? Is it transferred in the same way as other assets? To ensure you can plan for the sale or transfer of woodland property in France or Belgium with confidence, it is important to first consider any and all tax rules that may apply.
The information contained within this article is aimed at Belgian residents.
Find out in our brief about the tax rules that apply to Belgian residents who own woodland:
- In Belgium with Bernard Goffaux, Head of Estate Planning and Tax
- In France with Anne-Gaëlle Van Walleghem, tax expert.
Selling woodland:
What about capital gains?
B.G: If the property is sold for valuable consideration within eight years of the date of acquisition, capital gains are taxed at a separate rate of 33% or 16.5%, depending on whether the transaction takes place before or after five years have passed since the date of acquisition. On the other hand, a resale after this eight-year period is exempt from any capital gains tax.
A-G.VW: In France, you have to wait 22 and 30 years respectively before you are exempt from income tax on capital gains and social security contributions. If the property is sold prior to this 22 year period, France grants an additional allowance (€10 per year of ownership and per hectare sold) on the amount of income tax that is due at the rate of 19%. This additional reduction does not apply to the amount of tax due in respect of social security contributions (17.2%) or solidarity levy (7.5%) where applicable. Depending on the net capital gain amount, the additional tax on high capital gains and the exceptional contribution on high income may be payable.
Passing on woodland:
And when it comes to transfers without consideration (gifts or inheritance)?
B.G : The transfer of woodland assets without consideration benefits from a preferential regime, as it is exempt from gift or inheritance tax on the value of growing trees. This means that only the value of the land is taxable. It is therefore necessary to make a clear distinction between the value of the land and the value of the standing trees in the deed of gift or the declaration of estate. However, property located in Natura 2000 areas is fully exempt from gift or inheritance tax.
A-G.VW: France, meanwhile, has a preferential regime in place under which the transfer of woodland and forests is taxed at only a quarter of their value, under the same conditions as those applicable to the IFI, and, in particular, subject to compliance with a commitment to the sustainable exploitation and management of the woodland.
B.G: In terms of inheritance tax, the double taxation treaty between France and Belgium gives taxation powers to the country on whose territory the property is located. However, the French property will need to be included in the Belgian resident's declaration of estate and will result in inheritance tax being levied in Belgium. Double taxation will nevertheless be avoided because the inheritance tax actually paid in France can be offset against the taxes payable in Belgium.
Our specialists will be happy to answer any questions you may have regarding tax and assets.
