14 October 2020

Donations via foreign notary also taxed: “Cheese route” loophole closed

Until now, registration of donation deeds of movable property drawn up before foreign notaries was optional in Belgium. In the context of succession planning, a Dutch notary was therefore often called upon to organise a donation (the “cheese route”). In this case, no registration fees are due. However, a draft bill of law was recently submitted in which this registration will be mandatory in Belgium, with all the associated tax consequences.

Registration currently optional 

The application of the so-called “cheese route” loophole is a frequently used technique in succession planning. If parents donate movable property (money, shares, securities …) to their children before a Dutch notary, as the case may be, subject to certain terms and conditions (e.g. reservation of usufruct), the donation does not have to be registered in Belgium and no registration fees are owed. Moreover, such a foreign notarial deed has the same probative value and fixed date as a Belgian notarial deed. 

The flip side of the coin, however, is a suspect period of 3 years. If the donor dies within 3 years of the gift, the donated goods are fictitiously added to his or her estate, so that inheritance tax may be owed. Optional last-minute registration of the foreign notarial deed is still possible and can be interesting if the donor suddenly becomes seriously ill. 

New draft bill of law makes registration mandatory 

A recent draft bill of law aims to restrict the application of this technique. From 1 December 2020, all foreign notarial deeds relating to the donation of movable property would have to be registered in Belgium, at least if the donor is a resident in Belgium for tax purposes. Since foreign notaries cannot be obliged to register their deeds in Belgium, the parties themselves will have to register the deed.  


The mandatory registration makes the registration fees payable. For movable property, the registration fee in the Flemish Region is 3% (relations in the straight line and between partners) or 7% (other cases) of the value of the donated goods. This registration fee is in principle paid by the donee. When the deed is registered in Belgium, inheritance tax will no longer be payable on the donated goods upon the death of the donor. Note that shares of family companies can be donated (under certain conditions) in the three regions without registration fees. 

Possible alternatives 

Notwithstanding the compulsory registration of foreign notarial deeds in Belgium, movable property can still be donated tax-free. Thus, it remains possible to validly donate by bank transfer or manual donation without mandatory registration. Here again a suspect period of 3 years applies.  

However, no usufruct can be reserved on the goods donated by means of a bank transfer or manual donation, nor can shares be donated; a notarial deed remains necessary for this and the registration fee is then owed.  

A frequently used technique is the donation of a sum of money (via bank transfer or manual donation) followed by the sale of the shares between the donor and the donee. The donation is free of registration and the sale of shares is without specific formalities and in principle untaxed. When the donation of money (unintentionally) precedes the sale, such a transaction is not considered a prohibited private donation of shares. In addition, a purchase of shares followed by discharge of the purchase price may be qualified by the tax authorities as simulation or tax abuse. 

A contribution to a company on behalf of a third party also offers a possible solution. However, the disadvantage of this technique is the absence of discretion (deeds of capital increases of companies are published online).  


Dutch notaries are expected to be busy in the coming months. Even without crossing national borders, however, there are still enough safe structures possible to organise succession planning in a tax-friendly way.  

Robbe Dumont and Frank De Langhe 
De Langhe Attorneys 

Published in VOKA – Ondernemers, VOKA Kamer van koophandel Oost-Vlaanderen, edition 6 / 2020 

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