30 May 2023

Withdrawal from undivided ownership shareholder-corporation: not always does the distribution right apply!

For years, the acquisition of a real estate property in undivided ownership by a shareholder with its company has been a popular tax optimisation technique. On a later withdrawal from undivided ownership, the shareholder can benefit from the distribution right at a rate of 2,5%. Recently, the Court of Cassation stated that sometimes the 12% real estate transfer tax still applies.


For long time, there has been an optimisation technique where a shareholder acquires a real estate in undivided ownership together with its company. This involves assigning to the company the largest possible share (e.g. a 95% (company) – 5% (shareholder)-ratio), since in function thereof, depreciations and other costs can be deducted. Later, when the shareholder acquires the undivided rights, the 2,5% distribution right is due.

Tax planning at risk

However, the Flemish Tax Authority (hereinafter: Vlabel) considers that the real estate transfer tax is always due on the termination of the undivided ownership between a NV1 and its shareholder. Indeed, the Flemish Tax Code states that an acquisition, by any means, of real estate located in Belgium by a shareholder of its NV1 is subject to the 12% real estate transfer tax. According to Vlabel, this rule should be fully applied, regardless of the lower rate that applies in principle when terminating an undivided ownership.

Note that a similar provision exists for a BV2, VOF3, CommV4 or CV5 but that, specifically for these company forms, there is an exception rule wherein the 12% rate is not applied; for example, when the person obtaining the real estate from the company was already a shareholder at the time the company acquired it with payment of the real estate transfer tax. For a more detailed description of this, please refer to our previous contributions.

Ultimately, the Court of Cassation examined this issue, having previously referred to the Constitutional Court a possible violation of the constitutional principle of equality. After all, a shareholder of a NV1 becomes subject to the real estate transfer tax, while a third party (non-shareholder) still enjoys the distribution right when stepping out of undivided ownership with a NV1. The Constitutional Court considered that there was no discrimination here because of the voting right or control exercised by a shareholder within the company. In this sense, the Court of Cassation decided that the real estate transfer tax should be applied in priority when a NV1 and its shareholder step out of undivided ownership. Note that a BV2, VOF3, CommV4 or CV5 is not implicated here.

Remedial view of Court of Cassation possible?

Although the judgment of the Court of Cassation puts a stop to the technique with a NV1, a number of remedial caveats can, in our opinion, be made.

For instance, stepping out of undivided ownership with a BV2 etc. remains (for the time being) out of bounds, provided the conditions are met to apply the distribution right. Consequently, it may be interesting – in case of real estate property in undivided ownership with a NV1 – to think about a conversion to another company form. After all, there are known favourable rulings in which the conversion of a NV1 into a BV2 did not qualify as a tax abuse. Note that in each case, sufficient non-fiscal motives were present, such as:

  • a family succession that warrants a more private character;
  • simplified accounting in the event of a decline in activities;
  • the time lag between (i) the conversion of a NV1 into a BV2 and (ii) the withdrawal of the undivided real estate from the BV2.


Although the distribution right no longer appears to be the starting point when withdrawing an undivided property from a NV1, concrete situations remain conceivable that may still prevent the application of the real estate transfer tax. The conversion to another company form may – in certain cases – possibly provide a solution. Curious about the continuation of this saga.

Mathias De Schrijver and Evert Moonen
De Langhe Attorneys

1           Public limited liability company
2           Limited liability company
3              General partnership
4              Limited partnership
5           Cooperative company

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