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Belgium Taken To Task Over Discriminatory Housing Taxation

by Ulrika Lomas, for LawAndTax-News.com, Brussels

09 January 2007


The EC has this week sent Belgium a formal request to amend its legislation concerning tax relief for owner-occupied and secondary houses.

Belgian legislation distinguishes between two kinds of houses: dwellings, that is owner-occupied houses, and secondary houses. For dwellings, articles 104, 115 and 145/17 of the Belgian Income Tax Code provide tax relief for mortgage interest, for capital repayment of a mortgage loan and for contributions paid on a life insurance contract related to such mortgage loan.

For secondary houses, article 145/1(3) provides tax relief for the payment of mortgage loans. In both cases, the tax relief is only granted if the house is in Belgium.

However, the European Commission considers that this condition is contrary to the EC Treaty and the EEA Agreement, as it restricts the free movement of workers, the freedom of establishment and the free movement of capital.

The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Belgium does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.


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