A company with an apartment at the seaside
It remains a complex situation: an apartment at the seaside on the name of your company. The tax authorities are surely very reluctant to such constructions. Not seldom these discussions end before a tribunal or court. But also there, noses do not point in the same direction.
Acquiring a house through a company has a number of clear advantages. The most important advantage is off course the fact that all related expenditure and depreciations are deductible professional expenses.
If the concerned company is an active company obtaining itself taxable income, the taxable base of the company will be reduced.
The tax authorities
If such purchase is completely artificial and the inhabitant of the house (being the director of the company) does not have to do anything in return, it is clear for the tax authorities that there is abuse and they will reject the deduction of these expenses.
Second residence as salary
The main argument which is often used by tax payers in order to obtain deduction of expenses related to this second residence (or any other advantage to which the same rules apply) is that it is provided because of the services rendered by the beneficiary/director. In other words: it is salary. And salary is deductible.
The least which should happen is that the director obtains a taxable benefit in kind. According to the minister of Finance it should effectively be shown that this benefit in kind is a compensation for real performance. This proof should be provided by the tax payer.
This 'additional' condition also means that the risk exists that the director is taxed on the benefit in kind, but the tax authorities reject the expenses related to the second residence. Both items are not 100% linked.
Divided case law
To go to court with this discussion might seem a good idea, but it is no guarantee for success.
In 2019, the Courts of Appeal of Ghent and Antwerp followed the taxpayer's line of thinking: in both cases, it concerned an apartment at the seaside. Not only could the taxpayer demonstrate that the director obtaining the use of the apartment a) was taxed on the benefit in kind and b) this benefit in kind was granted in return for real performance.
Additionally, the taxpayer proved in both cases that there was a value increase on the apartment, so that the company over time would realize capital gains. These capital gains will be subject to corporate tax.
The Court of Appeal of Liège ruled (also in 2019) in another case against the tax payer. Maybe the company (medical radiology) forgot about some essential elements: it did not grant a benefit in kind and could not prove that it was a real estate investment which could in the future generate taxable income. Because the company also paid for some private expenses of its director, the tax authorities asked for and obtained a tax increase of 50%.
A second residence in a company is no walk in the park.