A regulated real estate company in Belgium ('Gereglementeerde vastgoedvennootschap' / 'Société immobilière réglementée') is similar to a Real Estate Investment Trust in the USA and is regulated by the Law of 12 May 2014.
INVESTMENT PROPERTIES ARE:
- properties or real rights on properties
- shares of real estate investment companies
- option rights on real estate, eclusive or jointly controlled by the Belgian REIT
- shares of public or institutional Belgian REITs provided that controle is shared or exclusive
- real estate certificates
- rights arising from contracts resulting from property leasing
The aim of the legislator is that a Belgian REIT should ensure maximum transparency in its real estate investments and maximum cash-flow dividends.
A BELGIAN REIT IS SUBJECT TO SPECIFIC REGULATIONS. THE MOST NOTABLE ARE:
- liabilities are restricted to 65% of total assets
- quarterly valuation of the property asset by an independent real estate expert
- a minimum distribution of 80% of its current cash-flow as dividend
- risk diversification: max. 20% of total assets invested in a single property complex
- exemption from corporate taxes
- deduction of a liberating withholding tax of 30% when the dividend is paid
The intention of all these rules is to reduce risk. Companies that merge with a Belgian REIT are subject to a tax of 16.995% on the latent increase in value and tax-free reserves, the so-called “exit tax”.