Professional rent, automatically deductible? This changes for your business from tax year 2024

Suppose you rent a property with your business that you use (partly) professionally. In that case, the rent you pay is a deductible professional expense, as follows from Article 52, 1° of the Income Tax Code 1992 (CIR 92).

"This tax deductibility of professional rent has been in place for years and has never been questioned,"Master Merckx explains. "However, end-of-year tax legislation changes this: indeed, the Law containing various provisions of 28 December 2023 introduced new conditions for the deduction of rent as a professional expense. Article 83 of this law supplements Article 53 CIR 92 with a provision under 33°, as a result of which the rent and rental benefits granted are deductible only if the taxpayer communicates the identification details of the tenant, landlord and property in the tax return."

Specifically, a company makes this notification by entering a new code in the tax return, accompanied by a tax annex that lists the necessary rental information.

"In addition to the identity details of the landlord or business law grantor of the right, the address of the building and the fees received should also be included in the tax return," Master Merckx states. "The motive of the tax authorities in this respect is crystal clear: to gather as much information as possible so that tax audits are easier to carry out. After all, such attachment establishes a very clear link between tenant, landlord and property."

Although this new reporting obligation looks like a simple, practical measure, it is anything but a non-binding tax formality. The tax authorities provide an important big stick: anyone who does not communicate this information in the annex to the tax return cannot deduct the rent as a professional expense. The same applies to the cost of the rental benefits granted, as well as the fees for a business right of use. And this can have major consequences for entrepreneurs, Master Merckx explains.

"Especially for SMEs, rent is an important deductible cost on an annual basis. Moreover, these stricter rules already apply from assessment year 2024 and therefore apply to 2023 income. This immediate applicability is regrettable. While it is understandable that the tax authorities aim to increase transparency in returns, this measure is, in my opinion, disproportionate to the abrupt, heavy penalty for the taxpayer. The tax authorities do not provide a transition period. As a business manager or accountant, it is therefore essential to file the tax annex correctly to enjoy the deductibility."

The immediate and far-reaching impact of these new rules regarding professional rentals is a reminder of how important it is to keep up with tax developments. And Novius does that very punctiliously, from closely monitoring legal journals, to organising training and information sessions.

"At the office, we have a fixed internal meeting routine, where our lawyers share important tax updates," Master Merckx explains. "From concrete cases entrepreneurs come to us with, to new legislation like this one. This is how we pool our knowledge and advise our clients proactively, so that they understand the impact of legislative changes and can smoothly adjust their business strategy accordingly."