Joint parenting for tax purposes: children of age also count

At the start of this year the authorities published a circular explaining the amendment to the article allowing joint parenting for tax purposes to now also be applied to children of age.

1. A brief history

Until the Law of 3 August 2016, the joint parenting arrangement for tax purposes (fiscaal co-ouderschap) was limited to children who were still under parental authority. This meant that only the joint, non-emancipated underage children of both parents were eligible for joint parenting for tax purposes. Once a child is of age (or emancipated before that time) joint parenting for tax purposes could no longer be applied.

2. Legislative amendment and circular


A child who is of age, however, can actually be a greater financial burden on his or her parents: just imagine the costs of further studies or moving into lodgings, clothing and anything else. The authorities rightly found the situation unjustifiable and have amended the terminology of article 132bis of the Income Tax Code, the article governing joint parenting for tax purposes, through the Law of 3 August 2016. As of that time ‘jointly exercising parental authority over a child’ was scrapped and was replaced with ‘obligation to support a child’, as a result of which emancipated children or children of age are now also eligible.

In its circular dated 20 January 2017 the authorities discussed the time for which that obligation to support a child – as set out in article 203 of the Civil Code – runs. On the basis of this the joint parenting for tax purposes can be applied for emancipated minors as well as for children of age, for as long as the child’s education has not been completed by 1 January of the tax year and the other conditions for joint parenting for tax purposes are met. This amendment is applicable as of the 2017 tax year.

3. Real-world considerations: joint parenting for tax purposes versus deducting maintenance


The amendment is a positive move in every sense and has removed one of the sore points of joint parenting for tax purposes. When parents choose joint parenting for tax purposes, one must however not forget that maintenance cannot be deducted by the parent of whom the children are not dependants.

We have already noted that costs for supporting a child of age can be higher, which means it is possible that deducting maintenance is more appealing from a tax perspective than applying the joint parenting for tax purposes arrangement. Under joint parenting for tax purposes the tax-free sum is divided among both parents, but it only has an impact upon the lowest personal income tax rates. On the other hand, the deduction of maintenance (80% of the regularly paid maintenance) is a deductible expense that impacts the highest tax brackets.

Before opting en masse for deducting maintenance for children of age, we wish to express the following reservations. The flipside of the 80% deductibility of the maintenance is that 80% of the maintenance is also taxable for the recipient (the child) and it can affect whether the child of age is considered a dependant of the parent with whom he or she resides. One must here also take into account the income generated from student jobs (exceeding the initial exempted income bracket of €2,660 for the 2017 income year), which also counts as a net means of support in determining whether or not the child is a dependant.

A prior consultation and a calculation of the tax effects for all parties concerned (both parents and children) is thus highly recommended.

Property planning finds itself in turbulent waters
Valuation of a usufruct: in complete (r)evolution?
Much has been said and written in the past few years about the valuation of a usufruct and where the fiscal shoe pinches. An overview of valuation problems, current trends and a look at future property planning is provided below. Valuation of a usufruct Valuation of a usufruct: a changing world Usufruct is one of the oldest property rights known and was already applied in Roman times. Usufr
This difference in treatment needs to be corrected
Benefit in kind on immovable property: tax authority abides by the court ruling (for now)
The Federal Public Service Finance published Circular 2018/C/57 on 15 May 2018 on the flat-rate valuation of the benefit in kind for providing an immovable property or a part of an immovable property free of charge to employees or managers. The flat-rate estimate of these benefits is laid down by the Royal Decree implementing the Income Tax Code 1992 (RD/BITC 92). The Courts of Appeal of Ghent and
The 'use and enjoyment" rules explained
Freight transport and closely associated services: new rules clarified in a circular
On 31 October 2017, (previous) Royal Decree No 57, which deals with the freight transport services Department and related services, was replaced by a new RD which came into force on 23 November 2017. It clarifies the former RD in part while introducing a new rule. In order to clarify and discuss the (new) rules, the tax authorities published an administrative circular in this regard on 31 May 2018
Guidelines
Substantial changes in the obligations for partnerships
The Company Law Reform, published on 27 April 2018, is making a number of changes in the Companies Code and the Code of Economic Law. These new regulations will enter into force on 1 November 2018. A few rules will also change for partnerships. Although some clarifications will still be published, we would already like to provide the following guidelines. Changes in the Companies Code A first
Quickly detect system risks
Without a Legal Entity Identifier your company will not be trading on the stock market in 2018
  As from 3 January 2018, every legal entity that buys or sells financial instruments must have a Legal Entity Identifier or LEI. Legal Entity Identifier A LEI is a 20-digit alpha-numeric code enabling quick identification of legal entities that are active on the (international or local) financial markets. The LEI enables regulators to quickly detect system risks. Registrati
A summary of the main points
Immovable property leases to include VAT
  Although currently there is just a draft bill on this issue, which obviously can be subject to change in the meantime, we would like to summarize the main points of the upcoming revolution in the VAT landscape: immovable property leases may become subject to VAT. History Until recently, immovable property leases have – in principle – been exempt from VAT (section 44, paragr
UBO = Ultimate Beneficial Owner
The UBO register: new disclosure requirements planned for your company’s administrative body
As a result of the insertion of sections 14(1) and 14(2) into the Belgian Companies Code all companies must in the future obtain adequate, accurate and current information about their ‘ultimate beneficial owners’ (UBOs) and record the data in the new ‘UBO Register’, a central register containing data about companies and the natural persons behind them. In view of the unwavering atte
Introduction of the matrimonial property law
Is it the end of the final set-off clause or is it getting new life?
  Much has been said about the final set-off clause in recent years. After the Court of Cassation in 2017 ruled in favour of the tax payer that the claim was deductible in the scope of the payable succession duties, the Flemish regulator decided to come to the aid of the tax authorities by changing the law. What is a final set-off clause and how does it work? Many spouses married un
Also the unequal treatment gets reviewed
Benefit in kind for housing: how to anticipate the higher or lower scenario?
Discrimination as regards the benefit in kind for housing has been highlighted on several occasions. Specifically, it relates to the unequal treatment of the same benefits, whether in terms of provision by a sole trader or provision by a legal person. In the most common cases, the benefit arising from being a limited company is almost four times more expensive taxation-wise than the benefit arisin
To reduce the financial burden
Start-up reduction on social security contributions for self-employed persons
The start-up reduction was part of the 'Summer agreement' and took effect on 1 April 2018. With this initiative, the government intends to reduce the financial burden of self-employed persons in start-ups, who often have low incomes at the start of their activity, thereby stimulating entrepreneurship.  Which self-employed persons are eligible?  The reduction measure applies to all se

Subscribe to our newsletter