The Damien Foundation (Damiaanactie), Caritas International, the Braille League, but also Belgian associations fighting against cystic fibrosis, diabetes or the Jean-François Peterbroeck Foundation… Around twenty non-profit organisations have decided to file, this Thursday, June 27, via the Rivus law firm, an appeal for the annulment of certain articles of the tax law of December 28, 2023 relating to the “estate tax”. This tax (“inheritance tax compensation”) was introduced in 1921, when associations and foundations were given legal personality.As such an organization never ‘dies’, it was then decided to impose an annual tax on its assets, compensating for the absence of inheritance tax and therefore the loss of revenue for the State., explains Marc-Étienne Baijot, lawyer at Rivus law firm. “Its rate was very low – initially 0.10%. But, collected every year, it represents very large amounts over a long period of time.”
Two criticisms
What do these (non-profit) organizations have to say about last December’s law, which now targets non-profit organizations and private foundations? Two things. One: the proportional rate of the tax (0.17% at the end of last year) was increased, via a progressive system, with a maximum rate of 0.45% per year, almost a three-fold increase. Two : “the law provided arbitrary partial exemptions for different specific legal entities in order to neutralize this tax reform for these institutions”, notes Marc-Étienne Baijot. In doing so, “the law has caused enormous inequalities between non-profit organizations and foundations that can benefit from an exemption and those that cannot, which are absolutely not justified by objective criteria.”
guillement“The health care sector is exempt but non-profit organizations which support the blind, cancer research, motor disabilities are not”
Examples ? “Private archives are exempt. Libraries are not. The health care sector is exempt but non-profit organizations that support the blind, cancer research and motor disabilities are not.”replies the lawyer, who specifies: “The distinction introduced by the amendment to the law is arbitrary and insufficiently reasoned, which constitutes the basis of the legal challenge.” How can we explain this discrimination? “We do not know. Perhaps some sectors have lobbied more effectively than others.imagines the lawyer.
The financial stakes are, in any case, very important, the tax affecting in Belgium the world heritage of non-profit organizations, which can therefore be counted in hundreds of millions of euros. “In addition, this tax hits gross assets, so it also affects all elements, including investments made through debt financing or elements that do not generate income, specifies Marc-Étienne Baijot. And with the progressive rate, non-profit organizations and foundations which have their own infrastructure or hold an investment portfolio to sustainably support their social objective are financially penalized, the tax being collected independently of any return. he adds. The contested reform therefore risks weakening institutions which certainly do not need this, “the Covid-19 crisis having left a heavy financial burden on many non-profit organizations and foundations”, he emphasizes.
