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Home » Services » Selling an Income-Generating Property or a Real Estate Holding Company » Sale of Shares in Patrimonial Real Estate Companies

Sale of Shares in Patrimonial Real Estate Companies

Patrimonial companies are a means of acquiring and transmitting real estate assets in Belgium, often used for managing family assets. Over the years, these companies have faced fiscal penalties during the sale of real estate, with a current liquidation bonus of 30%. Owners who wish to part with their assets have two choices: a taxed real estate sale or the transfer of shares or equity interests in the company.

A “patrimonial” company, i.e. a legal entity whose purpose is to manage a portfolio of property assets, can be used to acquire property and optimise the transfer of assets.

Holding property through a company does, however, involve a number of accounting, tax and inheritance constraints.

TREVI has set up the TREVI PATRIMONIAL department to help owners find the right buyer for their patrimonial company and determine the sale price. There is often confusion between the price of a property asset and the price of the shares in the company that owns it.

Without delving into exhaustive details, two crucial points should be emphasized:

  • Rental income generated by a property owned by a company is considered the company's income and is taxed as corporate income tax (ISOC).
  • The property is depreciated over the years in the company's accounts, and if sold, it may generate an accounting capital gain, which is also subject to ISOC.

Once these taxes are applied (regarding rental income and the proceeds from a sale), the remaining available values are still part of the company’s assets. If an administrator wishes to benefit from these funds, they must be distributed through available channels: salary, dividends, bonuses, full and final liquidation, etc.

The most commonly used distribution method is dividend payment, which is also subject to taxation through the payment of withholding tax.

In 2023, the corporate income tax (ISOC) rate is 29% (exactly 29.58% or 20.40% for reduced rate) and 30% for withholding tax. These amounts are significant and should not be underestimated.

 

Therefore, it is understandable that administrators of real estate companies, wishing to sell their property assets, prefer a buyer for the entire shareholding rather than selling the real estate assets themselves.

This is where the Trevi Patrimonial department comes in, having created a dedicated team specifically for this type of activity.

The process of selling shares is generally more complex than a “classic” real estate sale, as such transactions involve non-standardized real estate, accounting, tax, and legal aspects compared to a real estate sale carried out before a notary.

This explains why few professionals are well-versed in all these elements and why it is essential to engage professionals to accompany such operations.

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In summary, here is how a share transfer operation proceeds:

How long does the entire process take?

The entire process takes an average of 6 to 9 months. Each step requires great rigor to ensure the successful completion of the share transfer under the best conditions.

It is evident that the professionalism and quality of the stakeholders are essential elements in such an operation.

Over the years, the Trevi Patrimonial department has acquired unique expertise in this area. We rely on numerous concrete achievements, a professional team, a network of specialized external stakeholders, and a database of active Belgian or foreign investors specializing in such transactions. Very few stakeholders, even those of international renown, can claim such comprehensive expertise.

* Due Diligence: Internal audit of the accounts
** Closing: Conclusion of the agreement / final signature formalizing the sale