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30 October 2017 / article

How to obtain a reclassification of land use or destination?

In case of new project, assessing the rights you have on a property is not enough. The use or destination of a land is ruled by the Belgian region where your property is located, and a good project can be restrained by a wrong destination. Can you do something about it ?

Reclassification rules in the Walloon Region

In the Walloon Region, a request from a private entity to review a sector plan, in order to change the use or the destination of the related area, is only possible with respect to:

  • extension of economic activity areas;
  • registrations of new mining/extraction areas;
  • delineation of main infrastructure for fluid and energy transportation; or
  • booked perimeters for such delineations.

The request must be addressed to your municipal council (so-called “ordinary procedure”). After a prior information meeting, the files justifying the request are sent to the Walloon Government. That will lead the consultations and the public enquiry. The “ordinary procedure” takes 24 months at the most, but you can include your building permit application to the review request to gain time.

Reclassification: exemption in Wallonia

The “accelerated procedure” is not available for private entities. The only exceptions are requests from legal entities governed by public law that involve economic “sites to be redeveloped”.

When your reasons to change the destination of a land are not the ones mentioned above, it remains possible to derogate from a sector plan. The specific nature of the project has (i) to be justified, (ii) to respect the general economy of the sector plan, and (iii) to contribute to the protection, management or planning of the built or natural landscape. The derogation is not a review of the sector plan as such, but still allows you to obtain your permit.

Reclassification rules in the Flemish Region

A company that is expanding can ask the Government whether it would consider a plan change, by requesting a “planological certificate”. This certificate considers the company's support and its development capabilities. In addition, the certificate also makes clear whether a plan change is already ongoing or not.

Your request must be submitted to the Municipality, that examines its admissibility. These are the main requirements:

  • the business buildings and all the constructions that are necessary for your main business activity are authorized for administrative purposes, and meet the basic requirements of stability;
  • your company is environmentally compliant;
  • your company can demonstrate there is a spatial problem affecting the development of its business activity, which can only be solved through a planning initiative; and
  • your company is not involved in any other ongoing or recently completed planning procedures.

If you meet the requirements, the municipality sends the application to the Province or Region, or handles the application itself, depending on the nature of the plan. All requests must be handled by a spatial planner.

Reclassification: Attention to the tax cost

In the Flemish and Walloon Regions, a change in land use or destination due to review of the sector plan of an area by the administration can result in a lump sum capital gain for the owner (i.e. full ownership or residual rights). The regimes are almost identical in both regions.

In Wallonia, the capital gain is triggered when:

  • the granting or transfer of a right in rem on a land previously subject to a change of use or destination; or
  • the delivery of a building permit that could not have been granted without such a change of use or destination.

In Flanders, the change in land use or destination by itself triggers the taxation, which can be delayed until the transfer of the land or the delivery of a building permit. You will however receive a 15% discount on the taxation should you decide to pay the tax prior (no discount for early payers in Wallonia).

Reclassification: lump sum capital gain

The Walloon administration has defined a schedule including the 25 changes of use or destination deemed to result in a lump sum capital gain, while the Flemish legislation provides for 15 changes. In both Regions, a lump-sum capital gain is fixed per m² for each change of use or destination (e.g. an agricultural area becoming a residential area is deemed to result in a capital gain of 47.53 EUR per m² in Wallonia).

Tax in progressive brackets

In both Regions, the capital gain as determined by the schedule (and decreased by 50% in Wallonia) is subject to tax on the basis of progressive brackets, i.e. both from 1% to 30%, the last bracket of 30% being applicable for capital gains above 500,000 EUR. The capital gain can be limited to a maximal amount under specific conditions in the Flemish Region (no limitation in Wallonia).

Exemptions have been envisaged for transactions involving public entities or small pieces of land in both Regions.

Reclassification Wallonia: start compiling information

As the trigger event of the tax is delayed in Wallonia, owners should start to compile information related to the sector plan applicable to their properties. This way, you are completely informed on the consequences of a disposal or a development project. This problem does not apply in the Flemish Region. In Flanders, you will directly receive a kind request to pay at the time of the change in land use or destination.

Please note that the owner of a plot of land is entitled to receive compensation from the Regions when that land is no longer eligible for a building permit, due to a change in use or destination after a review of the sector plan of the area.

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