The valuation of usufruts: which standard to use?

 

An accurate valuation of the usufructs is a precondition to a successful operation, mainly to avoid the risk of taxation of a deemed remuneration in kind in the head of the director and/or the disallowance of the related costs incurred at the level of the company. But, as we know: after having massively used the RUYSSEVELDT valuation standard, the tax authorities has now switched to the standard applied by the Advance Ruling Committee since early 2016. The difference lies on the actualisation rate picked, which is strengthened and leads to lower valuations of usufructs.  The recent fall of the long terms interest rates likely explains this shift: under the original standard, these lower rates would generate higher values for such rights. Any retroactive effect are however normally left out.  This note compares the different valuation standards and their merits. Read more…

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