1 BIOF-lunchdebat 18-12-2009 Evaluatie van de hervorming van de schenkingsrechten op roerende goederen in het Vlaams Gewest Dr. C. Smolders

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BIOF-lunchdebat 18-12-2009BIOF-lunchdebat 18-12-2009

Evaluatie van de hervorming van Evaluatie van de hervorming van de schenkingsrechten op roerende de schenkingsrechten op roerende goederen in het Vlaams Gewestgoederen in het Vlaams GewestDr. C. SmoldersDr. C. Smolders

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outline

1. Steunpunt fiscaliteit & begroting: research plan

2. The Flemish reform of the gift tax on movables

3. The research question4. The results of the different projects5. General conclusions

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Evaluation of Flemish tax reforms

The budget of the Flemish Region 2007-2030: Threats and opportunities

The impact of taxes on economic growth and employment

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1. Steunpunt f&b: research plan1. Steunpunt f&b: research plan

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Evaluation of Flemish tax reforms

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Prediction of regional tax revenues

Evaluation of the Flemish reform of the gift tax on movables

2011

2007 2008

2010

1. Steunpunt f&b: research plan1. Steunpunt f&b: research plan

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Outline

1. Steunpunt fiscaliteit & Steunpunt fiscaliteit & begroting: research planbegroting: research plan

2. The Flemish reform of the gift tax on movables


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2.The Flemish reform of the gift tax on movables (art.131 §2 W. Reg) :

- Since 1.1.2004 separate tax rates for registered gifts of property and movables

- Substantial decrease in tax rates for gifts of movables :

3% -> gifts to children, parents, grandparents, spouses and partners

7% -> gifts to all other beneficiaries

- Registered gifts are permanently removed from the heritance (suppresion of the so called ‘progressievoorbehoud’)

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Evolutie van de ontvangsten 2004-2007

0,001000000,002000000,003000000,004000000,005000000,006000000,007000000,008000000,009000000,00

10000000,0011000000,0012000000,0013000000,0014000000,0015000000,0016000000,00

Schenking onder levenden van roerende goederen (in rechte lijn en tussen echtgenoten - 3%-)

Schenking onder levenden van roerende goederen (aan andere personen - 7%-)

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Evolutie van het aantal dossiers 2004-2007

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200

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600

800

1000

1200

Schenking onder levenden van roerende goederen (in rechte lijn en tussen echtgenoten - 3%-)

Schenking onder levenden van roerende goederen (aan andere personen - 7%-)

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Gifts at 3%-rate: Tax income increases with 74% (2004-2006) Number of files increases with 135% (2004-2006)

Gifts at 7%-rate: Tax income increases with 32% (2004-2006) Number of files increases with 84% (2004-2006)

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Outline

1. Steunpunt fiscaliteit & Steunpunt fiscaliteit & begroting: research planbegroting: research plan

2. The Flemish reform of the gift The Flemish reform of the gift tax on movablestax on movables


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3. The research question1. Did the reform result in an increase in the

number of gifts, did it change the timing of gifts, did it change the average amount given?

2. Are there significant differences concerning the profile of donors and beneficiaries before and after the reform?

3. What do tax payers know about the reform? Are they for or against the reform? Did the reform change their attitude?

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3. The research question4 constituent projects:

1. Estate planning experts: text analysis of the in-depth interviews with 22 experts

2. HORIZON-fair Ghent: logit-analysis on the data obtained from face-to-face interviews with 247 donors/potential donors

3. IVOX-panel: logit-analysis and OLS-regression analysis on the data obtained from an on-line survey (n=1050 potential beneficiaries)

4. Register offices: Logit-analysis & OLS-regression analysis on the data collected in 9 register offices (n=2686 registered gifts)

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Outline

1. Steunpunt fiscaliteit & begroting: Steunpunt fiscaliteit & begroting: research planresearch plan

2. The Flemish reform of the gift tax The Flemish reform of the gift tax on movableson movables

3. The research questionThe research question4. The results of the different projects5. General conclusions

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4.1. listening to experts…

Considering The donor:

age 60-65, healthy, relatively wealthy, male, better educated, meant to support children when they start their professional careers or plan to build a house, 80% of the gifts in direct line, most of them are equally divided over the beneficiaries

The gift: intentional gifts: at advanced age, larger average amounts, registered gifts

occasional gifts: in the earlier stages of life, smaller amounts, mostly non-registered

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4.1. talking with experts…

Considering the effects of the reform: Clients sooner aware of the benefits of

inter vivos gifts Shift in the type of gift: more registered

gifts, less other types of gifts (hansels) Significantly more gifts of movables More transfers accompanied by conditions Wealthy clients are well informed about the

reform<>others!

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4.2. talking to (potential)donors…

Aim Evaluation of the reform by (potential) donors from low to middle class income groups

Face-to-face interviews with 247 visitors at the HORIZON-fair in Ghent, October 2007

Analysis Chi²-testenLogit-regression:

GIFT = 1 in case of a donor (n=66)GIFT = 0 else (n=142)

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4.2. talking to (potential) donors…

ModelGIFT=f(KIND25D,HEALTH,GENDER,EDUCATION,

JOB,AGE,HOUSE,STATUS,INCOME,HEAD, MOTIVES,BENEFICIARY,APPREC,KNOWL, PLANNING,INHERIT,FISCAL)KIND25D: the number of children age 25-45 HEALTH: the donor’s health GENDER: the donor’s genderEDUCATION: the donor’s educational degrees JOB: the donor’s jobAGE:the donors’ age group HOUSE:house ownership

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4.2. talking to (potential) donors…

ModelGIFT=f(KIND25D,HEALTH,GENDER,EDUCATION,JOB,AG

E,HOUSE,CSTATUS,INCOME,HEAD, MOTIVES, BENEFICIARY,APPREC,KNOWL,PLANNING, INHERIT,FISCAL)

CSTATUS: civil status INCOME: household income level HEAD: the number of contributors to the household’s income MOTIVES: motives to give (marriage,birth,

illness/accident,altruïsm, children’s housing) BENEFICIARY: have been the beneficiary of a gift APPREC: the appreciation of the tax rates on gifts of

movables

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4.2. talking to (potential) donors…ModelGIFT=f(KIND25D,HEALTH,GENDER,EDUCATION,JOB,AG

E,HOUSE,CSTATUS,INCOME,HEAD,MOTIVES, BENEFICIARY,APPREC,KNOWL,PLANNING, INHERIT,FISCAL)

KNOWL:the knowledge concerning inheritance tax law PLANNING: being involved in estate planning INHERIT: whether the subject has been involved in an

inheritance procedure lately FISCAL: fiscal considerations

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4.2. talking to (potential)donors…

Results:- The probability to give is significantly larger in case of women, age

70+, monthly family income >5000 €, 1 or 2 children age 25- 50, consciously involved in estate planning, altruistic nature

- The probability to give is independent of:

education, job, tax resistance, knowledge concerning estate planning, health, civil status

- The reform is strongly appreciated, but the communication to a much lesser extent

- Knowledge of respondents concerning estate planning in general is disappointing

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Outline




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4.3. Talking to (potential) beneficiaries… Aim

? knowledge, impact, appreciation of the reform when potential beneficiaries are asked (representative panel, age 25-50)

Method & response rate

On-line questionnaire with cooperation of iVOX/Indigov (on line from 14/3/08 to 9/4/08) Response rate= 1050 respondents

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4.3. Talking to (potential) beneficiaries…

Results

19% of the respondents received one or more gifts donor? 76% parents, 13% grandparents, 10% others type? 50% hansels, 29% deeds, 15% bank gift, 6% not

registered nature? 63% movables, 30% estate property, 7% building lots amount? 15% < 2.000€, 31% between 2.000 and 10.000€,

25% between 10.000 and 25.000€, 29% > 25.000€ conditions: 25% of the deeds Self reported effects on behavior=negligible; the only

important effect is on investment in estate property

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In 35% of the cases the gift tax was paid because:

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9

3

0 5 10 15 20 25 30 35 40 45

beperken successierechten

zeker dat schenking bij overlijden niet meer belast

juridisch correcte schenking doen

latere discussie in familie vermijden

te betalen schenkingsrechten vielen goed mee

mogelijkheid afdwingbare voorwaarden


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in 29% of the cases the reform affected the giving:

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7

3

37

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0 5 10 15 20 25 30 35 40

schenker heeft op jongere leeftijd geschonken

schenker heeft frequenter geschonken binnen familie

schenker heeft frequenter geschonken aan niet-bloedverwanten

schenker heeft aan meerdere begunstigden geschonken

schenker heeft gekozen voor notariële akte

schenker heeft grotere bedragen geschonken


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Results beneficiary=

mostly men, married, owner of a home, healthy, double income family, income superior to 2500 euro, age 45 or older, higher education degree, at least a 4/5 FTE job

Larger gifts to:owners of a home, beneficiaries with larger incomes, better educated, age 40 & older, married, registered deeds

In the post-reform period more gifts to younger beneficiaries and to one-income families

Significant higher amount of conditional gifts in case the beneficiaries are feminine, less educated, less active, living from one income and in the case of larger amounts given


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Results Knowledge concerning inheritance taxes

and gift taxes = disappointing Knowledge concerning the reform: 67%

never heard of it The reform is appreciated by a majority of

the respondents

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Outline




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4.4. studying deeds…

Purpose- To obtain an objective view of the profile

shifts since the 2004 reform

Method- Screening of 3100 deeds available in 9

registration offices, period 2000-2007 - After merging the cases in which one

donor registered several gifts, 2686 gifts remained

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Data

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Data

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The profile of the gifts

- In 69% of the cases: only one registered donor- in 50% of the cases only 1 beneficiary- larger number of beneficiaries in case of gifts to others

(=‘in zijlijn’)- 70% of the gifts = in direct line- The average amount received= 195 197 euro- The average amount given=344 754 euro- The gift in DL > the gift to others- In 50% of the cases, the gift =money- Shares or other financial assets =22%- In 2 out of 10 cases the deed mentions conditions

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The profile of the donors- On average age 76; only 2% younger then 50 - Donors in direct line are younger (age 74,6

DL<> age 81,5 others)- In case of just one donor: mostly women

The profile of the beneficiaries- On average age 46;only 20% younger than 36- beneficiaries in direct line are younger (age 44

DL<> age 53 others)

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4.4. studying deeds…OLS-regressie; dep.var.= totaal geschonken bedrag

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Before and after the reform-Larger gifts

-Significantly more registered deeds (!)

-More conditions attached

-Gifts of financial assets increased

-Gifts to others increased

-Gifts on later moments in life time

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Outline



3. The research questionThe research question4. The results of the different projectsThe results of the different projects5. General conclusions

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5.General conclusions

1. Concerning the reform- Significant increase in tax revenues

- Significant increase in the number of registered deeds

- Significant increase in conditional deeds

- Significant increase in the number of gifts to others

- Significant increase of the amount given

- Donors still rather old (average> 70)

- Registration of gifts is postponed

- Gifts increase savings and moderately stimulate investment in real estate

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5.General conclusions2. Considering the knowledge about inheritance tax- Knowledge in general is very disappointing, except for the

wealthy group

3. Appreciation of the reform- Donors and beneficiaries are happy with the reform, but not

with the official communication considering the reform

- Gift taxes on gifts to partners are contested

- A majority of the respondents prefers lower tax rates for the highest tax breaks of the inheritance tax

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Contact

Steunpunt fiscaliteit & begroting

Algemeen secretariaat

Hogeschool Gent

Campus Schoonmeersen

Gebouw C

Voskenslaan 270

B-9000 Gent

09 248 88 35

[email protected]

Documents

1 BIOF-lunchdebat 18-12-2009 Evaluatie van de hervorming van de schenkingsrechten op roerende goederen in het Vlaams Gewest Dr. C. Smolders