08/2018: CIVIL-LAW PARTNERSHIP: CHANGES ON THE HORIZON
The civil-law partnership, a trust often used for succession planning, among others, has made the headlines with some frequency of late.
Also in light of the reforms to the Companies Code and the Economic Law Code, some rules for civil-law partnerships will be changing as well.
While we still expect some additional clarification, we are already informing you of the most important changes below.
The overview below is separate from the multitude of changes regarding inheritance taxes (in Flanders), the UBO register and the countless rulings concerning civil-law partnerships.
In a break with tradition, partnerships under the new law will from now on also be regarded as companies. This change entails a number of concrete additional obligations:
- As from 1 November 2018, new partnerships will have to register with the CBE (Crossroads Bank for Enterprises) before commencing their activities. For existing partnerships, a grace period would be extended until 30 April 2019 allowing them to successfully complete this registration.
- Partnerships will additionally be required to keep accounts. To the extent that turnover does not exceed EUR 500,000, simplified accounting is permitted. Should the turnover exceed this limit, full double-entry bookkeeping will be required. Given that the majority of partnerships already draw up annual balance sheets/asset statements, this change will likely involve few or no additional formalities.
Here too, in principle, the effective date is 1 November 2018. Existing partnerships shall be obliged to satisfy this requirement starting from the first full financial year that begins after the expiry of a period of six months, starting on 1 November 2018. Consequently, existing partnerships for which the financial year corresponds to the calendar year will have to start keeping accounts for the 2020 financial year.
- Partnerships are also required to store their books for seven years, but would not be required to file their annual accounts.
There is no doubt that this new legislation will have an effect on the partnership’s practice. It is time now, more than ever, to assess partnerships that are already in place.
Do not hesitate to contact us should you have any questions.
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