Anyone who has ever gone through one knows that a relationship breakdown is misery. Also aware of this situation, the legislator introduced the misery tax to bring some solace. The misery tax is the reduced stamp duty of 1% for ex-spouses and ex-legally cohabiting partners that is due when ex-partners want to buy each other out of what used to be their shared home after their relationship has ended. The misery tax is a mitigation because the basic stamp duty rate is 2.5%.

My point here is that in society the misery tax has more holes than Swiss cheese. Despite the tax relief, it’s not uncommon for the division of the shared property to incur a 12% tax. This incomprehensible situation is of course misery squared for those who face it.

People often enter into a relationship with someone who already owns their own house or apartment. It is common practice to make this house or apartment the shared residence. Why look for a new home together if your partner already has a nice home? Today’s housing market is challenging – to put it mildly. Obviously, the new partner would want to buy into the shared home. As obvious as this state of affairs may be, from a fiscal point of view it is a disaster waiting to happen.

Since the property was not initially purchased jointly, any partner who joins later and contributes to the purchase will be considered a “third-party purchaser”. In general, under stamp duty rules, this is regarded as a kind of intrusion into the joint ownership. As a result, in the event of a relationship breakdown, the 1% misery tax cannot be invoked. Not even the general duty of 2.5%. Due to the specific anti-abuse provision of the third party purchaser theory, the 12% sales tax will be applied. This is solely based on the method of acquisition of the property, regardless of whether there is fraudulent intent.

The contrast with the misery tax is huge. Remember, the misery tax was introduced to prevent couples who are faced with a relationship breakdown – and are therefore already experiencing financial hardship – from having a fiscal millstone around their necks.  Remember, the legislator already considered 2.5% to be a – fiscal – millstone. In such cases, couples are faced with as much as 12% in stamp duty. This is incomprehensible, especially since the misery tax itself is subject to various conditions to prevent abuse. For example, the misery tax can only be applied between former qualified cohabitants if the official cohabitation has lasted for at least one year without interruption and the property division takes place within three years from the official termination of the cohabitation. Also note that the manner in which the partners became partners is not a condition.

It can therefore be said that there is much more than just a hint of discrimination here. Discrimination compared to separating couples who did purchase a home jointly, i.e. at the same time. But this also constitutes discrimination with regard to the ex-partner who was initially the sole owner of the property in question. The person who initially purchased the property is not considered a third-party purchaser and will therefore be able to buy out his or her partner under the stamp duty rules.

In this set-up, the legislator forgets that situations in which partners subsequently buy in are in themselves fiscally disadvantaged. This purchase does not qualify for the reduced rate for the own and only home, which is currently 3% (soon 2%). A 12% rate is imposed on the purchase, even though the person concerned would be able to benefit from the reduced sales tax of 3% for the own and only home if they were to purchase another home.

Now that the Flemish government is tinkering with stamp duties, it would be better to correct these kinds of injustices. Anyone who is a victim of such fiscal discrimination can turn to the Constitutional Court with the aim of reducing the insane 12% to 1%.