Can I set up my business at home?

Town planning rules

The Regional Land-Use Plan (PRAS), the main land use plan for the Brussels Region, provides special protection for housing. In order to preserve existing housing, one of the requirements of the PRAS (0.12) includes significant limitations on the possibility of transforming a dwelling, or part of a dwelling, in order to replace it with another function (business, office, etc.).

Professions which can be carried out at home

If this was not foreseen when the building was constructed or before the PRAS came into force (2001), and you wish to use all or part of your home as a workspace, the only businesses permitted by the PRAS are:

1. The liberal professions

There is no official definition of exactly what the liberal professions are. However, it is generally accepted that a self-employed person who is a liberal professional essentially provides services or goods that cannot be defined as a trade or craft.

Here are some characteristics of the liberal professions:

• They are always exercised in the interest of the client and the company.
• They are often governed by a code of ethics and specific legislation that establishes their professional status.
• The holder of a liberal profession assumes personal liability.

In general, the holder of a liberal profession does not carry out any commercial activity.  By way of example, the following professions could be mentioned: lawyer, notary, architect, doctor, pharmacist (chemist), physiotherapist, psychologist, etc.

2. Intellectual service company

This concept refers to professional activities known as "services", such as real estate agent, surveyor, accountant, auditor, tax consultant, etc.

3. Company producing material services and/or intangible goods

The "production of material services" based in the home can be understood as a removal company, a cleaning and maintenance company, plumbing, an inspection agency, etc.

Regarding the productive activities of intangible goods that can be carried out at home, the reference here is to activities such as audiovisual production, software production, recording studios, professional training, pre-press and call centres.

4. Private classes

Private classes may also be taught at home. Since there are no specific criteria for home teaching, we recommend that you check with your local municipality to see if your situation is acceptable.

What are the conditions for carrying out my home-based business?

If your business activity falls into one of the four above-mentioned categories, there are still a few conditions that must be met in order to work at home or in an apartment building.

There are two possible cases:

1. To set up your business, you will alter part of a dwelling (single-family house or apartment). To do this, the following (cumulative) conditions must be met:

• it should not exceed 45% of the floor area of the dwelling (single-family home or apartment);
• it should be an accessory function to the main residence of the person carrying out the business or of one of the directors/partners of the business. The person carrying out the profession should therefore be officially resident on the site.

2. If you wish to use an entire housing unit for your activity, the following conditions must be met:

• it should be located in an apartment building (not a single family home);
• all the activities other than housing carried out in the building account for less than 15% of the total floor area of the building;
• it should be located preferably on the ground floor or 1st floor.

Is planning permission required?

In general, planning permission is required to convert a dwelling or part thereof into a workspace. However, if your activity takes up only a limited area of your home, exceptions are fortunately provided.

You will not need to apply for planning permission if you meet both the following conditions:

• The professional activity is incidental to the main residence of the person, director or partner carrying out the activity;
• The floor area for the professional activity is less than 75 m².

Example: you are a psychologist and you wish to hold your consultations at home. This is possible with no need for a permit if the floor area of your office is less than 75 m².

If you want to find out more : should you have any doubts, do not hesitate to contact the town planning department of your municipality or one of the hub.brussels advisors.They are at your disposal for any questions you may have and can help you complete your application for planning permission if necessary. To make the most of this service, just email permit@hub.brussels.

Legal protection of the home

We would advise you to draw up a declaration of unseizability for your main residence (to be done in the presence of a notary). This ensures that the company's creditors cannot seize the entrepreneur's main residence. Having said that, you should note that banks tend to be more reluctant to grant credit for your business when there is such a declaration of unseizability.

In order to define what is exempt from seizure within the framework of this declaration, the floor area taken up by the professional part in relation to the total surface area of the building is taken into account:

• If it is less than 30%, the whole building will be declared unseizable;
• If it is equal to or greater than 30%, only the portion allocated to the principal residence will be declared unseizable. A basic deed should then be drawn up in order to clearly divide the property into private and professional areas. 

What if I am a tenant?

The lease contract of a dwelling often states that "The Lessor does not authorise the Lessee to use all or part of the property leased for the exercise of a professional activity".

An entrepreneur who carries out his activity at home can legally deduct a part of the rent (according to the floor area of the property allocated to the exercise of the professional activity) as a professional expense. However, what is authorised here for the lessee-entrepreneur involves tax consequences for the lessor. Hence the frequent stipulation of this type of clause in lease contracts.

Tax implications for the lessor

 Below we review the tax implications for the lessor.

1. Payment of registration fees

By inserting a clause partially authorising a professional activity, we would have a mixed lease (for use as housing with the authorisation of partial assignment to another activity). In this case, the registration of the lease is subject to registration fees for its entirety (which would have been different if two separate leases had been drawn up). For further details.

2. Tax on real estate income

The general rule is that when property is rented to a natural person, the lessor is taxed for real estate income on the indexed land register income plus 40%.

If the tenant uses (part of) the building for his professional activity, the tax base becomes the rent (minus a fixed amount of charges) actually received. This is generally (much) higher than the indexed land register income plus 40%.

In practice, we speak of the business use of property when the tenant deducts part or all of the rent as a business expense. Two cases are then possible:

• If the lease is not registered or is registered but does not specify the professional and private parts of the rent: the taxable real estate income is the total rent actually received (minus a lump sum for expenses);
• If the lease is registered and specifies the professional and the private part of the rent and the rental benefits: the taxable real estate income for the residential part is the indexed land register income increased by 40% and that for the professional part is the rent actually received (decreased by a fixed amount of charges).

The tax authorities will generally consider that the deduction of business expenses by the lessee leads to a corresponding taxation on the lessor - according to a principle of interconnection (a position which is however not always followed by judges).

More specifically:

If your contract does not specify whether a part of the rented property may be used for your business, you can deduct a portion of your rent as a business expense. Note that this will have a tax impact on the owner, so you should inform him. If you don't, the Court may find you guilty of an abuse of rights and therefore order you to compensate the lessor for the resulting additional tax.

If your contract prohibits you from doing so and you still deduct a portion of the rent as a business expense: in that case, the lease contract, even if it contains a clause prohibiting any professional activity, is not enforceable for the tax authorities. Consequently, the tax authorities are fully entitled, despite the existence of this clause, to tax the lessor on real estate income. In such case, the landlord may claim against you for not respecting the lease contract. You will probably be ordered to repay the excess tax as well as paying damages to the lessor.

If your contract prohibits you from doing so and you do not deduct rent as a business expense, your landlord will not in principle be taxed. "In principle", because if the tax authorities decide to tax the lessor anyway, this will ultimately be left to the discretion of the court (according to some judges, the fact that the lessee does not deduct the rent is irrelevant).

What is the alternative if the lease does not authorise the exercise of a professional activity?

The first solution is to discuss it with your landlord. You can, for example, include a clause in the contract stipulating that you will be responsible for any possible taxation that may arise for the lessor and that is directly linked to the fact that you have registered your activity in said rented property.