Belgium’s Inheritance Tax Reform in Doubt as Wallonia Faces Budget Crisis

Walloon Minister-President Adrien Dolimont has opened the door to a fundamental reworking of Belgium’s most anticipated tax reform, signaling that the version of inheritance tax cuts already voted by the regional parliament may not be the right approach. His comments, published in La Libre Belgique on June 13, add a new dimension to an ongoing debate over tax policy in Belgium’s southern region.

The Reform at Stake

The inheritance tax overhaul — a flagship measure of the MR-Les Engagés coalition government — was initially agreed upon in July 2024 and would halve most inheritance tax rates. As reported by RTBF, the proposed rates would be set at a minimum of 5% for direct line (spouses, parents, children), 7% for indirect line (siblings, nieces, nephews), and 15% for third parties without family ties. This represents a dramatic reduction from current rates that range from 3% to 80% depending on the relationship and amount inherited.

Inheritance taxes currently generate approximately €800 million annually — roughly 4% of Wallonia’s tax revenue. Implementation was originally scheduled for January 2028, at the end of the current legislative term.

A Budgetary Straitjacket

Dolimont’s shift in tone comes as Wallonia confronts a severe budget crisis. The region faces a projected deficit of €2 billion for 2027, requiring significant austerity measures. According to the minister-president, Wallonia must eliminate its deficit by 2029, which would require approximately €600 million in annual savings — more than double the current pace of €270 million per year.

“We must stop spending 2 billion in three years,” Dolimont said in earlier remarks, as reported by Belga via La Libre Belgique on May 20, 2026. While he had previously indicated the reform could be modified “at the margins,” his latest statement goes significantly further by questioning the fundamental approach of the already-voted legislation.

Coalition Tensions

The uncertainty surrounding the reform has exposed growing tensions within the MR-Les Engagés coalition. According to an analysis by 21News, some MR officials question whether a general rate reduction is justified, arguing it would be more reasonable to limit cuts to indirect inheritance where taxation is highest. Les Engagés continue to publicly defend the reform, but some voices within the party question its pertinence given the budget situation.

Progressive implementation — phasing in the cuts over several years — has been suggested as a potential compromise.

Opposition Reaction

The Socialist Party (PS) has consistently criticized the reform as “a gift to the richest” and lacking clarity on financing. Ecolo has expressed concern about the lack of climate ambition and what it calls “budgetary fog.” The opposition argues that the 2028 implementation date is strategically placed “on the eve of elections,” pushing the cost onto the next majority.

The Core Dilemma

The reform presents a fundamental policy tension: Wallonia’s inheritance tax rates are among Europe’s highest and are widely seen as economically damaging, but the region can ill afford the revenue loss. MR President Georges-Louis Bouchez defended the original reform by arguing that wealthy individuals already use tax planning or move abroad to avoid inheritance taxes, making the burden fall disproportionately on the middle class.

“It was unacceptable that a region like Wallonia had a rate of 80%,” Bouchez said when the agreement was announced. “Do we realize the image that gives? It was more like an image of the USSR.”

What’s Next

Dolimont’s June 13 comments represent a significant escalation from his previous position. While he had said the reform could be modified “at the margins” in May, his new statement opens the door to a more fundamental reworking or even abandonment of the reform.

The question facing the Walloon government is whether the symbolic and economic benefits of lower inheritance tax rates outweigh the fiscal cost at a time of required austerity. With €600 million in annual savings needed by 2029 and the reform potentially costing several hundred million euros in lost revenue, the political calculus may shift decisively against the tax cuts.

Observers will be watching closely for any concrete alternative proposal from Dolimont, who has not yet specified what form a revised reform might take. The coming months will reveal whether the MR-Les Engagés coalition can maintain its signature policy in the face of mounting fiscal pressure.