The Belgian government has announced plans to speed up reforms and likely limit financial support to the royal family after the prime minister rebuked Queen Fabiola for setting up a special inheritance system widely seen as a tax evasion.
Elio Di Rupo said on Friday he planned to change the system by which the royals receive about $20m a year and force them to reveal what the funds are spent on.
Di Rupo said he wanted "more transparency, so that we are aware of how the stipends of the royal family are handled".
Fabiola is facing widespread accusations that she is trying to shield some of her fortune from taxes, a move that has frustrated many people struggling in tough economic times.
Experts say legal constructions like the private fund would allow the queen to bequeath part of her fortune to relatives like nieces and nephews, and to her favourite charity causes, without having to pay the regular amount of taxes.
Di Rupo called the queen's plan to create a private fund to deal with her inheritance ethically flawed even if it was strictly legal.
"Because of the position of Queen Fabiola and the stipend annually provided by parliament, this fund causes ethical problems," he said.
The prime minister also said the queen had not told the government or the king about her plans, which broke in the media on Wednesday.
Fabiola, who is childless, insisted in a statement that none of the money granted by the government, almost $2m a year, would be used in the new fund, which would only include her private money.
She said she spends the government stipend on "housekeeping, of which the biggest part is staff wages".
It is the latest in a series of scandals to embroil the Belgian monarchy, one of the few remaining symbols that unite the divided nation of 6.5 million Dutch-speaking Flemish and 4.5 million French-speaking Walloons.
With much of Europe hit by a majors debt crisis, monarchies are often seen as living in the lap of luxury, feeding off annual public stipends while other families struggle.