Programme law + circulars published on demolition and reconstruction, heating installations and coal


The time has finally come: the programme law was published after several delays. From a VAT perspective, this programme law envisaged the following changes:
  • The new reduced VAT rate regime of 6% for residential demolition and reconstruction (Circular 2025/C/48)
  • Increase in the VAT rate for coal (Circular 2025/C/46)
  • Exclusion from the 6% VAT rate for certain heating installations (Circular 2025/C/47)
 

1.    6% VAT rate for demolition and reconstruction - new regime 


With the new scheme, the reduced VAT rate of 6% will permanently apply to the supply of housing after demolition and reconstruction, effective from 1 July 2025, which was not the case before. 

Indeed, as mentioned earlier, (Tolerance provided for the application of the reduced 6% VAT rate to demolition and reconstruction), the minister has remedied through tolerance the practical application problems of the 6% VAT rate for the period between the extinction of the previous transitional regime and the date of the entry into force of the programme law. This is reaffirmed in the circular.


Memorandum: what will the final regime look like?

The final scheme on demolition and reconstruction, included in the new heading XXXVII of Table A to Royal Decree No 20, consists of four measures (three existing and one new) that apply the reduced VAT rate of 6%. These measures are briefly summarised below:

1.    Demolition and reconstruction by a builder - natural persons:
  • The demolition of a building and reconstruction of a dwelling by a builder (natural person) who will himself occupy the new dwelling.
  • For at least 5 years, social criteria apply regarding surface area (maximum habitable area of 200 m²), own home, only home and domicile obligation. 
  • This measure has already applied since 1 January 2024 and remains unchanged.
 
2.    Demolition and reconstruction with rental to social rental offices:
  • The demolition of a building and reconstruction of a dwelling by a builder (legal or natural person) who will rent the new dwelling for at least 15 years to a social rental office or to a recognised social housing company, or other public or private legal entity with a social purpose (or have it rented out by one of the aforementioned under a management mandate granted to them).
  • This measure has applied unchanged since 1 June 2024.
  • There are no conditions regarding habitable area.
 
3.    Demolition and reconstruction:
  • The demolition of a building and reconstruction of a dwelling by a builder (legal or natural person) who will directly rent the new dwelling for at least 15 years to a natural person who will be domiciled there without delay. 
  • Maximum habitable surface area: 200 m².
  • This measure has applied unchanged since 1 June 2024.
 
4.    New measure with effect from 1 July 2025:
  • The delivery of a dwelling after demolition and reconstruction by a supplier/constructor (legal or natural person) who will sell the dwelling to:
    • A natural person who will occupy the new home himself (maximum habitable area of 175 m², with social criteria on own home and domicile).
    • A natural person or legal entity who will let the new home on a long-term (at least 15 years) social basis (no restriction on habitable surface area).
    • A natural or legal person who will let the new home privately on a long-term basis (at least 15 years) to a natural person who will be domiciled there without delay (maximum habitable surface area of 175 m²).

The circular also includes the practical formalities to be fulfilled in the context of the final regulation. 

 

2.    Increase in VAT rate for coal


With effect from 29 July 2025, the reduced VAT rate of 12% on coal and coal derivatives will be removed, making the standard VAT rate of 21% applicable to various products from now on. More specifically, from 29 July, the standard VAT rate will apply to the supply of the following products:
  • Coal and solid fuels made from coal,
  • Lignite and compressed lignite (excluding git),
  • Coke and semi-coke made from coal, lignite or peat,
  • Non-calcined petroleum coke used as fuel.
 

3.     Exclusion from the 6% VAT rate for heating installations


In case of renovation works on private residences older than 10 years and in case of delivery after demolition and reconstruction, the supply with installation of central heating installations using fossil fuels such as gas, heating oil and coal will no longer benefit from the 6% VAT rate  

The new exception will apply from 29 July 2025 for renovation works and from 1 July 2025 for the supply of reconstructed houses. For contracts concluded before these dates, the old rules continue to apply, provided all conditions are met.
 

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