Tolerance provided for the application of the reduced 6% VAT rate to demolition and reconstruction
Tolerance provided for the application of the reduced 6% VAT rate to demolition and reconstruction
It has already been widely reported in the media, but the delay in the parliamentary work on the program law submitted by the de Wever I government has unpleasant VAT consequences for the Belgian real estate sector. Indeed, through a transitional regime, a 6% VAT rate was provided (under various conditions) for the supply of demolished and reconstructed private homes. This transitional regime expired after June 30, 2025.
The draft program law envisages, among other things, a permanent arrangement for the reduced VAT rate of 6% on the demolition and reconstruction of private dwellings. This reduced VAT rate would also apply to the supplies of such reconstructed homes, and would in principle take effect from July 1, 2025.
However, in principle, the reduced VAT rate can only be applied after the entry into force of the program law. Until it enters into force, the standard rate of 21% must currently be applied . The Minister of Finance had already announced that a solution would be provided, and the FPS Finance has now announced through a notice on its website that, due to this unforeseen delay, it will tolerate the proactive application of the reduced VAT rate, provided, of course, that the supply meets the conditions in the program law.
Beware! Should the program law ultimately not be approved, a regularization of the VAT rate from 6% to 21% will be necessary. A full explanation will be published soon by the administration.
This new tolerance meets legitimate concerns from the real estate sector, as well as the buyers of such properties. However, it is important to always verify that all conditions for the application of the reduced VAT rate are met. Contact our VAT experts for support or advice at btw-tva@bdo.be or do so directly with one of the following members of the VAT team:
The draft program law envisages, among other things, a permanent arrangement for the reduced VAT rate of 6% on the demolition and reconstruction of private dwellings. This reduced VAT rate would also apply to the supplies of such reconstructed homes, and would in principle take effect from July 1, 2025.
However, in principle, the reduced VAT rate can only be applied after the entry into force of the program law. Until it enters into force, the standard rate of 21% must currently be applied . The Minister of Finance had already announced that a solution would be provided, and the FPS Finance has now announced through a notice on its website that, due to this unforeseen delay, it will tolerate the proactive application of the reduced VAT rate, provided, of course, that the supply meets the conditions in the program law.
Beware! Should the program law ultimately not be approved, a regularization of the VAT rate from 6% to 21% will be necessary. A full explanation will be published soon by the administration.
This new tolerance meets legitimate concerns from the real estate sector, as well as the buyers of such properties. However, it is important to always verify that all conditions for the application of the reduced VAT rate are met. Contact our VAT experts for support or advice at btw-tva@bdo.be or do so directly with one of the following members of the VAT team: