6% VAT for demolition and reconstruction: update
6% VAT for demolition and reconstruction: update
March 2024 - Since January. 1, 2024, you should expect significant changes regarding the VAT rate for demolition and reconstruction of private homes.
Until now, you could apply (or have applied) the 6% rate only for renovations of homes older than 10 years and for demolition and reconstruction in 32 centre cities.
Since Jan. 1, 2021, a broader scope applied, whereby this reduced 6% VAT rate also became possible for demolition and reconstruction outside the 32 center cities. However, this was subject to some strict conditions:
· The property had to be demolished and rebuilt by the builder
· The property had to be rented out for 15 years as part of a social policy
· The house had to be used as the sole owner-occupied dwelling for at least 5 years
· The property had a maximum area of 200m².
This measure also applied to the sale of real estate, allowing property developers to sell demolition and reconstruction projects with a 6% VAT rate. This extension initially applied for the years 2021 and 2022 but was eventually extended to 2023. As of 2024, however, a new regime is in effect.
Introduction of the new system
One system remains in place throughout Belgium in the area of demolition and reconstruction at 6% VAT. This rate only applies to:
· Private individuals who use the property (with a maximum area of 200m²) as their only own home for at least 5 years. Thus, it is no longer possible for developers to sell demolition and reconstruction projects at 6% VAT.
· Individuals and companies that rent out the home (with a maximum area of 200m²) for 15 years as part of a social policy.
Transitional measures
· Have you bought a property as a private individual from a construction promoter? Then you can keep the 6% VAT rate for invoices received in 2024, provided that the environmental permit for demolition and reconstruction was submitted before July 1, 2023.
· Individuals and companies that have submitted a permit for demolition and reconstruction before Jan. 1, 2024, in the 32 centre cities can still enjoy the 6% VAT rate for invoices received in 2024 under the old conditions.