Until the end of 2023, it was possible for property developers to sell rebuilt housing after demolition at the reduced VAT rate of 6% under certain conditions. However, for projects that had started in 2023 or earlier, the legislature provided for a transitional arrangement whereby the VAT on tranches charged in 2024 could still benefit from the reduced rate.
Submission of statement 111/3-2024 for projects demolition and reconstruction in transition regime
One of the conditions to enjoy the reduced rate is the submission of a joint 111-3 declaration by the seller and buyer. For ongoing projects, this declaration may have already been filed in 2023 or earlier so that, as a rule, this condition is met. However, the administration has decided that for projects in transition a new declaration 111/3-2024 must be filed and this no later than 30/06/2024.
What is it about?
Under the final regulations for demolition and reconstruction of housing that have been in effect since January 1, 2024, it is no longer possible for developers to sell housing at the reduced VAT rate of 6%. However, the legislator has provided for a transitional arrangement whereby projects - for which the building permit was submitted before July 1, 2023 - can still benefit from the reduced rate and this for the VAT that becomes due before 31/12/2024.
This provided that the seller and buyer submit a joint declaration 111-3 via MyMinfin and the reference number obtained afterwards is mentioned on all relevant documents. For sales on plan for which VAT has already become due in the course of 2023 or earlier, a declaration 111/3 has already been submitted. However, the administration has decided that for these ongoing projects under the transitional regime, a new declaration 111/3-2024 must still be submitted for all VAT that has become, or will become, due in 2024. This declaration must be submitted by 30/06/2024 at the latest. Consequently, two 111/3 declarations must always be submitted for projects already started.
Specifically, what needs to happen next?
On the part of the project developer, the following situations may arise:
Situation 1: I entered into a purchase agreement in 2023 or earlier for a home under construction (after demolition) for which disks will be charged at the reduced rate of 6% in 2024. The building permit was filed no later than 30/06/2023 and I already filed a Declaration 111-3 with the buyer no later than the end of 2023. The reference number obtained was included on all relevant documents issued (agreements, invoices, deeds...).
- This is a project under the transitional regime, i.e. in the period 01/01/2024 to 31/12/2024 VAT is or will be payable at the reduced rate of 6%.
- However, a new joint declaration 111/3-2024 must be submitted by the buyer and seller no later than 30/06/2024. To clarify: a new declaration must also be submitted for projects that have reached an end in 2024 and for which the last tranche was charged before 30/06/2024!
- For your information, the statement on MyMinfin does not explicitly mention 111/3-2024 but simply 111/3. After submitting the new statement, a new reference number will also be obtained. From then on, this number should be mentioned on every document. If you have not yet received a new reference number for 2024, but you are invoicing in the meantime, you may use the old reference number (which you obtained when you submitted the first declaration). This is an administration tolerance. Consequently, the projects that have reached an end in 2024, and this before submission of the new statement, no document will mention the new reference number.
Situation 2: I develop a real estate project that meets the conditions for demolition and reconstruction and submitted the building permit by 30/06/2023. The works already started and during 2024 I find a buyer.
- Writings charged between 01/01/2024 and 31/12/2024 can benefit from the reduced rate of 6% provided a joint declaration 111/3-2024 is filed. This statement must be submitted before the VAT on the first write becomes due (or, in other words, before issuance of the first invoice to the buyer or receipt of a payment). Thus, the deadline of 30/06/2024 is irrelevant here.
- After submitting the statement, the reference number obtained should be included on every piece (including sales invoices issued).
- VAT that becomes due after 31/12/2024 will have the standard rate of 21% instead of 6%.
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