In the fight against climate change, the federal government decided to remove the application of the reduced VAT rate for a number of climate-unfriendly products.
As a result, as of July 27, 2025, supplies with placement of fossil-fuel central heating systems in homes will now be subject to 21% VAT instead of 6%. The reduced rate still applied to placements in homes older than 10 years that were renovated or when a home was demolished and rebuilt.
Of course, this change brings a lot of practical questions. In this article, we answer 8 frequently asked questions.
1. Which services are subject to the rate increase?
Old situation
Until recently, VAT legislation provided for a reduced VAT rate of 6% for the supply and installation, or for the installation only, of (part of) components of fossil fuel boilers in the following situations:
- The renovation work performed on homes older than 10 years, if they are billed directly to the final consumer;
- The works in real estate in the context of a demolition and reconstruction of a property:
- by a natural person who will occupy it himself;
- by a natural person/legal entity who will rent the property for at least 15 years to a recognized social housing authority;
- by a natural person/legal entity who will rent the property for at least 15 years to a natural person who will be domiciled there.
- The delivery of a rebuilt house by a construction promoter to a natural or legal person who will give it any of the above-mentioned uses.
New situation
Effective July 27, 2025, delivery with attachment to a dwelling of components of the specific portion of a fossil fuel-fired central heating system excluded from the reduced rate.
It thus involves services that may or may not involve delivery, the so-called works in immovable state. The mere supply of materials related to such heating installations are and shall always remain subject to 21% btw.
2. What is included in "fossil fuels"?
Specifically, it involves natural gas, fuel oil, coal and peat.
Wood fuels (such as firewood, briquettes and pellets) are not included. Installations using these fuels can therefore still have the reduced tariff enjoy under existing conditions.
3. What is meant by "the specific part" of a fossil fuel heating system?
Below the specific section be understood:
- The actual combustion boiler, both as an autonomous system or as a subsidiary system when installing a heat pump, for example:
- Thermal boilers intended for heating, hot water or a combination of both;
- The boiler connected to the boiler;
- ...
- All parts which are intrinsically part of the boiler:
- Supply lines;
- Mazout or gas tank;
- Mounting hardware;
- Flue;
- ...
- All components connected to the boiler strictly necessary to make them work:
- Control and monitoring devices integrated or not on the boiler;
- Circulation pumps;
- ...
- Heaters, radiators or convectors that only operate on fossil fuels and are connected to a chimney pipe with a fixed joint and/or are connected to pipes necessary for the supply of energy:
- Gas stoves and fireplaces;
- Fuel oil stoves;
- ...
4. So does the "non-specific" part continue to enjoy the reduced rate?
Indeed. Components intended for heating systems that do not run on fossil fuels, or those that are intended for them but can also be integrated into other systems may have the reduced VAT rate continue to enjoy.
This includes the installation of the following components: radiators and underfloor heating with their control systems whose operation does not depend on a particular heat source, hydraulic pipes, thermostats, sensors, vents, EMS systems, ...
5. An existing fossil fuel heating installation is replaced by a new installation. When can the reduced rate still apply?
The demolition of an old fossil fuel plant by itself is No work in real estate that can enjoy the reduced rate. This is the case when the breakdown happens with a view to installing a new installation that does not run on fossil fuels, for example, a heat pump. In that case, the whole thing can still benefit from the reduced rate, as long as the applicable conditions of the reduced rate are met.
For example, the replacement of a heating installation on heating oil with a high-efficiency gas boiler is subject to 21% VAT, as far as the specific portions of this installation are concerned.
6. Can the mandatory biannual gas boiler maintenance and any repair work still be subject to the reduced VAT rate of 6%?
Yes, the repair and maintenance work of (non)specific portions of heating installations operating on fossil fuels continue to enjoy the reduced VAT rate under the conditions of that regulation.
7. I am a plumber installing a heat pump with a subsidiary natural gas boiler in a home over 10 years old. How do I prepare my bill?
This supply with placement involves an installation that in part is excluded of the reduced VAT rate of 6% (specific part natural gas boiler). The price on the invoice should be disaggregated thus making each part undergo the applicable rate.
If the price is not split then the whole subject to 21% VAT. By way of tolerance, when hybrid systems are installed, the administration accepts that any global price requested for 35% is considered to refer to the specific part that operates on fossil fuels. The application of the reduced rate is thus limited to 65% of the price of the hybrid system.
8. What rate is the installation of fossil fuel heating systems subject to for current contracts?
The exclusion from the reduced rate applies as of July 28, 2025 and for deliveries of demolished and rebuilt homes as of July 1, 2025.
However, the administration accepts the application of the reduced rate to the extent that the VAT becomes due no later than June 30, 2026 for construction contracts concluded no later than July 28, 2025, and for deliveries of demolished and rebuilt housing no later than June 30, 2025.
The supplier has several ways to demonstrate this: one for that date for agreement signed quotation or agreement, a proof of payment of a advance pertaining to such agreement or any prior to that date sufficiently detailed (advance) invoice.
Do you have questions about the impact on your business?
Your client manager is ready to help you and proactively advise.