In the margin of the energy agreement, the federal government decided to extend the VAT reduction, the rate of 6% for the demolition and reconstruction of housing on the Belgian territory by one year. The measure, which was initially scheduled to expire at the end of this year, has therefore been extended until December 31, 2023. In order to respond somewhat to the sharp increase in energy prices, a temporary reduction in VAT is also planned for the installation of heat pumps, solar water heaters and solar panels.
Demolition and reconstruction
Belgians who demolish and rebuild a family home will thus be able to enjoy the reduced VAT rate of 6% even after December 31, 2022. This was confirmed in a Royal Decree on Friday, April 1. The extension until the end of 2023 does not entail any change in the (application) conditions.
To recap:
- The demolition of an old property followed by the rebuilding of a new one;
- The demolition and reconstruction is done by the same person;
- This is the buyer's sole and own home privately;
- The maximum habitable surface of the house is 200 m2;
- The buyer establishes their primary residence in the home for at least 5 years;
- Advance statement to be submitted to the VAT control office.
The extension also maintains the so-called "anti-abuse provision" that was initially inscribed in the law. For environmental permits that are only applied for from July 1, 2023, the VAT reduction is limited to 25% of the total amount of the application. This is to avoid rapid advance invoices being issued at the end of 2023 to take advantage of the reduced rate.
If you can show that the amount invoiced in 2023 corresponds to the operations actually completed in 2023, the full amount of the works does qualify for the reduced VAT rate.
Heat pumps, solar water heaters and solar panels
To help families and single people financially to make their homes energy efficient, the VAT on the installation of solar panels, heat pumps and solar water heaters will also be reduced to 6%. This VAT reduction will take effect from April 1, 2022 and run until December 31, 2023. The VAT reduction applies to homes under 10 years old including newly built homes and homes rebuilt after demolition. For homes over 10 years old, there is already a regime in place today where the installation can be at 6%.
The reduced VAT rate applies to all work required for the installation of the installations in question (preparation, any specific earthworks such as soil drilling, electrical and plumbing work, finishing...). Also, all components (cables, pipes, inverters...) that are specific to the installation when installed are subject to the reduced rate of 6%.
Please note that in a recent press release the Minister clarified that the scheme only applies to the separate supply and installations. The purchase of a new home in its entirety including a heat pump, solar water heater and/or solar panels will therefore remain subject to 21% VAT. The VAT reduction to 6% will therefore unfortunately not apply to the purchase of the house on plan.
We would like to briefly outline the conditions of application:
- The installation is provided and billed to the end user;
- The property must be used exclusively or primarily as a private residence after installation;
- The property is not older than 10 years;
- The installation falls under reference standard regarding emissions. Taking into account that most solar water heaters and heat pumps have no or hardly any emissions, this condition is almost always met;
- Express mention on the invoice of the application of the reduced VAT rate.
Due to the strict conditions of application, it must be examined project by project whether the reduced rate can be applied and whether this is useful for you or can be. We can of course assist you with this.
Do not hesitate to contact us here contact us with questions.
Would you like a conversation about the reduced rate?Then schedule an appointment with one of our tax advisors here!
