6% VAT for demolition and reconstruction of private homes: an overview

6% VAT in 32 cities (until 31/12/2024)

Historically, the reduced VAT rate of 6% was only applicable to demolition and reconstruction projects in 32 specific urban areas. This now only applies as a temporary transitional measure until 31 December 2024.

• Where: Antwerp, Ghent, Ostend, Mechelen, Sint-Niklaas, Leuven, Bruges, Kortrijk, Roeselare, Aalst, Dendermonde, Genk, Hasselt, Brussels, Anderlecht, Sint-Gilles, Sint-Joost-ten-Node, Sint-Jans-Molenbeek, Schaerbeek, Forest, Ixelles, Uccle, Etterbeek, Charleroi, Mons, La Louvière, Seraing, and Liège, Mouscron, Tournai, Verviers, and Namur.

• Who: Builders who use the building themselves or rent it out.

• Formality: Submission of form 111-4.

Currently, this scheme is only possible for projects for which the environmental permit application was submitted before 1 January 2024.

Extension of 6% VAT to the entire territory (until 31/12/2024)

Since 1 January 2021, it has been possible to carry out demolition and reconstruction projects throughout Belgium at the reduced VAT rate. This possibility remains as a temporary transitional measure until 31 December 2024. Specifically, this measure applies to three situations of demolition and reconstruction:

1. A natural person as the builder, who will occupy the new property as their sole residence.

2. A natural person or legal entity as the builder, who will rent out the property for 15 years as part of a social policy.

3. A natural person or legal entity as the supplier, who sells the new property to a natural person for whom this is their sole residence.

An additional condition is that the house to be built/sold must have a maximum habitable area of 200m².

Formally, a form 111-1, 111-2, or 111-3 must be submitted depending on the specific situation.

It is important that sellers/builders in 2024 will need to submit a new declaration (111/3-2024). For projects with a provisional delivery before 1 July 2024, this must be done by 30 June 2024. For projects with a provisional delivery from 1 July 2024, the deadline is the provisional delivery date. Nonetheless, it is recommended to submit this new declaration no later than 30 June 2024.

Currently, this scheme is only possible for projects for which the environmental permit application was submitted before 1 July 2023.

Final scheme for the entire territory (from 01/01/2024)

The final scheme is essentially a watered-down version of the scheme that was previously introduced from 1 January 2021. Specifically, it still applies to two situations:

• A natural person as the builder, who will occupy the property as their sole residence.

• A natural person or legal entity as the builder, who will rent out the property for 15 years as part of a social policy.

The sale of new homes by property developers, built after the demolition of an old building on the same plot, can no longer be subject to the reduced VAT rate.

The condition that the home must have a maximum habitable area of 200m² remains, as well as the formal requirement that a form 111-1 or 111-2 must be submitted.

Extension of the final scheme (from 01/06/2024)

An amendment to the final scheme added an additional paragraph, making the 6% rate also possible for:

• A natural person or legal entity as the builder, who intends the property for long-term rental to natural persons who will have their domicile there.

This adjustment takes effect on 1 June 2024, which means that the 6% rate can only be applied to invoices from this date. Additionally, builders must also submit a form 111.