Extension of 6% VAT rate for property developers

Details of the extension

The transition period has been extended until June 30, 2025, for two phasing-out regimes:

• Sales by developers to eligible buyers after demolition and reconstruction: Initially, sales where the environmental permit was applied for before July 1, 2023, were eligible for the reduced 6% VAT rate until December 31, 2024. For off-plan sales, this meant that only the amounts invoiced by December 31, 2024, could benefit from the 6% VAT rate. The extension now ensures that this will remain the case for an additional six months.

• Demolition and reconstruction in 32 cities: The old regime, which allowed builders in 32 specific cities to apply the 6% VAT rate on the demolition and reconstruction of private homes, provided that the environmental permit was applied for before January 1, 2024, was initially set to end in 2024. This regime did not require compliance with “social conditions,” such as a maximum area of 200 m² or the requirement that it be the “sole primary residence.” The extension now ensures that this regime will continue for an additional six months.

No impact on permanent arrangements

This extension does not affect other permanent arrangements for applying the 6% VAT rate on demolition and reconstruction:

• Demolition and reconstruction by individuals of their sole primary residence;

• Demolition and reconstruction by companies or individuals who subsequently use the property for long-term social rental or long-term rental to residents who establish their domicile there.