Source De Tijd
1. Urban areas
The reduced VAT rate for demolition and reconstruction is now available in 32 urban areas. The scheme is not limited to impoverished neighborhoods and urban cancers, but applies to the entire city.
The coalition agreement states that this scheme will be extended to the entire Belgian territory ‘in the context of social housing policy’. ‘That social aspect is imposed by a European directive. A reduced VAT rate for new construction is only permitted if it has a social component, ‘says Tim Van Sant, VAT specialist at PwC Tax Consultants. ‘It is not yet clear how this social component will be fleshed out, but a bill submitted by the CD&V in 2017 and 2019 can indicate the direction.’
A reduced VAT rate for new construction is only permitted if it has a social component.
In principle, it is sufficient that what is demolished is a ‘building’. What its function is for the breakdown does not matter. It goes without saying that it can be a private home, warehouse or office building. In the VAT scheme, the term building is interpreted very broadly. It concerns any structure that is permanently connected to the ground, above or below ground. An asphalt site or an area with underground pipes also meets this definition. However, a parliamentary question in 2009 indicated that what is broken down must be of significant size. This is not stated in the law, but VAT inspectors often rely on it in practice. This leads to many disputes about what meets the condition of a building and what does not. Moreover, there are major differences in interpretation between VAT inspectors, ‘says Van Sant.
‘Sometimes people even say that what is being demolished must have a significant size compared to what is being rebuilt,’ says the VAT specialist. ‘Think of a dilapidated house that is being demolished after which a ten-storey apartment building is built. It would be good if those points of discussion were clarified in the new legislation. ‘
In current legislation, the reduced VAT rate is only for building contracts. ‘As a result, the reduced VAT rate can never be used for an on-plan sale. The bill provides that it may also concern a house that has been rebuilt by developers and developers after a purchase and demolition, on condition that it is subsequently sold to a natural person. A sale on plan could therefore also be possible, which would be a relaxation, ‘says Van Sant. Furthermore, the demolition and reconstruction must take place consecutively today and be for the same client.
4. Material works
Only material works are eligible for the reduced VAT rate for demolition and reconstruction. Intellectual performance – such as the services of architects, construction engineers, and safety coordinators – remains subject to the 21 percent rate.
5. Cadastral parcel
For a long time there was a discussion whether the new building should be in the same place as the demolished building. That has now been clarified: it is sufficient for the new building to be on the same cadastral plot.