Tax
01 February 2024

Demolition and reconstruction at 6% VAT: an update

by Dries Torreele

From 1 January 2024, changes have been introduced to the VAT rate on the demolition and reconstruction of private homes.

Previously, the 6% rate could only be applied to renovations of homes older than 10 years and to demolition and reconstruction in 32 central cities. From 1 January 2021, the scope has been extended to allow the 6% rate to be applied to demolition and reconstruction outside the 32 central cities. However, this was subject to the following strict conditions:

  • Demolition and reconstruction is done by the builder;

  • The property is rented for 15 years as part of a social policy; or

  • The property must have been used as an own and only home for at least 5 years;

  • The property has a maximum surface area of 200m².

This measure also applied to property sales, allowing developers to sell demolition and reconstruction projects with a 6% VAT rate. This extension initially applied to 2021 and 2022, but was eventually extended to 2023. However, a new regime will apply from 2024.

New system

One system for demolition and reconstruction at 6% VAT remains in force throughout the territory. This only applies to:

  • Private individuals who use the property (with a maximum area of 200m²) as their only residence for at least 5 years. Property developers will therefore no longer be able to sell demolition and reconstruction projects at 6% VAT.

  • Individuals and companies renting out the property (with a maximum surface area of 200m²) for 15 years as part of a social policy.

In addition, two specific transitional measures are foreseen for the year 2024:

  • Individuals who have purchased a property from a developer will be able to keep the 6% VAT rate for invoices received in 2024, provided that the building permit for the demolition and reconstruction was submitted before 1 July 2023.

  • Individuals and companies who have submitted a building permit for demolition and reconstruction before 1 January 2024 can continue to benefit from the 6% VAT rate in the 32 central cities for invoices received in 2024 under the old conditions.

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